PhillyDeals: How soon we forget the need to fix things

Did the Obama administration blow its chance for fixing the nation's financial rules by waiting too long?

"People have forgotten how emotional we got a year ago," when Lehman Brothers failed and the credit markets stalled, says W. Bradley Baturka, managing director at corporate adviser LECG Corp.'s Wayne office.

Baturka joined former Securities and Exchange Commission chief accountant Lynn Turner and Ballard Spahr partner Hank Hockeimer, among others, at the Union League last Thursday to argue about financial reform, its costs, and its prospects.

There's no shortage of ideas. "Obama has a regulatory-reform proposal, you've got various 'shareholder empowerment' acts in the Senate, and even Arlen Specter has a proposal to greatly increase liability for people tangentially associated" with securities fraud, Baturka recounted.

But with markets stabilized and the panic mostly past, financial companies are attacking these proposals as costly efforts "to kill a fly with a hammer."

Turner, now a managing director at LECG, believes that, of all the proposals, "the only things the lobbyists won't be able to defeat are consolidation of some of the bank [regulators], and shareholders' rights to have 'say-on-pay' " votes at annual meetings, Baturka told me.

"All this other stuff on regulating derivatives and the credit agencies will really have a hard time passing. There's a lot of noise," Baturka added. "But at the end of the day, with a lot of Washington and Wall Street insiders in key positions, the stuff that's likely to pass is not that much."

But Timothy R. McTaggart, a Washington partner at Philadelphia-based Pepper Hamilton L.L.P., tells me Rep. Barney Frank (D., Mass.) and other House leaders look serious about passing Obama's financial package despite hostility from both banks and entrenched Washington regulators.

Frank's House Banking Committee is holding hearings on the package this week and next. McTaggart figures it's the Democrats' second priority, after health care.

He thinks Obama's proposed Consumer Financial Protection Agency looks likely to pass the House, and "might have a shot in the Senate," despite resistance from bankers and competing regulators at the Federal Reserve and the Federal Trade Commission.

When Art Rooney Sr. died in 1988, he split the Pittsburgh Steelers five ways among his sons.

"It went 20 percent to each brother. That wasn't really compliant with NFL rules, which require a 30 percent controlling owner," says San Diego lawyer Carl Sanchez. As head of the mergers and acquisitions practice at Paul, Hastings, Janofsky & Walker L.L.P., Sanchez has represented four of the five Rooney brothers over the years.

After much negotiation, the Rooneys finally solved both NFL governance and personal tax and investment challenges last week.

Team president Dan Rooney (with his son and heir apparent) boosted his stake, two of his brothers stayed on as "passive" shareholders, and the other two sold out, though they retain game-attendance rights and collect cash from new, NFL-approved outside investors.

The deal implies the Steelers, one of the NFL's smaller-market franchises, are worth $800 million. "That's darn good for this economy," says Sanchez, whose firm also represented Stephen Ross in his purchase of the Miami Dolphins from Wayne Huizenga last year.

Sanchez predicts more complex team sales in the near future. "You have these individuals who are quite wealthy who own these teams," he said. "But the franchises have become so expensive, family ownership is going to go by the wayside."

Why not sell to public shareholders - to all the rabid fans who'd love to own a piece? "The franchise rules are strict," Sanchez explained, at least in the NFL. "Every single person in the Steelers organization had to go through screening and approval. I don't know how you do that in a public environment."

Instead, "you're going to see more syndicated groups and more corporate groups buying pieces of teams in the future," he predicted. "It's incredibly difficult for individuals to come up with a billion dollars."

We're in a recession, you know.