Springfield and MetroPCS

David Wighton writes "Wall Street Dispatch" for the wonderful peach-colored Financial Times.

His column today carries a fine discussion of the American "addiction" to litigation, as it affects Wall Street right now. In the process, he draws a connection I hadn't thought of before.

"In February," he writes, "Merrill Lynch repaid the City of Springfield, Massachusetts about $13.9 million for collateralized debt obligations it had sold to the municipality with the permission of city officials."

That's true, of course, and I've made a couple of references to that dispute in my other blog, Pragmatism Refreshed.

What I hadn't realized is that the old rule about the need to punish every good deed applies here. Wighton points out that after Merrill Lynch repaid the disputed amount, the Mass secy of state "promptly launched a fraud case against Merrill."

I also wouldn't have thought to make a connection between that fraud case and a civil action brought this week against Merrill Lynch in connection with auction-rate securities. Wighton tells me that cell phone operator MetroPCS has filed a lawsuit claiming that Merrill didn't properly explain the risks, selling auction-rate securities to MetroPCS as "low-risk and highly liquid," in compliance with that company's investment policy.

Why was a cell phone company interested in auction-rate securities at any rate? Wighton doesn't spell it out, but if I understand him accurately this was a way of saving money for its employees' pension plan. I'll have to look into that a bit.

Wighton's over-riding point is that companies (and municipalities) "across the US are considering taking an unusual step to counter disappointing returns from their corporate treasuries: legal action."

We've lost the ability to suck it up and move forward. We always have to sue somebody. We ought to learn the stereotypical stiff-upper lip from Mr. Wighton's fellow countrymen.

He's got a point.