Bank Lawyer's Blog

Siesta

There will be no postings for the next couple of days while the author indulges in non-billable fun and frolic.

Nothing Doing

Do you remember in January, when the FTC fined ChoicePoint $10 million (the largest civil fine in the FTC's history) and required ChoicePoint to set up a $5 million fund to aid victims of identity theft that resulted from the theft of personal information from ChoicePoint? Guess how much of the $5 million has been disbursed to identity theft victims?

If you guessed "zippo" you were right "on the money."

Nearly eight months after federal regulators trumpeted a settlement they secured with ChoicePoint Inc. over a data breach, the government has not paid any money to victims from a $5 million fund that was to be set up as part of the agreement.

The Federal Trade Commission also has not yet implemented procedures for how the 800 fraud victims it has identified so far can apply for and receive compensation from the fund, nor has it hired anyone to administer the fund on behalf of the agency, said FTC spokeswoman Claudia Bourne Farrell.

"That's under review,'' Farrell said Tuesday. Responding to an open records request by The Associated Press, Farrell said the commission is trying to develop a plan to distribute the money "expeditiously and efficiently."

Jessica Rich, assistant director of the FTC's division of privacy and identity theft, said in a statement released to AP on Wednesday that "law enforcement is still identifying victims and we want to make sure we have the right people."

"We are hoping to complete the process soon," Rich wrote.

"Soon" in bureau-speak means "right before hell freezes over."

Farrell said she assumes the 800 victims the agency identified would be eligible for payments. She was unable to say whether any victims have inquired about the fund.

The settlement also permitted the FTC to use money from the fund to pay any expenses from administering the fund. Farrell said no expenses have been paid.

This is beginning to sound uncannily like Sergeant Schultz from the old "Hogan's Heroes" show: "I know nothing! NOTHING!"

Surprisingly, politicians used the opportunity to hold a press briefing.

Rep. Edward Markey, D-Mass., a member of the House Telecommunications and Internet Subcommittee who has authored legislation to protect consumers' personal information, said the FTC isn't moving fast enough.

Markey said the "victims should immediately receive the compensation they urgently need to protect themselves from exploitation by identity thieves." He added, "Further delay is unacceptable."

He added, but not for attribution, "that's 'Markey' spelled M-A-R-K-E-Y."

From Russia, With Love

For every federal bank regulator in the U.S. who thinks he or she has a thankless job, I have this to say to you: You're absolutely right.

On the other hand, thank your lucky stars you aren't trying to do the same job in Russia. According to a story on page one of last Friday's The Wall Street Journal (paid subscription required), two weeks ago, Andrei Kozlov, Russia's top bank regulator, "was shot outside a Moscow sports stadium after playing soccer with fellow bankers. He later died of his wounds."

Mr. Kozlov was one of the most senior Russian officials to be murdered since the end of communist rule, and his death stunned the country's elite. Contract-style killings of businessmen were commonplace in the early 1990s, when capitalism was in its infancy here, but most thought they had become a thing of the past.

The attack exposed the fragility of [Russian president Vladamir] Putin's claims to have ushered in a new era of stability. It also showed that despite the gradual removal of political challenges to Kremlin power, crime and corruption still menace the authority of the state. Indeed, Mr. Putin himself admitted this month that the lack of progress against corruption was one of the major failures of his presidency.

Though investigators say they have few leads in the Kozlov murder, Mr. Putin already has drawn his own conclusions. In a hastily called meeting of top officials last Friday, he said it showed Russian banking was riddled with crime. Banks continue to be used to channel billions of rubles in cash payments used for tax evasion, "huge bribes," terrorism and the "narcomafia," he said.

Other than elements of the lunatic fringe who occasionally bomb federal buildings in the heartland, federal bank regulators in this country don't face the prospect of disgruntled bank shareholders and executives gunning them down or blowing them up (or paying others to do their dirty work). Sure, some of them fantasize about it, but in an overlawyered society like the U.S. of A., we prefer to settle our differences the old fashioned way: we litigate until we bleed. Or, we go on the Jerry Springer show and start throwing chairs.

