Tag: Eliot Spitzer

Wall Street’s Biggest Fear: Eliot Spitzer

Cross posted from The Stars Hollow Gazette

Why is the financial world freaking out over the possibility of former New York State Governor Eliot Spitzer becoming New York City’s Comptroller? Professor of Political Science at the University of Massachusetts Thomas Ferguson laid it out in his article republished at naked capitalism:

Who, when the Justice Department, Congress, and the Securities and Exchange Commission all defaulted in the wake of a tidal wave of financial frauds, creatively used New York State’s Martin Act to go where they wouldn’t and subpoena emails and corporate records of the malefactors of great wealth, winning convictions and big settlements.

Who in 2005, as New York State Attorney General, actually sued AIG instead of thinking up ways to hand it billions of dollars of taxpayers’ money.

Who brought a suit over the Gilded Age compensation package Stock Exchange head Richard Grasso had been awarded by his chums on the board.

And who in 2013 with business as usual once again the order of the day, is promising to review how the Comptroller’s Office, which controls New York City’s vast pension funds, does business with Wall Street and corporate America. With his incisive questions about Wall Street’s fee structures and criticism of the passive stances most pension funds take to skyrocketing executive compensation in the companies they invest in, Eliot Spitzer is the last person on earth Wall Street wants to see in that slot.

The chorus of outrage from Wall Street pundits and media over Spitzer’s return after embarrassing exit from the governor’s office after his out of state tryst with prostitutes (omg, he had the nerve to use his own money) and, according to a New York Times article, his out of control ego and combative, go-it-alone style.

Prof. Ferguson dismisses the hyperbole as a “smoke screen” for the real objections that Spitzer would stop Wall Street from using the city’s pension funds to make profits for the 1% while cheating the workers out of a lifetime of investment. Spitzer as an activist for the 99% scares the crap out of them.

The compelling case for activism in the Comptroller’s Office by somebody of Spitzer’s intelligence, knowledge, and experience rests mostly on quite different grounds. As Spitzer has observed, most pension funds put up little or no resistance to management’s soaring claims for compensation. These come massively at the expense of investors as a group; pushing back would benefit investors in general and, obviously, beneficiaries of City pension funds. At a time when the air is filled with sometimes dubious claims of pension fund inadequacies, increasing returns to the City pension funds would be a real triumph. You can be sure, however, that the threat to ever-escalating executive salaries fuels a lot of the animus to Spitzer within much of big business and finance.

No less important, though, is another reality to which Spitzer has alluded to from time to time. Wall Street overcharges for financial advice and pension funds often find it expedient to tolerate this, rather than shop vigorously around. Studies of pension funds returns routinely note the frequency with which high fees accompany relatively shoddy performance, often over many years. It is high time attention was focused on this situation; Spitzer would likely do that.

And the Office of the Comptroller has subpoena power, that’s a lot of power:

First, part of the comptroller’s job is ensuring that private sector employees working on city projects are paid the prevailing wage. If an employer, for example a construction company, is reported to be paying workers below-market rates, the comptroller can open an investigation and subpoena payroll records if the employer won’t cooperate.

In addition, the comptroller has the authority to review all legal settlements entered into by the city’s corporation counsel. Last fiscal year, the city paid $486 million to settle lawsuits filed against its agencies or employees, the comptroller’s office said in a report last month. The settlements were for cases such as malpractice at city hospitals or police misconduct.

That’s just for starters.

Accounting Was Never So Much Fun Since Charles Bronson Played A Serial Killer

Why Client No. 9 Can Seek Office No. 3

I think I speak for a lot of New Yorkers when I ask this question: Is Eliot Spitzer the best we can do?

Seriously, we can’t find another candidate who hasn’t shamed public office with what he admits was “horrendous” behavior in which he “lied?”

It’s not that Mr. Spitzer isn’t gifted. His work as New York attorney general from 1999 to 2006 was one of the most dynamic in the history of the job. He took on Wall Street’s questionable dealings, was a true maverick and thumbed his nose at Washington regulators who had become inured to Wall Street practices.

When the public interest aligns with Mr. Spitzer’s political ambition, the results can be spectacular.

