Blessings of the College Riots Part 2: Sue Members of the Board

If you have not done so, I urge you to read Part One of this series here.

For years we have been urging billionaire donors to stop donating their billions to universities that stand in opposition to everything they believe in. They are successful capitalists who donate to institutions teaching their students to be socialists and communists, to hate them. For example, Jewish donors are big givers, supporting universities whose professors teach their students that Israel is illegal and must be destroyed entirely from the Jordan River to the Mediterranean Sea and that Jews who support Israel — Zionists — need to be extinguished, too. The Final Solution.

There is no stopping or persuading these idiot billionaires. They became billionaires because they would not stop as multi-millionaires. They had egos and needed to have more. Three hundred million.  Seven hundred million. A billion. Two billion. Three Billion. Five billion. No amount ever was enough to sate their egos. And so be it. If that is what they needed, so be it. To each his own. I need to learn more Torah and to write more articles and books. It never is enough. For me, I am always driven to more Torah learning and writing. For billionaires, making money is never enough. Okay by me.

The problem is that they are partly driven by insatiable ego. I happen to know a few billionaires personally, from fundraising for my synagogue, so I know. They need to see their names on buildings, on classroom doors, in endowed chairs, in kitchens, everything but on toilet bowls. They must see their names on walls. And, again, really, that is basically O.K. by me. Some guy named Keck, whoever he is, made it possible for USC to have a magnificent medical center.  A guy named Hoag gave Orange County a premium medical center that has saved countless lives. A lawyer named William Shea gave money to help bring National League baseball back to New York after the Dodgers and Giants left for California, so the Mets named their original playing field “Shea Stadium.” (READ MORE from Dov Fischer: A Rabbi, a Pastor, and a Bishop Defend a Shared Goal)

The problem with these egomaniacal billionaires is that, for all intents and purposes, they will not stop donating to the universities whose students despise them. We have tried for years to persuade them, and with only a very few exceptions, they are useless. Vladimir Ilyich Lenin once said that a capitalist will even sell you the rope to hang him. A contemplation of billionaire donors to American universities confirms that Lenin got that one right. Even a broken clock is right twice each day.

So who can be pressured to change the campus climate. Yes, that is what we desperately need: climate change — on campuses.

The next step was to pressure college and university presidents. Time has taught that, too, is useless. In Judaism, we have an expression: a “brakhah l’vatalah” — a blessing with no purpose. Just as I hyphenate “G-d” because the Creator’s Name is holy and should not be spelled out completely other than in prayer or in Torah study, so it is forbidden to recite G-d’s name in vain in a purposeless blessing. Therefore, whenever someone suggests even a secular action that will lead to nothing, we say “Don’t bother. It’s a brakhah l’vatalah.” A waste.

We have learned the hard way, from experience, that appealing to university presidents for justice and fairness and an end to the rot in university life is a brakhah l’vatalah, useless, a waste.  They are not part of the solution because they are essential components of the problem.

So who on G-d’s earth has the power to change things, and whom can we pressure? Here is a novel proposal:

In 1992, I published a landmark law review article on FIRREA (David B. Fischer, Comment, Bank Director Liability Under FIRREA: A New Defense for Directors and Officers of Insolvent Depository Institutions — Or a Tighter Noose?, 39 UCLA L. Rev. 1703 (1992)). It may be called “landmark” because it was cited in at least 13 separate federal court opinions, several state court opinions, and dozens of law review articles.

FIRREA was the Financial Institutions Reform, Recovery, and Enforcement Act. (In its initial form, the proposed first word of the law’s title was “Depository,” not “Financial.” Honest to goodness. You figure out why they changed the word.)

Back in the 1980’s, America had a widespread network of independent financial institutions that were very similar to banks, called “Savings and Loans,” or “S&Ls.” S&Ls were so similar to “banks” that most Americans did not even notice a difference. But there were important technical differences that lie outside the scope of this article. I refer you to my law review article.

If a bank ever goes “insolvent” (the technical term for when a financial institution goes “bankrupt”), depositors may line up to be reimbursed by the FDIC, the Federal Deposit Insurance Corporation. Similarly, if an S&L would go insolvent, its depositors would be reimbursed by the FSLIC, the Federal Savings and Loan Insurance Corporation, a body separate from the FDIC. In the 1980’s, there were a spate of S&L insolvencies. It was a national financial catastrophe. S&Ls were dropping like flies. Perhaps you may remember the name of Charles Keating, a central figure in the mess. Depositors throughout the country demanded recompense from the FSLIC, and the feds had to cough up the cash.  And then the Feds, in turn, through the Resolution Trust Corporation (RTC), looked for ways to recoup some of the lost millions.

But whom could they sue? The S&Ls that failed? Pointless — they had no money left. The bank managers? How much could be collected from them? Bupkes. So whom could the Feds sue to collect?

The federal government landed on a terrific idea: let’s sue all members of all boards of directors and boards of trustees at any and every failed S&L. Sue them for recklessness, gross negligence, and even simple (or “ordinary”) negligence. As directors of the S&Ls, they were the governing body of the financial institutions, and that meant they had a “fiduciary duty” to oversee administration of the Savings and Loans. They could be liable for damages. And even if they could not fork over all the money awarded in a court judgment, most such people are covered by “D&O” (Director and Officer) insurance policies that cover that kind of liability. So the Feds sued away, like crazy. (READ MORE: A Queen, Two Bishops, Jews, and Muslim Madmen in Turbans)

I worked at a prominent law firm that represented such a defendant. He was no financial wizard. Rather, on an S&L Board of millionaires and billionaires, he was added because he was locally prominent, a very successful local entrepreneur, owner of several auto dealerships. So they invited him onto the Board, and he gladly accepted the honor. Now he was being sued for millions. I still remember, thirty years later, the meeting with the client in which he beamed: “I’m the easiest guy to defend on the whole Board. While they were making and approving crazy things — toilets made of gold, windmills that produced no electricity — I never voted for any of that garbage.”