Almost ten years ago, a former federal bank regulator who was helping former Soviet republics attempt to establish modern banking systems based upon the American model, offered me an assignment to help one of those republics draft regulations to cover the takeover of insolvent banks. Although intrigued with the challenge and the opportunity to do something many don't get to do, family and client obligations made the time commitment unworkable. What I remember most about those discussions was the former U.S. regulator telling me that if I accepted the assignment, I'd better be prepared to deal with bank regulators who didn't even know the basics. They knew that under the communist regime, money came in and money came out, but other than that, modern Western banking practices were pretty much a mystery to them. Even the concept of "debits" and "credits" was as mystifying as time travel.

The problem in Russia and other countries in similar straights isn't the lack of basic knowledge of banking law and practices, however. They're smart enough to travel up the learning curve fairly quickly. The bigger problem is that those societies do not appear to have respect "throughout the ranks" for the need for both the rule of law and for transparency. It's as if the majority of bankers in these countries were schooled by Andy Fastow. Central bank regulators like the late Mr. Kozlov "got it," but look what his knowledge got him. Dead. Putin appears to "get it," as well, and, as a former KGB big wig, you'd think he could clean up his country's act. Apparently, the culture of corruption is too deeply ingrained to easily root it out.

On this blog, we have a lot of fun poking at the foibles of all of us involved in banking in the U.S. Stories such as this one make us realize how good we've got it. In Russia, there's nothing funny about the defects in its banking system. As long as Russia remains essentially a "kleptocracy," and prefers to kill those who attempt to reform it, its banking system (and its economy) will never be modernized.

Exotic Mortgages: Guidelines Are Near

Testimony by federal bank regulators before Congress this week indicates that (1) the proposed guidelines on nontraditional mortgage products (previously discussed here and here) are nearing completion, and (2) they're going to make life painful for financial institutions that make these types of loans. In other words, the guidelines will afford bank lawyers an opportunity to bill the ever-living stuffing out their clients. As I've exclaimed on more than one occasion: Is this a great economic system, or what!

Nothing has occurred to alter my initial thoughts on the proposed guidelines, but, then again, I'm a man who's filled with inertia on most subjects. Yet, when I read reports that the testimony of regulators and the bleating of U.S. Foghorn Leghorns focused on ensuring that lenders make "meaningful disclosures" to consumers who do not understand the obvious consequences of these types of "exotic" loans, which disclosures will include a "consumer handbook" being written by the regulators, I have to take both hands and place them firmly on my closed eyelids to prevent my eyeballs from rolling so fast and furiously that they risk dislodging themselves from their sockets. While I could be wrong (I believe that occurred once, on February 14, 1957, when I took my father's advice and stood up to a playground bully), I'm skeptical about adding yet more paperwork to the stack of disclosures, notices, and legal documents that utterly confound even those of us who do what we do for a living. I ask this seriously: how many home owners read through every item of paperwork that they're given at a loan closing? Of those who do read, how many understand what they read, and, as to something that they don't understand, ask for it to be explained to them? You're going to add to the unread stack more paper that most borrowers won't read, no matter how "understandable" you think you'll make it.

As to making it "understandable," much of the testimony lambasted many lenders for drafting disclosures that are, in the words of Orice Williams of the GAO, "generally written with language too complex for many adults to fully understand." That's likely a true statement, but how far down the food chain do you have to "dumb it down" before you believe that most American adults will understand that "bad things happen to good people"? Does the average unicellular microorganism have to be able to "feel the payment shock"? Pardon my skepticism. It's likely totally unjustified.