But does Mr. Spitzer, who earned the nickname “Client No. 9” in a humiliating prostitution scandal, deserve a second political life?

Why would anyone ask such a question since Bill Clinton made a sex scandal a badge of honor?

Consider Mr. Stringer. On the one hand, he has been a relatively faithful city politician. He championed the Second Avenue subway, bike lanes and women’s rights. He took a controversial stand against hydraulic fracking. His scandals have been garden variety: use of taxpayer funds for travel and the like.

But Mr. Stringer doesn’t produce much in the way of headlines. Many New Yorkers probably don’t know who he is.

Who?

This New Yorker is looking forward to hearing more about gardening.

many may be tempted to vote for Kristin Davis, the Wall Street madam who is running and was accused of supplying Mr. Spitzer with his trysts.

http://blogs.wsj.com/moneybeat…

When my sister and her husband owned a motel [no, not at all the kind of motel rented by the hour], I was more than a little fascinated to learn the aging spinster-looking lady talking business with my sister was the local madam.

Not since Charles Bronson played a serial killer accountant has there even been remotely such fun in accounting.

Best,  Terry

Why the $2 Billion Chase Loss Matters to Everyone

Cross posted from The Stars Hollow Gazette

Felix Salmon, finance blogger at Reuters and Matt Taibbi, of ‘vampire squid” fame from “Rolling Stone“, were guests on “View Point with Eliot Spitzer“, discussing the implications JPMorgan’s $2 billion trading loss and why it should matter to anyone with a banking account at Chase, or any other to big to fail bank.

Taibbi and Salmon agree JPMorgan’s risk-taking has broad implications. “JPMorgan Chase takes deposits in from every single mom and pop, and small business and large business, in the world, and the President of the United States,” Salmon says. “They’re a utility bank and it is their job and their duty … to take those deposits and lend them out into the economy. And what do they do instead? They take $360 billion and put it in a hedge fund in London.”

Jamie Dimon’s failure

by Felix Salmon

Drew’s Chief Investment Office quadrupled in size between 2006 and 2011, reaching $356 billion in total, and it’s easy to see how that happened. On the one hand, it was incredibly profitable, with the London team alone, which oversaw some $200 billion, making $5 billion of profit in 2010, more than 25% of JP Morgan’s net income for the year. At the same time JP Morgan accumulated enormous new deposits in the wake of the financial crisis, both by acquiring banks and by attracting big new clients wanting the safety of a too-big-to-fail bank. Historically, JP Morgan has served big corporations by lending them money, but nowadays, as the cash balances on corporate balance sheets get ever more enormous, the main thing these companies want from JP Morgan is a simple checking account – one where they can be sure that their money is safe.

With lots of deposits coming in, and little corporate demand for loans, it was easy for all that money to find its way to the Chief Investment Office, which could take any amount of liabilities (deposits are liabilities, for a bank) and turn them into assets generating billions of dollars in profits.

Never mind the weak tea Volker rule, what is needed is a new, revised Glass-Steagal, the break up the TBTF and protection for investors and the economy.

DOJ Ignoring Grand Theft Wall Street

Cross posted from The Stars Hollow Gazette

Former New York governor and attorney general general, now CNN talk show host Eliot Spitzer appeared on Anderson Cooper’s “360” with “Rolling Stone” editor and blogger, Matt Taibbi discussing the two year investigation of the financial institutions that “plunged the U.S. economy into a painful recession”. The Senate subcommittee’s 650 page report that was released on April 13th is a scathing indictment of cover-ups,  lies, the conflict of interest of regulators and the cozy relationship with ratings agencies. During the discussion, Spitzer challenged Attorney General Eric Holder to either prosecute Goldman Sachs or resign:

SPITZER: Senator, I’m going to take a leap. I’m going to say it out loud. Very directly.

   Goldman Sachs, you lied to the public. You lied to your clients. You’ve got a problem. You come on the show. Sue me. I don’t care. You lied to the public, you should be prosecuted.

   I’m going to say it right now. And I hope they are.

It isn’t surprising that the “powers that be” went after Spitzer because this is the man who should be the US Attorney General.

Geithner: Criminal or Just Incompetent ?

