The Lenders Obama Decided to Blame

NY Times ^

[y6162]

“etter check with Greenberg over at AIG. “

He had nothing on Greenberg. It was all a personal vendetta.I read the NY Post daily and followed the case closely.

This is a good summary of the case.

http://busmovie.typepad.com/ideoblog/2006/09/spitzer_to_gree.html

Spitzer to Greenberg: “never mind”

Eliot Spitzer drummed out of his job one of the most prominent executives in the insurance industry, Hank Greenberg, who had built his AIG into a titan, along the way extracting a multi-billion dollar settlement. At one time the Spitzer moves had erased a third of AIG’s market value. Spitzer did all this in part by threatening a criminal prosecution that would have put the company out of business. All over alleged accounting improprieties that were at worst debatable and likely never fooled investors.

Now, according to the WSJ:

The prosecutor has in fact abandoned nearly every substantive claim he’d made against the insurance titan, claims that helped lose Mr. Greenberg his job. . . . . Of the $1.64 billion Mr. Spitzer wrenched from AIG, the charges he continues to press against Mr. Greenberg represent $25 million. So what we really have is a philosophical disagreement over how a near-negligible transaction was accounted for at a $150 billion to $200 billion company. Only in this case, Mr. Spitzer used that trifling dispute to ruin a man’s career. Let’s also recall that when this hoopla broke, Mr. Spitzer astounded even fellow prosecutors by threatening to indict AIG unless it fired Mr. Greenberg. Then he broke further prosecutorial codes by going on national TV to accuse Mr. Greenberg of fraud — before he’d even filed charges. It was only months later, in the media blackout of the Thanksgiving holiday, that Mr. Spitzer leaked the news that he wouldn’t pursue criminal charges. Now he’s admitting most of the civil case is also bunk.

As I’ve said:

this looks like it may be a sad case of regulatory extortion. Fortunately we may find out. Spitzer is going to actually have to go into a real court against Greenberg who, like Grasso, is not playing dead.

And:

history will probably demonstrate that AIG was better off with him in charge, or trusting to corporate governance processes to replace him, than with Spitzer’s political maneuvering. In other words, the price tag on the costliest governor election campaign in history is mounting.

Lest we forget, Spitzer’s partner in crime was, as always, the NYT’s Gretchen Morgenson, who breathlessly reported every move in the case, always casting Spitzer as the defender of the public good against the onslaught of yet another greedy executive. For example, last January 1, 2006, Morgenson said:

while business titans’ transgressions may have lacked creativity last year — there was the usual hubris, greed and accounting tricks to prop up stock prices — at least the cast of ‘’Scandalot 2005’’ involved a few new characters. Maurice R. Greenberg, for instance, the revered chief executive of American International Group, was chased off stage by the New York attorney general, Eliot Spitzer, proving that even the most entrenched and imperious executives can be vulnerable to ouster.

Yes, that’s right. Even a multibillion dollar company can be sent reeling and the man who built it crushed by the power of the state, abetted by a powerful journalist, all based on flimsy charges, even before these charges have had a hearing. But is this really something to crow about?

[April Lexington]

Lots of opinions on Elliot. I happen to believe he was a good cop. Egotistical, but a good cop. I respect his efforts in keeping Wall Street a bit more honest.

[y6162]

Spitzer showed Obamachev that he could succeed by demonizing Wall Street. Unfortunately, almost everyone on Wall Street is honest. Their real sin is that they make a lot of money.

Obamachev is replaying the French Revolution. He forgets that the revolution destroyed its architects.

[April Lexington]

I spoke with Madame du Farge yesterday. The scarf is getting to be quite long!