How are we coming with the simplification of annual privacy notices that banks send out to their customers? They certainly have made a huge difference in informed consumer choice based upon the differences in banks' privacy practices, haven't they? I know I enjoy folding them into various perfect zen-like origami representations of sea fowl, or making paper airplanes, or using them start a nice fire on a brisk winter's eve. Julie Williams lambasted their complexity, giving a Dick Cheney-like buckshot-in-the-face blast to bank lawyers who draft (and the clients who love them).  Simplification has been promised. We'll stand by.

Seriously, folks (and by "folks" I mean exotic lender lawyers throughout this great country I like to call: The United States of America), let's be honest. When the subject is billable hours and the year is in the backstretch, does any prospect whet your appetite for a great final fiscal quarter more than guidelines that promise as much as these do? Can you feel your clients starting to vibrate like tuning forks as they contemplate having to ask your advice and what it will do to margins already under duress?

P.S. Despite the alarm over "payment shock" and its potential to increase default rates, thus far, it's been a "no-show.":

"We have not seen any specific signs that lead us to those conclusions that there will be huge amounts of defaults," said Sandra F. Braunstein, director of the division of community affairs at the Federal Reserve Board. "We will be watching very carefully in the next few years as (the loans reset) to see what happens."

To me, underwriting is more important than disclosure. Lenders presumably have more sophistication and control than the average consumer (yeah, I know, we're talking about mortgage bankers). The underwriting standards ought to be stringent enough to hedge the risk of payment shock, whether or not the borrower fully appreciates it. In many cases, borrowers who can buy a house only by using an exotic mortgage are desperate enough to take any risk and hope for the best, so disclosure of the risk is likely to be as effective as telling Bill Bennett he might lose money on the slots at the Bellagio.  Underwriting guidelines are supposed to act as a check on the consumer's stupidity and the originator's venality.

If there are huge numbers of defaults, look to the financial stability of the originators, not the loan buyers. As I've noted previously, in mortgage banking, the ultimate risk can be be the buyback risk, not the credit risk. A little "mortgage banker" originating and selling a huge amount of exotic loans may have them off its balance sheet, but the contingent liability represented by a potential buyback liability is the stealth bomber waiting to blow it out of the water.

Lower Than a Bank Lawyer's Ethics

To prove that this isn't "pick-on-a-lawyer week" at Bank Lawyers Blog (although there is no group of pompous, bloviating Bill O'Reilly wannabes more deserving of abuse than lawyers, unless it's the small group of "blawggers"), let's pick on a job category that even lawyers can look down upon.

A couple of weeks ago, our parish priest (I can see the evangelical atheists heading for the exits as I write this) was delivering the homily during Sunday mass, during which he told how low in the public estimation Catholic priests had fallen. Although he didn't state this specifically, that is due principally to the severe outbreak of pedophilia among priests that the Church fathers were slow to reign in and even even slower to eradicate.

"When I visit people's homes, they lock up their kids," he lamented. "We're almost as low as lawyers."

[Much laughter ensued]

On the way out of church, the good father was greeting the parishioners and spotted me making a beeline for him with a grin on my face. Knowing my profession, as well as my penchant for being the anti-wallflower of hot opinions, he was ready for me when I grabbed his hand to shake it. He opted to deflect my response as well as get in another bon mot. He succeeded with the latter, if not with the former.

"Some of my best friends are lawyers," he assured me.

"Well, at least we both have mortgage brokers to look down on, Father," I responded.

Thank God I have some support for that heinous slander!

According to last weekend's edition of National Mortgage News Daily Briefing (subscription required), mortgage brokers are falling on hard times, and running afoul of law and regulation in the process. At least they are in the Empire State.