It has been announced that House Oversight Committee Will Hold Hearing On Geithner/NY Fed/AIG Scandal

Ed Towns, the chairman of the House Oversight and Government Reform Committee, just announced that he would hold hearings into the emails that show how the New York Federal Reserve delayed disclosure of AIG counter-party payments, hiding public information from federal regulators. The statement is below.

Towns wants to hold the hearing the week of January 18, and has invited Treasury Secretary Geithner to testify.

The question is did Geithner’s New York Fed Ordered AIG to Violate Securities Law in 2008

Yves Smith over at Naked Capitalism commented on a report from Bloomberg News that just about made my eyes pop out of my head. Evidently, Darrell Issa got his hands on some 2008 emails between AIG and Tim Geithner’s New York Federal Reserve, wherein the NY Fed orders AIG to make material misstatements on SEC filings:

Bloomberg reports:

   The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

   snip

   AIG’s Dec. 24, 2008, filing was challenged privately by the U.S. Securities and Exchange Commission, which polices the adequacy of disclosures by publicly traded firms. The agency said in a letter to then-CEO Edward Liddy six days later that AIG should provide a Schedule A, which lists collateral postings for the swaps and names the bank counterparties that purchased them from the company. The Schedule A was disclosed about five months later in a filing.

It can Pay to be on the Inside

Usually they get away with …

Usually they trade their knowledge, for money or power, and no one notices —

But not always:

Insider-Trading Ring Bust May Fuel Hedge-Fund Concern

By David Scheer – March 2, 2007

March 2, (Bloomberg) — The U.S. government’s accusations that Morgan Stanley, UBS AG and Bear Stearns Cos. employees were central figures in an insider-trading ring illustrate why regulators and lawmakers are suspicious of Wall Street’s relationship with hedge funds.

Prosecutors in New York and Washington yesterday brought criminal charges against 13 people, claiming that an executive at UBS and a former compliance lawyer at Morgan Stanley tipped off hedge-fund traders and brokers to new analyst ratings and secret takeover talks. Bear Stearns was home to at least four professionals who traded on information leaked from inside the two firms, according to a complaint filed by the Securities and Exchange Commission.

(emphasis added)

http://www.bloomberg.com/apps/…

White Collar Crime, is not any less heinous, because they commit it with a Keyboard, instead of a Handgun.  Yet more often than not, in the Wild West of electronic casinos, these criminals can make “a killing”, without having to pull that trigger themselves … without ever having to worry about ever facing their “day in court” …

Was Spitzer Like Siegelman The Target Of A Political Prosecution?

cross posted from The Dream Antilles

Don Siegelman, a former, Democratic governor of Alabama and a good guy, was railroaded to a federal prison where he’s now serving a 7-year sentence, in a case that has Karl Rove’s fingerprints all over it.  The case is a travesty and proof positive not only that there are political prisoners in the US but that Siegelman is one of them.

Yesterday, I wrote a diary about this disgraceful travesty because I wanted to keep the story alive.  I don’t want us to forget that this conviction is an example of why there was a US Attorney scandal and why investigation of that scandal must continue.

The best sources of information on Siegelman, if you’re not yet familiar with this mockery of justice, is OPOL’s Friday diary on the case, a diary with lots of video and background, and Siegelman’s web site.

What’s any of this got to do with Eliot Spitzer, who has been forced to resign as Governor of New York because of his hiring prostitutes?  Plenty.

Join me across the jump.

What I expect from MY $5,500-a-night-hooker.

Well, the sex thing, of course.

But not just “sex”… rattle-the-teeth-loose-from-my-jaw, curl-the-hair-on-my-head, cover-

the-sheets-in-every-known-human-liquid, eyes-rolling-back-in-my-skull, lungs-emptying-

of-air, screaming-exclamations-to-a-God-I-previously-didn’t-believe-existed-sex.

Then, with THAT formality out of the way…

“It looks like the Bush Justice Department just bagged themselves another Democratic Governor.”

Eliot Spitzer has resigned, effective Monday. Taegan Goddard didn’t spare him:

Rule #1: If you ride into elective office as a crusader on your white horse, people will try to knock you off. If you’re arrogant, they’ll try harder. In Spitzer’s case, he came into office on a streamroller but the lesson is the same. The forces of bureaucracy and the status quo are incredibly powerful. Show any sign of vulnerability or hypocrisy and they’ll stop you right in your tracks.

