Eliot Spitzer

Spitzer, Seoul, and Wall Street

by Brian McGraw on November 16, 2010

in Economy, International, Labor, Trade

Eliot Spitzer, who occasionally publishes over at Slate, wrote yesterday about President Obama’s “disastrous Asia trip” and decried America’s fall from grace as a world leader. The culprit? Wall Street. Pretend you’re shocked.

First, he writes that South Korea rejected a “reasonably standard and straightforward trade pact.” That isn’t quite what happened. Rather than Korea, the U.S. [has, for a few years now] rejected a reasonably standard and straightforward trade pact by failing to approve an already negotiated trade agreement. Obama went to Korea on behalf of the domestic auto industry in an attempt to negotiate increased access to the South Korean auto market on behalf of the UAW, etc. Here is a good summary on why Koreans are unlikely to be buying many American automobiles, and why the KORUS-FTA is a very good deal for the United States.

Ironically, one complaint from the auto industry was that Korean regulatory requirements for auto emissions and fuel economy were too restrictive. Normally the standard union opposition to free trade is that they don’t want to hurt the little guy in foreign countries where labor and environmental standards are often lower. One might think in this case that they’d be thrilled that Korea has more stringent environmental regulations for their automobiles than the United States does. Except that they weren’t thrilled, and Obama still attempted to renegotiate the agreement despite South Korea making it very clear that there would be no more negotiations.

This would seem to dispel any illusion that unions, etc. actually care about the little guy. They care about the American “little guy” (e.g., their dues-paying members, constituents) — where the American little guy is richer and healthier than 90 percent of the rest of the world — and will actively seek policies that do not allow the actual little guy the ability to improve his life.

Back to Spitzer. He is frustrated that the the United States’ alleged fall from grace has led to all sorts of problems, from the failure to succeed in bullying other countries into accepting our one-sided trade terms, to international support for China to revalue its currency, and a failure to get the G20 to “agree to anything more than vapid words about trade.” Spitzer doesn’t elaborate much on this, as the Asia introduction was nothing but another excuse for Spitzer to write an article attacking Wall Street. Read the rest if you’d like to hear Spitzer jump through hoops in order to explain how Wall Street is solely responsible for all the problems America faces today.

Don’t hold your breath on the further liberalization of trade anytime soon, recent polling data indicates that fewer and fewer people believe free trade agreements help the United States. Given the recession and the new understanding in America that some of these other countries are no longer third world watering holes, it seems that Made-in-America might make a comeback.

Photo credit: GreenDominee’s flickr photostream.

Jim Hood: Another of the Nation’s Worst State Attorneys General

by Hans Bader on July 28, 2010

in Deregulate to Stimulate, Economy, Employment, Legal, Nanny State, Personal Liberty, Regulation

Mississippi Attorney General Jim Hood has a truly awful record, as today’s Wall Street Journal notes, citing his links to trial lawyers who tried to bribe a judge, and his dishonest attempts to deny those links.

CEI recently rated the nation’s worst state attorney generals, but it only listed the six worst, which didn’t include Hood.  Hood clearly would make a list of the top ten worst state attorney generals, though.  (CEI once issued such a top-ten list, back in 2007, which Hood narrowly avoided making.  Here’s that list, and my here’s my op-ed describing the worst three attorneys general on that list, Richard Blumenthal, Bill Lockyer, and Eliot Spitzer.)

The six worst attorney generals this year are (1) Jerry Brown (California), (2) Richard Blumenthal (Connecticut), (3) Drew Edmondson (Oklahoma), (4) Patrick Lynch (Rhode Island), (5) Darrell McGraw (West Virginia), and (6) Bill Sorrell (Vermont).

All of these politicians use lawsuits as a weapon to restribute wealth from businesses and consumers to wealthy trial lawyers and their political cronies.  What sets Jerry Brown apart, and makes him the worst state attorney general in America, is his refusal to defend state laws and agencies against frivolous lawsuits, based on ridiculous reasoning that could endanger state-constitutional guarantees; and his destruction of California jobs through lawsuits (and threatened lawsuits) against California businesses and local governments.

Here is a link to the full study explaining my ratings of the nation’s worst state attorneys general.  Here is a link to my additional explanation for why Jerry Brown is the nation’s worst state attorney general.

Media Give Disgraced Politician Eliot Spitzer a Soapbox to Lecture the Public

by Hans Bader on June 4, 2010

in Bailout Watch, Deregulate to Stimulate, Economy, Employment, Labor, Legal, Mobility, Politics as Usual, Regulation, Sanctimony, Zeitgeist

Eliot Spitzer, who was forced out as Governor of New York after paying prostitutes tens of thousands of dollars and then violating federal finance laws in trying to cover it up, is now apparently going to replace respected journalist Campbell Brown in a prime slot on CNN.  Earlier, the leading liberal website Slate hired him as one of its financial commentators.

As attorney general of New York,  Spitzer was an overbearing, hypocritical bully who used the threat of prosecution and lawsuits to force profitable companies to dump their highly-competent CEOs, resulting in declining profits and losses to shareholders at companies like AIG, which the taxpayers later bailed out at a cost of $170 billion.

Spitzer is just the latest liberal crook given a soapbox by the liberal media.  The Washington Post just gave former auto czar Steve Rattner space to boast about the supposed success of the auto bailouts, even as the SEC was moving to ban him from Wall Street for three years because of his unethical conduct.  (Rattner whined about how critics of the bailout like Senator Charles Grassley, who exposed how General Motors was using taxpayer money to make a phony “repayment” of part of what taxpayers gave GM, were “elasticizing the facts,” even though the government’s own inspector general for the TARP bailout program confirmed what Senator Grassley was saying.)

