April 13, 2005
AG Spitzer is the Devil Incarnate
Yes, I'm a partisan hack, but anybody who doesn't think the Attorney General of New York is the scariest guy in politics is not paying attention.
Eliot Spitzer has a wall filled with trophy scalps from prominent businesspeople and these are a substantive political advantage (cf. Rudy Giuliani).
The trouble is that a prosecutor should follow due process, yet Mr. Spitzer's modus operandi is to make defamatory comments to the media, and force nervous boards to capitulate before risking (further) bad publicity or ensnarement. Today's victim is Hank Greenberg. As Larry Kudlow has pointed out, this man landed at Omaha Beach, and served with distinction in Korea.
The ideals he risked his life for, however, will not be afforded to him. AG Spitzer smears him, but will not charge him with a crime.
The WSJ Ed Page sez: "So Indict Him Then."
And yet you don't have to belong to the ACLU to wonder about the lack of due process here. Mr. Spitzer uncovers questionable accounting about an insurance transaction and demands that the board fire the CEO. He then uses that firing to justify a public accusation of "fraud" that he hasn't yet proven to anybody, much less to a jury of Mr. Greenberg's peers.More fundamentally, there is an issue of whether the underlying AIG accounting was in fact illegal, or merely a matter of "reasonable" interpretation. Allow us to offer a short primer on "finite" insurance products to elaborate. In traditional insurance, a company pays small premiums to cover itself in the event of a future loss. Finite reinsurance, in contrast, often starts with the recognition that a loss has already happened but that its ultimate cost may not be known for a long time.
Gubernatorial candidate Spitzer can subpoena email records from any New York business and have his government staff sift through all of them to look for malfeasance -- or simply an embarrassing thing to leak. No firm could withstand that scrutiny from a dedicated enemy.
I like a hockey player that pushes the rules a bit to win, or a tax attorney, or a brain surgeon. But prosecutors must be forced to follow the rules.