Roughly 18% of the mortgage bankers and mortgage brokers in New York state have not yet paid their general assessment and are in immediate suspension, according to a New York Banking Department official who addressed the New York Association of Mortgage Brokers convention in Melville, N.Y. If the bill, plus a $100 late fee, is not paid by Oct. 10, the registration is considered to be expired, and if it is not paid by Dec. 10, the expiration is considered permanent, said Robert A. Mengani, assistant deputy superintendent of banks in the department's mortgage banking division. The department is seeing an increasing number of violations of advertising regulations, which Mr. Mengani attributed to the shrinking mortgage origination market. A particular problem involves materials using the words "United States of America" or having a picture of the Statue of Liberty, which are protected words and images. Violators open themselves up to a $15,000 fine and must send out retraction letters, he said.

As the residential real estate market continues to deteriorate, this problem is likely to grow worse. And according to a number of experts, including blogger and financial services consultant Mish Shedlock (quoting Florida real estate broker Mike Morgan), in some parts of the country we're not in for a "hard landing," we're in for a "crash."

Enron: What Have Lawyers Learned?

Integrity without knowledge is weak and useless, and knowledge without integrity is dangerous and dreadful. --Samuel Johnson

A few weeks ago, The Washington Post noted that, notwithstanding the penalties suffered by accountants, investment bankers and senior officers of scandal-plagued companies such as Enron, "lawyers serving fraud-ridden companies have emerged relatively unscathed."

Unlike the accounting profession, forced by the Sarbanes-Oxley Act in 2002 to submit to independent oversight, lawyers have generally ducked proposals that would have forced them to blow the whistle to outsiders.

On an individual level, law firms that dispensed bad advice or failed to act on red flags mostly have avoided prosecution, in contrast to their brethren in the accounting industry.

[...]

Nor have securities regulators pursued sweeping civil cases against groups of law firms, seeking to determine if they may have performed shoddy work or ignored fraud under their noses.

Notwithstanding the contention of defense attorney John Villa that "[t]he trend line evident in the last 12 months is that both SEC regulatory sanctions and criminal prosecution of inside counsel are increasing sharply," Villa's own statistics show that lawyers are still getting off easier than other parties involved in these scandals:

...the SEC's enforcement unit pursued civil charges against 34 lawyers between 2002 and mid-2006, and prosecutors filed criminal charges against 13 in-house lawyers during the same period.

In comparison, nearly three dozen executives, accountants and bankers have faced charges in connection with the Enron case alone since the Houston energy trader collapsed in December 2001.

[...]

Experts say there are significant obstacles to bringing charges against a lawyer or a law firm. First among them: Lawyers often are a layer or two removed from the decision-making roles in striking deals, dictating accounting policy or preparing corporate financial statements, said Michael J. Missal, a partner at Kirkpatrick & Lockhart Nicholson Graham LLP in Washington.

Moreover, at companies engaging in fraud, there may be a push to conceal information from lawyers so as to avoid detection. Lawyers also can defend themselves by saying that they relied on the word of top executives in collecting bonuses and other payments, as former Tyco International Ltd. general counsel Mark A. Belnick successfully argued to a New York jury that acquitted him of larceny two years ago.

The law itself poses complications. In order to protect communications between lawyers and their clients and to preserve the flow of information, attorneys enjoy broad protection from claims that they gave bad advice so long as they offered it honestly. That means prosecutors usually must seek cases with evidence of clear criminal intent: ones when lawyers personally profited, destroyed documents or misled auditors (as court papers say in the case of former Comverse Technology Inc. general counsel William F. Sorin, who was charged this month in a criminal complaint).

Just because lawyers manage to "skate" legal sanctions doesn't mean that they're not accountable as human beings. I hope that out of these scandals, some lessons have been learned. There are some indications that at least some of the lawyers involved have walked away wiser.

The Bill To Nowhere

Ted Stevens of Alaska, Chairman of the Senate Commerce Committee, an opponent of net neutrality, champion of the "Bridge to Nowhere," and a guy who thinks the Internet is "a series of tubes," has proclaimed net neutrality legislation dead for this year. I've given Ted a hard time in the past, to some degree because he's slightly goofy, but mainly because he's a politician. According to the same article that quotes Ted, "[t]op Senate committee aides said it remains impossible to predict whether their bosses will succeed in passing its communications legislation this year, particularly since Congress has only a few weeks before it expects to recess again for last-minute campaigning."