And the Washington Post earlier gave former Fannie Mae head Franklin Raines a soapbox to lecture Fannie Mae’s critics, after he was fined for massive accounting fraud at Fannie Mae, which had to be bailed out by taxpayers shortly afterwards thanks to the risky practices he promoted.

As I noted at the time in a letter to the editor, “Mr. Raines stepped down as Fannie Mae’s CEO after a ‘$6.3 billion accounting scandal’ that rivaled Enron’s; in a settlement with the government, he and other Fannie Mae executives agreed to pay fines and forgo millions in stock, pension and other benefits. . .Yet The Post gave Mr. Raines a soapbox to make the same arguments against reforming Fannie Mae that he and Fannie’s lobbyists have made for years. Mr. Raines, a liberal power broker, derided “ideologues in the Bush administration” who, he said, tried to “undermine” Fannie Mae. Those officials were in truth warning about Fannie Mae’s risky practices.”

The Obama administration earlier lifted a $400 billion limit on bailouts for Fannie Mae and Freddie Mac, two mortgage giants known as the Government-Sponsored Enterprises (GSEs).  “Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie,” reports The New York Times.

Fannie and Freddie helped spawn the mortgage crisis by buying up risky mortgages and repackaging them as prime mortgages, thus creating an artificial market for junk. ”From the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime.” They paid their CEOs millions, and engaged in massive accounting fraud–$6.3 billion at Fannie Mae alone–to increase the size of their managers’ bonuses. As Government-Sponsored Enterprises, they were exempt from the capital requirements that apply to private banks, so they did not have enough reserves to cover their losses when their mortgages started defaulting.

The Obama administration refuses to reform these mortgage giants, saying it is “too hard” to do. Earlier, Senate Democrats blocked reform of the mortgage giants in a party-line vote.

(Obama received $125,000 in contributions from these mortgage giants as a Senator, second only to the corrupt Senator Chris Dodd, who is retiring this year due to his financial scandals. Dodd is the chief drafter of the financial “reform” bill.)

At the direction of the Obama administration, Freddie Mac recently ran up more than $30 billion in losses to bail out mortgage borrowers, some of whom have high incomes. Federal regulators sought to make Freddie Mac hide the resulting losses from the SEC and the public.

The federal government has sunk over $50 billion into General Motors itself, $17 billion more into its finance arm GMAC, $15 billion into Chrysler, and spent billions more on the wasteful cash-for-clunkers program and pension bailouts for GM spin-offs.  Even if GM manages to recover, taxpayers will never get most of this money back.   (Taxpayers may get back some of the money sunk directly into GM itself, in an IPO, if all goes according to plan; but the remaining money sunk into related entities, and indirectly used to prop up GM, will never be repaid, even if GM recovers.)

Even if GM recovers, it will not be because of its ability to fairly compete (the Obama administration used the bailout to protect excessive union wages), but rather because of good luck (Toyota’s recent safety issues have driven car-buyers away from it to GM and Ford) and special favors from the government (the Obama administration artificially reduced GM’s costs by ripping off bondholders who had loaned the company money, and dumping costly pension obligations of GM spin-offs onto taxpayers).

LibertyWeek 83: What Would Reagan Do?

by Richard Morrison on March 8, 2010

in CEI Projects, Podcast

Richard Morrison, Jeremy Lott and Marc Scribner collaborate to bring you Episode 83 of the LibertyWeek podcast. We cover the ever-growing deficit, the Reagan legacy, Cablevision v. ABC, the RNC’s fundraising strategy and David Paterson on scandal watch.

Ex-CEO Hank Greenberg hits home run against AIG and Spitzer

by John Berlau on July 7, 2009 · 3 comments

in Bailout Watch, Features, Insurance, Legal, Personal Liberty, Politics as Usual, Sanctimony, Zeitgeist

Once again, the team of politicians and corporate bureaucrats pursuing the witchhunt against former American International Group CEO Maurice “Hank” Greenberg have struck out. Or maybe the better baseball analogy would be that they hit another ball into foul territory.

Greenberg, who built AIG into a financial services powerhouse during the 35-plus years he served as its head, won another legal round today as a federal jury in New York City ruled that he did not have to reimburse AIG for shares taken by an investment firm Greenberg owned when he was forced out as CEO. The jury found that the shares belonged to Greenberg’s company, Starr International, under terms of the original contract.
Yet outrageously, it appears that AIG will continue to use the billions in taxpayer dollars it has receive to pursue this frivoulous litigation agianst Greenberg.
The jury’s verdict today is the latest piece of evidence that much of AIG’s problems — and the systemic disruptions they have caused — can be traced to political meddling. Greenberg was forced out in 2005 because of baseless charges of accounting fraud by then-New York Attorney General Eliot Spitzer. Nearly all of Spitzer’s charges have been dismissed, but the mere allegations were enough to cause AIG’s board to force Greenberg out and to be replaced with a succession of caretaker CEOs more pleasing to politicians like Spitzer.
Greenberg has testified that as many mortgage-related credit default swaps were written in the nine months following his departure as AIG had issued in the entire previouse 7 years combined. No one has refuted him on these specifics. We will never know what would have happened had Greenberg stayed on as CEO, but given his track record, it is doubtful the implosion would have been so sudden and so severe.
In sum the lesson of AIG is not that there should be more government meddling, but less arbitrary intervention by subprime politicians.