Rule #2: You need friends and allies in politics. Even politicians with the best intentions get pushed off course. But without people on your side, you’ll spend most of your time trying to get out of a ditch. Your adversaries will work tirelessly to keep you there. Since his inauguration, Spitzer has even had people in his own party cheering for his demise.

The New York Times had a profile of Lieutenant Governor David A. Paterson, who will become this nation’s fourth-ever African American governor, and who is legally blind. But there’s much more to the story. Glenn Greenwald wants to know who cares if Eliot Spitzer hires prostitutes? And my DocuDharma colleague ek hornbeck angrily made the point:

On the one hand we have a man who, if every single allegation and inference is proven true, paid money to have sex and tried to conceal that fact from his wife, the government, and the people who elected him.  He hypocritically denounced the crimes he was committing.

Hmm…

On the other hand we have a man who is a war criminal.  Who’s administration has killed hundreds of thousands of innocents (maybe along with a few guilty). and rendered millions homeless refugees.  Who has condemned millions of women to Sharia Law and Burkas.  Who lied 935 times to us and the whole world.  Who is even now plotting to extend this illegal war that has damaged our national defense and our economy in a direction that will DESTROY IT!

But others question the very process that led to Spitzer’s getting busted. Because it fits a certain sinister pattern.

The Impeachment of Eliot Spitzer

My friends, the choice before us can not be more stark or more clear.

On the one hand we have a man who, if every single allegation and inference is proven true, paid money to have sex and tried to conceal that fact from his wife, the government, and the people who elected him.  He hypocritically denounced the crimes he was committing.

Hmm…

On the other hand we have a man who is a war criminal.  Who’s administration has killed hundreds of thousands of innocents (maybe along with a few guilty). and rendered millions homeless refugees.  Who has condemned millions of women to Sharia Law and Burkas.  Who lied 935 times to us and the whole world.  Who is even now plotting to extend this illegal war that has damaged our national defense and our economy in a direction that will DESTROY IT!  We can not beat Iran.

We.  Will.  Lose.

Not only that, they have raped our Constitution and laws- Habeas Corpus, Torture and the Geneva Convention, Warrentless Wiretapping and National Security Letters, Ignored Supeonas and Signing Statements, Corruption of the Department of Justice and Selective Prosecution.

Made it happen on purpose or let it happen on purpose?  Katrina, Recession, Out of control Mercenary Armies, Poisoned Water Supplies, Crappy Equipment, Crappy Food, Crappy Leadership, and Embassies as big as the Vatican pre-built as non-functional ruins under no bid crony contracts.

These people are-

  • Thieves
  • Liars
  • Torturers
  • Murderers

And Traitors.

Look! It’s a sex scandal!

While the corporate media are dancing on Eliot Spitzer’s political grave, and the supposedly lefty blogs are inventing new and exciting sludge bombs to sling at the Democrat they love to demonize, McClatchy has this:

Eight U.S. service members were killed in two attacks today in Iraq, making it the deadliest day against the military this year, a senior American military official in Baghdad said. At least 11 Iraqis also were killed Monday in a surge of attacks throughout the country.

Five of the Americans died when a suicide bomber walked up to a foot patrol in Baghdad and self-detonated. The others died while on a patrol in Diyala province, the official said. He asked not to be identified as he isn’t an official spokesman.

The rash of attacks against a spectrum of targets raised new questions about whether the U.S. can draw down its presence from the current buildup to levels of about a year ago.

Note To Media: Ask John McCain About David Vitter

New York governor Eliot Spitzer has blown it in a big way. Anti-corruption crusaders ought not to be dallying with call girls. Ordinarily I don’t like to assign much importance to personal and/or family matters. But when a personal act is both illegal and hypocritical, it becomes a hurdle that is very difficult to get over.

That said, the media is demonstrating its customary tunnel-blindness in reporting this story. The news is less than two hours old and I have already heard reporters on CNN, Fox and MSNBC asking about the impact on Hillary Clinton’s campaign.

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