I'll go with Ted. Net neutrality is dead for 2006. When ISPs start charging banks higher fees for online banking because...well...they can, don't come crying to Congress. You had your chance to make a difference and you didn't do bupkis.

Now, about the Internet being made up of a series of tubes. These are the leaders of your U.S. Congress, Americans. Be proud. Be very proud.

I Breathe, Therefore I Bill

Last Friday's "Law Blog" of The Wall Street Journal featured a post about an extremely busy Sunday September 10 for Silicon Valley hi-tech legal guru Larry Sonsini.

LB Trivia: What was Larry Sonsini (pictured, left), of Palo Alto, Calif.-based Wilson Sonsini Goodrich & Rosati, up to last Sunday?    

(A) He ran long stretches of Hewlett Packard’s board meeting that night, when directors conferred by phone to discuss the fallout over the company’s spying-in-the-boardroom scandal.    

(B) He advised the board of Freescale Semiconductor, which late into the night weighed competing offers in what turned out to be one of the largest technology LBOs in history.    

(C) He spent part of the day at Pebble Beach, one of the world’s elite golf resorts, attending Wilson Sonsini’s annual partners’ retreat (but didn’t get out on the golf course).
(D) All of the above

Answer: (D)

I'd be surprised if Mr. Sonsini didn't have plenty of help from other members of his firm. Still, that sounds like a "full day" even for someone with high levels of blood sugar and an ample supply of "crank." When he looks back on his life, will he remember fondly how many weekends he spent multitasking for clients? You have to wonder.

The first comment to the blog post must have been left by a big-firm associate.

my question is, did he manage to bill 40 hours in those 16 waking hours?  i bet he did.

I have no idea what Mr. Sonsini might have billed to various clients for his work that day; however, the cynicism expressed by the commenter is shared by many other lawyers and their clients.

I had a banking client whose general counsel once had a legal assistant audit the bills of a big firm partner who seemed to billing a lot of time to a lot of files. She discovered that in one 24-hour period, he'd billed in excess of 26 hours to the bank. Not unsurprisingly, his firm's representation of that bank did not endure.

A well-known Texas attorney was once featured in a magazine article that trumpeted him as one of the "hardest working" lawyers in Northern Texas. He claimed to have billed over 4000 hours in the previous year. An unnamed source, identified only as another experienced Texas lawyer, commented to article's author: "He may have billed that many hours, but he damn well didn't work all of them."

These types of incidents and comments fuel client resentment of lawyers' billing practices, yet reflect a very real problem, a problem that can cause "burnout" not only by clients, but also by lawyers who try to live their lives honestly. They also end up generating stories like one from the August 30, 2006 edition of The Wall Street Journal entitled "Lawyer's Charge Opens Window On Bill Padding." According a law professor quoted in the article, "bill-padding is the perfect crime."

Read it and weep.

A Legend In His Own Mind

This post is filed under the "tooting your own horn" category.

By Damian Paletta
     Of DOW JONES NEWSWIRES

    WASHINGTON (Dow Jones)--Debates over federal banking law can be high-pitched and often warn of some sort of Armageddon - such and such will kill small banks, ruin big banks or bury consumers.

   The stakes - the industry controls trillions of dollars of assets - make the sector an attorney's dream, full of confusing and ever-changing jargon about things like credit derivatives, Basel II and mortgage-backed securities.

   But in the last two years, another philosophy has emerged, one that professes much of this is, well, slightly funny.

   Enter Kevin Funnell, 56, a Texas-based attorney who began the Bank Lawyer's Blog in 2004 and puts a daily humorous spin on previously humor-repellent issues like federal preemption, government-sponsored enterprises and identity theft.

