There’s something else notable that happened during that period. “What’s fascinating,” he says, leaning forward in the spindly chair at the small wooden table next to his desk, “is that in the summer of 1982, the banks went to Washington and said to the Fed and the IMF and the World Bank, ‘All you have to do is lend Mexico the money it needs to repay us, and the markets will reopen.’ And they were absolutely rebuffed.” He adds, “They were told they had to man up to their credit decisions, that taxpayers were not going to bail them out, and they had to restructure. It was precisely the opposite of the decision that was made by the official sector of Greece in May of 2010, when they decided they would notoriously and openly repay their existing creditors in full and on time.”
Governments these days are a little too hesitant to tell financial institutions to man up, which is why Buchheit takes it upon himself. “He enjoys coming up with an elegant move, and he’s extraordinarily good at it,” says Anna Gelpern, a law professor who considers Buchheit a mentor. His signature style, she says often involves taking an accepted precedent from one country “and transplanting or transposing the rules onto something bigger,” as he did in Greece.
Of course, getting a good deal for his clients often means stiffing someone else, and not always the big guy. “They don’t want to recognize the people that they are screwing,” says one Wall Street executive that has tangled with Buchheit, noting that hedge funds contain investments from pension funds, state funds, and college endowments, even churches. “Priests and nuns,” he says, his voice rising.
Buchheit doesn’t mind being hated by the people he negotiates with. He rather enjoys being the swashbuckling Robin Hood of sovereign debt. “The lenders’ blood will run in the streets!” he was once heard exclaiming after devising a particularly nifty way of parting creditors from their money. He also enjoys cutting back the expected profits of so-called vulture funds that buy cheap debt of a country on the verge of default, then sue over the corpse. A folder in his office, marked vultures, contains a sheaf of articles about their activities. “Paul Singer is not the devil,” reads the first line of the article sitting on top. Singer’s $20 billion investment firm, Elliott Management, is perhaps Buchheit’s biggest nemesis. Over the years, millions of dollars have been spilled on court battles between his firm and theirs, most memorably over Peru, where one of their hedge funds managed to extract $58 million from the fleeing autocratic president, in part by taking possession of his plane. This week, they’ll meet again in court over bonds an Elliott affiliate purchased from Argentina during its 2001 economic crisis. After the country’s nearly $100 billion debt default, the rate of interest soared, and now, a decade later, the hedge fund claims the bonds are worth more than $2 billion. Argentina has recovered and theoretically can afford to pay. But: “Argentina doesn’t want to pay,” says the Wall Street executive. Cleary Gottlieb represents Argentina, as a critic of the firm points out, and is also the one who wrote the contracts that set the interest rate during the restructuring. Buchheit isn’t involved with Argentina—early in his career, he represented one of the creditors, which presents a conflict—but some see his hand in the country’s seeming disregard for its creditors and suggest the firm is being opportunistic. “Cleary has probably billed Argentina more than $500 million over the past decade,” the Wall Street executive adds, with a bitter chuckle. “Who’s the vulture now?”
Even some of Buchheit’s fans admit the critic kind of has a point. “Part of Lee’s identity is that he’s fighting the good fight,” says Gulati. “But from an academic point of view, it’s a classic before the fact and after the fact: After a country has no money, the good fight is to screw the creditors, give people as much money as possible. But before, if the people who lent you the money knew what you were going to do, they wouldn’t have lent you the money.”
Buchheit wouldn’t comment on Argentina, but several people tell me he actually disapproves of the country’s behavior. “It’s interesting because with Argentina, he was like, ‘The country has gone too far,’ which was sort of a surprise,” Hans Humes tells me.
But money is far from Buchheit’s prime mover. Back at his office, he puts down the plush globe. “It’s amazing that they pay me money to do it,” he says. “I would do it anyway. There’s nothing like it.”