Elliot Spitzer

Courtesy of StoneZone:

Spitzer Responsible For AIG Crash Now Criticizing Bonuses 

Spitzer: Responsible for crash

By Roger Stone The idea of former New York Governor and Attorney General Eliot Spitzer criticizing the AIG bailout and bonus in a recent column for SLATE is ironic: Spitzer is responsible for the economic condition of the company for which they need a bailout. In fact, Spitzer's crackdown on Wall Street caused the firms to increase leverage because he took away the ability for them to make money in research and underwriting, and they looked for other ways to make money-like securitizing subprime mortgages. In fact, if Spitzer hadn't removed Maurice "Hank" Greenberg from AIG, the company would never have crashed. Greenberg was a much more conservative investor and had tighter risk management rules that were suspended by the company only after Spitzer drove Greenberg out over charges that proved bogus in the courts. The billion dollar investment in credit default swaps which were not hedged brought the company and the economy down. This insurance was written only after Greenberg was forced out and never would have been written under Greenberg's risk management rules. Thus, Eliot Spitzer is partially responsible for the current economic crisis, not some Boy Scout crying an early warning. This is so typical of his reign as Attorney General where he blackmailed companies by press release, threatening to destroy your company's value unless you pled to infractions you hadn't actually committed. Most saw the futility of winning in court after Spitzer had destroyed their company so they settled. When cases actually went to trial most were dismissed or those Spitzer apprehended were acquitted. Spitzer's assault on the New York Stock Exchange's Ken Grasso, Ken Langone and Greenberg, while not also pursuing NYSE board member Carl McCall for fear of offending key African American political leaders, stands out as the kind of perverted justice Spitzer pursued. Spitzer made base-less charges against Greenberg, drove him from the company and set the stage for AIGs collapse. Now, Spitzer criticizes the AIG -bail-out. Now that's chutzpah!

Dear Senators Dodd and Schumer and Congressman Frank,

First things first, let me congratulate you for reaching a level of hypocritical grandstanding I thought impossible even for the United States' Congress.

Congressman Frank, you blocked oversight at Fannie and Freddie while you were dating a high ranking Fannie official.

Senator Dodd, you took a bribe from Angelo Mozillo to filibuster George W. Bush's attempts to reign in criminal excesses at Fannie and Freddie.

Senator Schumer, the 100% tax rate you propose on Wall Street bonuses violates the ex post facto clause in the United States Constitution.  Not that you care when you're up for re-election this cycle....

Furthermore, all three of you were crucial players in the decision to bailout Wall Street.  While you may personally disagree with some of the decisions those firms have made, the fact remains you had an oppotunity to let said firms fail six months ago.  Instead of letting Wall Street fail; you failed.

Once you decided to bail these firms out, you implicitly accepted responsibility for any unpopular business decisions said firms made.

Against that backdrop, I find your grandstanding over the compensation paid by the American International Group (AIG) utterly nauseating.  Said compensation, while perhaps unwise from a narrowly defined business perspective, is standard practice in the financial services industry.  Gentlemen, if you didn't want AIG engaging in standard business practices; THEN YOU SHOULDN'T HAVE BAILED THEM OUT IN THE FIRST PLACE!!!

Don't get me wrong: AIG screwed up and THEY SHOULD FAIL as a result (the fact that their screw up is a direct result of Elliot Spitzer's bullying is a topic for another day).  That said, Gentlemen, you are standing in the way of AIG's creative destruction.  Until you are willing to let AIG fail, your whines about executive compensation ring hollow.

Sincerely,

Adam Cahn

Austin, TX