PlanetaryWorks
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Of Note:

If most of these people get off, which company would be most likely to face criminal charges?

AIG.I said for years that AIG is the center of the web. When we started investigating AIG and challenging
[former CEO] Hank Greenberg, it was unambiguous to me that what we were seeing was evidence of a
deeply problematic structure.

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PlanetaryWorks Posts:
http://www.stockhouse.com/Blogs/ViewDetailedPost.aspx?p=88743

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Eliot Spitzer: Redemption Tour

Photograph by: Marco Grob



Who has the right blend of power and personality to serve as Wall Street’s watchdog now?

Very few government officials will be successful, because they don’t have the market credibility. If you want to understand markets, you have to understand the flip side of when markets don’t work. So if Warren Buffett wanted to say, “Here’s where, on a thematic level, government must step in to contain market failures,” he could do it. Or Felix Rohatyn. Or Bill Gates.


As we speak, investigators are crawling all over Wall Street firms. Do you expect prosecutors to go after many of the CEOs from the big banks?

They will try very hard. Trust me, there are prosecutors out there right now who wake up every day saying, “I’ve got to catch the big one.” People—and I don’t mean to point fingers—are dropping subpoenas on anybody who ever got a bonus, as if somehow receiving a bonus is a per se violation of law. There were clearly some illegal things being done, but really what we had was grotesque use of an opportunity to take advantage of people. It was bad judgment. And you don’t litigate against bad judgment.

How would you address the furor over bonuses?

I would weave a legal theory of unjust enrichment or of other tort concepts that have a lot of elasticity to them. Maybe on the [Joseph] Cassano types [Cassano was head of AIG’s financial products unit], you could dig something up. Most of what happened was just a bubble that was fundamentally wrong. But was it outright fraud when these people were given bonuses? Probably not.

What about the chief executives’ cheery statements about firm finances prior to the collapse?

There will be lots of parsing of the utterances of Dick Fuld leading up to the demise of Lehman. Did he publicly say things are great when he knew they weren’t great? But you could also go back and look at what is still considered a great company—GE, and Jeff Immelt. GE’s stock has gone down about as much as most of the others. People could parse any one of his comments. But proving the subjective state of mind of the CEOs is going to be hard. Dick Fuld is going to say, “I believed we were okay because I thought the markets were going to bounce back. The aberration was the stock-price plummet, and if the Fed had done this, we would have been okay. We should have been okay.”

If most of these people get off, which company would be most likely to face criminal charges?

AIG. I said for years that AIG is the center of the web. When we started investigating AIG and challenging [former CEO] Hank Greenberg, it was unambiguous to me that what we were seeing was evidence of a deeply problematic structure.

Could you have done more to prevent what’s happening at AIG?

I suppose, inevitably, the answer is yes. We wanted to investigate more. But federal prosecutors in the Southern District asked us, insisted, that we not put certain things in our complaint, because they said that they were investigating. They never did anything.

What were they looking at?

I’m not sure. But one of the things we were looking at was their reinsurance business and other things related to ­AIG’s stock and the trading of AIG stock, and they didn’t want us to pursue them. So who knows? [The Southern District of New York declined to comment.]

Obviously, you’re still very interested in these issues. How difficult has it been to be on the sidelines?

It’s been tough. Tough. I’ve worked very hard over the past year to cleanse myself of the need or desire to be involved in this day-to-day, because my focus needed to be on other things, on my wife and my kids. I’m not in that arena anymore, so being on the outside desperately looking in isn’t going to be a healthy or productive thing to do. But obviously, for a decade, ­I was in that arena, enjoyed it, and tried hard to contribute something useful. Not being in it, you know, causes some agony.

So do you watch television and yell at the screen these days?

I don’t watch the news the way I used to. I just can’t. I watch American Idol and 24. Those are my two favorite shows, I will confess.

Do you get calls from people asking for your opinion on how to respond to the crisis?

Yeah....

Can you talk about any of them?

No, because they are private calls. There are people who probably wouldn’t want it known that they called me. [Laughs.] Which is fine. I understand that reality.

Given the problems you’ve faced over the past year, has your perspective on the failings of Wall Street bankers changed?

You mean am I more philosophical?

Or more forgiving?

It would be kind of remarkable if I didn’t acknowledge that, after going through what I’ve gone through, the notion that we all have certain flaws isn’t more evident. That’s the reality that I grapple with, of course. So of course I’d say yes, it requires one to look at things differently.

Do you think your own case was handled fairly?

I haven’t spoken about that. I probably shouldn’t, but here’s my view. Some people have said, “You were targeted. Nobody else who’s done this has had their name revealed this way,” or “None of this happened to anyone else.” And I said, “I’ll let other people discuss that, debate that, worry about it.” The only thing that matters to me now is looking forward in terms of my family, my kids. And so what I did in terms of resigning was for the sake of my family and for the state. I thought it was the only right thing to do. And what led up to it in terms of how the Southern District handled it, how the FBI handled it, simply isn’t going to change any of that.


Condé Nast Portfolio


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