   "I sit outside the Beltway and look at all the stuff that has occurred over the last 32 years," he said in an interview. "I see repeated patterns of dysfunctional behavior. Time and time again, it seems to be the same thing in different clothing."

   So he has a little fun with it. Here are some examples from past blogs:

   - On efforts to pass a law creating new oversight for government-sponsored enterprises Fannie Mae and Freddie Mac:

   "For all you supporters of GSE reform (stand up, all three of you and be recognized), your hopes for some action on legislation this year appear to be dwindling severely, if not outright dashed."

   - On votes in Texas that affect commercial and residential loans:

   "Ever the optimist, I misjudged the century into which Texans were willing to move vis a vis their state lending laws. I guessed the early 20th Century, and was at least a century ahead. Maybe a millennium."

   His musings - or bloviations, as he likes to call them - go beyond just the legalese. In July, he remarked about the bad luck one prospective bank robber encountered when he discovered his ex-girlfriend was the bank teller.

   "But seriously, folks - and with all due respect to my former girlfriends - you just have to know that if a former girlfriend recognizes you and knows that you're a wanted man, she's sprinting to the nearest cell phone or land-line to dial 911 and give your sorry keister to the federales," Funnell wrote.

   And even though Funnell has represented multiple banks over the last 30 years, he's not always an apologist for the industry.

   "Every once in awhile, a story comes out that makes me wish I represented Tyra Banks, rather than commercial banks," he wrote before delving into the tension between Gulf Coast banks and their customers following last year's hurricanes.

   All of this has given Funnell a stable group of readers who don't mind laughing along with him.

   "He has a fabulous sense of humor and he doesn't take himself too seriously," said John "Buz" Gorman, general counsel at the Conference of State Bank Supervisors in Washington

Funnell is one of the scores of bank attorneys who doesn't live in Washington but deals with its oddities (for example, at least seven different agencies regulate financial services companies) every day. This makes it easier for Funnell to find humor in banking law, he said, even though he's made his living from it.

   "To a lot of people, millions of people, it's not that earthshaking," he said, adding that insiders can become "breathless" when debating banking law.

   Funnell said he usually spends close to an hour - typically at the end of each workday - working on his blog.

   "I don't do the pajama thing," he said. "I'm not sitting around in my skivvies with a beer and a cigarette."

   Instead, he often starts off with a recent news article (disclaimer: these can include pieces from Dow Jones Newswires), quotes it, and then launches into his interpretation.

   He sees the blog as more of a creative outlet than anything else. He doesn't accept any advertising or make any money from the site, and he also doesn't intend for it to help attract clients for his firm, Parsons Funnell & Berke LLP, where he's a partner. And the blog isn't exactly his life. He's been married for 30 years, works out, and plays "the valve trombone very poorly."

   His blog carries a disclaimer that his entries do not mean he's willing to give free legal advice, but this hasn't stopped people from asking him for some.

   "I get a lot of e-mails from consumers, some of whom write in all block letters with exclamation points at the end of each sentence," he said.

   He has also received questions and comments from bankers and regulators. One reader even threatened to beat him up.

   "One guy left a voicemail for me, threatening to kick my (expletive)," he said. "Anyone who threatens to kick my (expletive), I just forward the message to the local police and leave it at that."

   To be sure, the Bank Lawyer's Blog is captive to its niche audience and does not have even a fraction the readership large political blogs have. Funnell said his receives and average 130 to 150 visits each weekday.

   Still, the blog has gained him some attention. In May, the Financial Times quoted him as the person "who runs Bank Lawyer's Blog" in a story about online customer account security.

   Funnell's not quitting his day job, though.

   "I attended a (banking) conference recently in New York and I don't think anybody knows who I am," he said. "I don't wear a sign on my chest that says, 'Bank Lawyer's Blog.'"