The partner in charge of our team asked: “So you voted against those things?”

And our client boastfully responded: “Even better: I never attended a single Board Meeting!”

We attorneys looked at each other. This guy was finished, kaput. He had utterly violated his fiduciary duties. Not malfeasance. Not misfeasance. But major league non-feasance. We had to settle with the RTC for a boatload of money, within the limits of his D&O policy. He went back to selling cherries and lemons, and he never sat on another board again.

And that got me thinking, When Rep. Elise Stefanik conducted the Congressional Hearing heard ‘round the world, she focused a spotlight on three decayed worms, the presidents of Harvard, University of Pennsylvania, and MIT. It became clear that all needed to be fired. The Board of Directors at Penn rapidly fired their decayed worm, Liz Magill. The board of directors at MIT refused to fire their decayed worm. And the board of directors at Harvard initially refused to fire their decayed worm, Claudine Gay, until Christopher Rufo broke the story that Claudine was a mega plagiarist. The story grew like kudzu and got uglier until students at the Harvard Crimson called for her resignation. And finally the Board of Directors at Harvard put a boot in her derriere and showed her the door.

So who indeed has the power? Not the billionaire donors. Not the professors. Not the university presidents. But the Boards of Directors, the Boards of Trustees.

Until the publication of this article today, I don’t think anyone else has figured out the ramifications of this.

It is time to enact a law like FIRREA that empowers the federal government — and private citizens, too — to sue university and college directors and trustees, not only collectively but also individually. They have the millions and the billions, and they have the D&O policies. They — and no one else — decide whom to hire as university president and whom to fire. They run the universities.

Yes, they are behind the scenes. No one knows them, sees them, or thinks of them. But they are the power. It’s like in baseball: the all mighty manager on the field and in the dugout makes the lineup, decides when and whom to pinch-hit, and when and whom to bring in as a reliever. And then, with the flick of a pen, the front office will fire the manager and bring in a new one. That’s  where the power lies.

Yes, like that hapless car dealer, many university directors and trustees have no grasp of the entirety of responsibilities they have accepted and assumed when they became directors and trustees, but they bear those fiduciary duties nonetheless.

What fiduciary duties do they have to the federal (and state) government? The Feds allocate millions of dollars to the universities for research. They allocate millions in Pell Grants and other federal financial grants to students so that the kids get a full unhindered education. They extend loans at advantaged interest rates and often end up writing off those loans, at the expense of the national budget and American taxpayer, when it becomes clear that the students cannot or will not pay the loans back. They grant the universities tax exemptions that waive millions in federal tax revenue so that donors will give more to the colleges and universities. Any single federal expenditure for a college entitles the federal government to subject matter jurisdiction and standing in any lawsuit brought over Director or Trustee malfeasance, misfeasance, or non-feasance in the conduct of fiduciary duties. (READ MORE: Catching Up on More Infuriating Things in the Past Month’s News)

Most students’ parents also would have legal standing to sue. If their kids pay all the tuition and dorm rent, or borrow it all, then such parents may not have standing. But if a parent has paid even one dollar, not to mention tens of thousands, or borrowed tens of thousands in Parent PLUS loans, toward paying tuition or dorm fees, then they have paid for their child to receive a full, unhindered education on a safe and peaceful campus. Any extended rioting or other insurrection on campus distorts the very purpose for which that money has been spent. It comprises, at the very least, a breach of contract. The failure of the directors or trustees to impose solutions, fire ineffective university presidents, demand the removal of toxic professors, and implement all steps necessary to secure the campus for reasoned and calm learning legally exposes them to great individual liability. And what a fabulous class action that lawsuit would be! One thousand parents suing Columbia University for $60,000 apiece, a winning class action for $60 million. I am almost tempted to return to practicing law.

All that is needed is a federal law like FIRREA and similar state laws, since states also finance educational institutions within their borders. Overnight, you will see one Claudine Gay after another, like that evil woman now at the helm of Columbia University, fired; students expelled and a great many deported back to the dirt holes whence they came, and a return to proper, reasoned, and respectful learning.

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His 10-part exciting and fact-based series of one-hour classes on the Jewish Underground liberation movement (Irgun, Lechi, and Haganah) and the Rise of Modern Israel can be found here. In it, he uses historic video clips of Irgun, Lechi, and Haganah actions, decades of past Arab terrorist atrocities, as well as stirring musical selections from the Underground and video’d interviews of participants, to augment data, statistics, maps, and additional historical records to create a fascinating, often gripping, and scholarly enriching educational experience about issues that remain deeply relevant today as Israel engages in an existential war in Gaza against Hamas terrorism.

His latest deeply moving weekly series of informational and inspirational programs on the Hamas Gaza war may be found here.

His 40-part Bible Study series covering all of I Samuel (First Samuel) intensively with Talmudic and Midrashic commentaries, and now into II Samuel is now up here.

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