FDIC Overstates Lawyers' Success, Says Law Journal
WASHINGTON - The Federal Deposit Insurance Corp. is overstating its return on the money it spends on outside lawyers, The National Law Journal reported in its Sept. 2 edition.
The publication stated that the FDIC gets back less than $4 for every $1 spent on outside lawyers - not the $29-to-$1 return previously cited by FDIC General Counsel Alfred J.T. Byrne.
The FDIC is sticking by its number. Spokesman Alan Whitney said the journal's numbers and calculations are "on the goofy side."
Grounds for Challenge
The FDIC has been criticized for hiring high-priced, private-sector attorneys. Early this year Mr. Byrne tried to justify hiring one for $600 an hour by claiming that the FDIC recoups $29 forevery $1 it spends for outside counsel. Mr. Byrne said the FDIC spent $733 million on lawyers who recovered $21.1 billion in cash.
The weekly law journal said the FDIC is inflating its recoveries by $8.4 billion and ignoring the costs of other professionals, like accountants, who help obtain those recoveries. Mr. Whitney said the FDIC previously had made clear that it did not view lawyers as solely responsible for the recoveries.
The paper said the FDIC actually spent $3.29 billion in recovering $12.9 billion in cash.