   -By Damian Paletta, Dow Jones Newswires; 202-862-9241; [email protected]

God Save Me From My Friends-of-the-Court

In what amounted to a brutal body blow to the OCC, and one that must have staggered it back on its heels (after all, NAR and the OCC have previously been so amiable in their disagreements), the National Association of Realtors last week filed a "friend-of-the-court" brief with the Supreme Court of the United States, which has agreed to hear an appeal of the decision of the US 6th Circuit Court of Appeals' decision in Wachovia v. Watters. The 6th Circuit upheld (as did the 2nd and 9th Circuits) OCC interpretations that extend to state-chartered operating subsidiaries of national banks, the same federal preemption from state law that applies to the parent national bank.

According to a NAR press release,in its brief, NAR opposes the OCC's extension of federal preemption to operating subsidiaries of national banks. What a shock! An unnamed source who may or may not be connected to the Conference of State Bank Supervisors (which also filed an amicus curiae brief in the case) declared: "I love the smell of NAR amicus briefs in the morning. They smell like...victory!" We assume that when this source used the word "briefs," he or she was referring to a legal document and not to an article of clothing.

As we've repeatedly honked about on this blog, NAR has been a consistently strident and unyielding opponent of national bank federal preemption as promoted by the OCC. With NAR, it's the principle of the thing. As far back as 1776, NAR minute men took up the musket to oppose the oppression of an unjust overbearing monarch (in that case, His Majesty's Chief Commissioner of the Colonial Multi-list Oversight Commission for the Commonwealth of Massachusetts). In 1861, NAR members were the first to enlist in what later became the Army of Northern Virginia, to fight for their right to charge a flat 6% commission no matter how little work they did in hunting down runaway slaves and returning them to their rightful masters. The term "Doughboy" originated during WWI to describe fat-cat realtors, dressed like the Pillsbury ad icon of the same name, who in 1918, launched brutal human wave methane gas attacks on German trenches in France, armed with nothing more than "For Sale" signs and cans of Bush's Baked Beans.

For NAR, every battle has been about one issue and one issue only: states' rights. The worry that national banks might get into real estate brokerage and be preempted from state laws that benefit realtors by restricting price competition have absolutely nothing to do with it. Nope. It's all about constitutional purity.

Wharton Real Estate Professor Susan Wachter opined that realtors "are concerned that if nat'l banks enter the real estate services business they will have a competitive advantage that allows mortgage buyers to 'one-stop shop' for both home financing and brokerage." Perish the thought! Nothing so vile as common self-interest motivates these men and women of the sport coat and the ready smile.

Not too proud to take help where he can find it, CSBS strategist Karl Rove proclaimed: "The enemy of my enemy is my friend. That's the only way that I can rationalize accepting this support."

Inside moles at the OCC report that Comptroller Dugan rallied the troops late last week with a speech of Churchillian proportions. Excerpts:

I have, myself, full confidence that if all do their duty, if nothing is neglected, and if the best arrangements are made, as they are being made, we shall prove ourselves once again able to defend our Island home, to ride out the storm of war, and to outlive the menace of tyranny, if necessary for years, if necessary alone.

Even though large tracts of preemption and many old and famous national bank prerogatives have fallen or may fall into the grip of NAR and all the odious apparatus of NARzi rule, we shall not flag or fail.

We shall go on to the end, we shall fight in state court, we shall fight in federal court, we shall fight with growing confidence and growing strength in Congress, we shall defend our Island, whatever the cost may be, we shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender, and even if, which I do not for a moment believe, this Island or a large part of it were subjugated and starving, then our national bank Empire beyond the beltway, armed and guarded by the threat of regulatory retaliation, would carry on the struggle, until, in God's good time, the New World of a Democratic majority on the SCOTUS, with all its power and might, steps forth to the rescue and the liberation of the Old dream of federal power over all, the 10th Amendment be damned!

I know those ringing words bring a tear or two to my eye. I trust that they do to yours, as well.

The battle rages on. God save us all.

Peace Out!