When interest rates went up, Bowery's income from interest payments by the FDIC also went up, guaranteeing Bowery's income would stay ahead of its interest obligations to its depositors. Thus, Bowery's interest cost and interest income were both variables. Under the interest rate risk protection, Bowery paid the FDIC the fixed rate of income received from its assets and the FDIC paid Bowery a variable rate of interest on those same assets based on current market rates. In order to avoid insolvency, Bowery and the Federal Deposit Insurance Corporation (FDIC) entered into an assistance agreement designed to protect Bowery from credit and interest rate risks. Prior to any involvement by Wachtell, the Bowery Savings Bank found itself in severe financial difficulty resulting from the fact the interest it was required to pay to attract depositors exceeded the income the bank earned on its fixed-rate loans. īefore us is the question whether the trial court erred in refusing to disqualify the lead counsel representing Salomon Brothers, the New York law firm of Wachtell, Lipton, Rosen & Katz (hereafter Wachtell).fn. Salomon Brothers filed a cross-complaint against Ahmanson for breach of contract. Ahmanson filed a complaint against Salomon Brothers alleging breach of fiduciary duty, fraud, negligence, negligent misrepresentation and breach of contract. Ahmanson contends it suffered over $100 million in damages as a result of Salomon Brothers' negligent and self-serving advice in the course of the Bowery transaction. Ahmanson & Company and others (hereafter Ahmanson) hired defendant Salomon Brothers, Inc., to provide financial advice and investment banking services in connection with Ahmanson's acquisition of Bowery Savings Bank. Plaintiffs appeal from an order denying their motion to disqualify defendants' attorneys on the ground of conflict of interest. Liebhafsky, Alschuler, Grossman & Pines, Frank Kaplan and Michael Linfield for Defendants and Respondents. Wachtell, Lipton, Rosen & Katz, Douglas S. (Opinion by Johnson, J., with Lillie, P.J., and Woods (Fred), J., concurring.)īelin & Rawlings and Daniel N. (Superior Court of Los Angeles County, LASC No. SALOMON BROTHERS, INC., et al., Defendants and Respondents. AHMANSON & COMPANY et al., Plaintiffs and Appellants, v.
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