(Above, Eliot Spitzer taking the oath of office.)Before expressing any Noticing New York reservations (there will be some) you should know that “Client 9: The Rise and Fall of Eliot Spitzer” is such a superlative film that it unquestionably raises the bar for the increasingly popular genre of political documentary. Its achievement is to navigate densely intricate subject matter with masterful adroitness.
The film is a product of the same book-and-movie collaborating team, Alex Gibney, film maker and Peter Elkind, book author, who produced a book and film each titled “Enron: The Smartest Guys in the Room.” “Eron” was a great documentary on a related subject (we didn’t read the book) but “Client 9" surpasses that previous film and you should see it.
Here’s WhyIf political machinations fascinate you, you should see this film. If procedurals about using and abusing the law intrigue you, you should see it. If being witness to extreme brute force power games race your pulse, you should see it. But most of all, if you value your own personal economic and political freedoms you should see it because this film is very clear about the tenuous thread on which those freedoms hang.
Notwithstanding that the story is true and all its characters real, the film is like the best noir in that it is about people consistently behaving very badly, and we are not talking about the escorts, prostitutes and madams who are central to the plot. For the most part these bit players come off rather well. We are not even talking about Eliot Spitzer, the cornered John and disgraced, hypocritical politician.
Though the film proceeds like a detective story following what the New York Time review refers to as a persuasive “trail of bread crumbs” (we would say a “convincing” trail) it is no mystery if you have seen the film’s trailer that its real heavies are miffed Wall Street tycoons, accompanied by their lower echelon henchmen, hungry for revenge after Spitzer’s “Sheriff-of-Wall-Street” `Bingos!' identifying malfeasance they were up to. That the lower echelon henchmen include a G. W. Bush appointed United States attorney for the Southern District of New York (Michael Garcia) indicates how near the pinnacle of power we should consider the vengeful tycoons to be. Racing through its multitude of connections, the film reminds us of the contemporaneous Bush-Gonzales U.S. Attorney appointments scandal which involved orchestration by the U.S. Department of Justice and the White House to turn control over U.S. Attorney and their investigations to partisan political advantage.
(Trailer for "Client 9" above.)
The Lower Echelon Henchmen Working for the Messrs. Big
Other picturesquely entrancing lower echelon heavies provide exuberant and unabashed interviews that keep the film lively. The harlequinesque Republican operative Roger Stone is one of them. Joe Bruno, recently the head of the New York Senate and recently convicted on federal corruption charges for concealing conflicts of interest while receiving hundreds of thousands of dollars from a businessman wanting favors from the Legislature is another. Bruno was sentenced to two years in prison plus three years’ probation and to pay $280,000 in restitution. His conviction and sentence is in doubt because the U.S. Supreme Court has ruled that the federal “honest-services” law he was found to have violated (which makes it a crime “to deprive another of the intangible right of honest services”) is insufficiently specific to be constitutional. (The trial revealed that during his years as Senate leader, Mr. Bruno received more than $3.2 million as a consultant, with his public-employee staff handling much of the work for which he was being paid.)
Top Heavies
The two particularly identified Wall Street titans at whose doorstep Spitzer’s ouster from the governorship is laid are Maurice R. (Hank”) Greenberg, the former chairman of A.I.G., and Kenneth G. Langone, a former director of the New York Stock Exchange. Greenberg and U.S. Attorney Garcia were linked prior to Garcia’s pursuit of Spitzer: Garcia intervened to protect Greenberg from Spitzer’s prosecution by making a faux claim that he, Garcia, would prosecute Greenberg in the future. Greenberg’s A.I.G. is the firm that absorbed $182 billion (yes, “billion”) of the $700 billion bank bailout Congress authorized in 2008. While some of the banks that received bailout money are returning funds, A.I.G. is ultimately expected to succeed in returning only a fraction of what it received.*
(* A complicating wrinkle in straightening out the overall accounting in this is that, to its detriment, A.I.G. was, in the course of implementing the bailout, forced to be a conduit of funds to other financial institutions so that banks like Goldman and Barclays that returned funds to federal government did so with unearned profits, essentially free money, passed to them by A.I.G.. This, however, does not vitiate how great a role A.I.G.’s excessive risk taking had in precipitating and deepening the overall crisis.)
Rose Colored View, . . . Not
In trying to rehabilitate and distance himself from A.I.G.’s problems after the financial meltdown
Greenberg appeared on Charlie Rose and attempted to blame Spitzer for A.I.G.’s collapse, asserting that problems at A.I.G. could have been prevented had he, Greenberg, not been forced out as head by the accounting scandal Spitzer’s prosecution brought to light,. The film contains a snippet of that March 2009 Charlie Rose interview which Noticing New York mentioned at the time. Watching the program back in 2009 Greenberg’s argument to disassociate himself from A.I.G. problems was intriguing and we don’t recall that Rose, being a soft interviewer, challenged him about the improbability of his proposition that A.I.G.’s 2008 $182 billion problem was attributable to events that intervened after Greenberg’s June 8, 2005 departure from the firm. From the film it appears to have been quite the contrary: Greenberg’s efforts to doctor the A.I.G. books* with unreal assets were more likely a warning sign that bad financial practices were catching up with the firm. The scheme involved AIG attempting to get a fictitious transfer of nominal balance sheet assets from Warren Buffett’s Berkshire Hathaway's General Re insurance unit. (For more on this see: AIG's meltdown has roots in Greenberg era, By Lilla Zuill - Analysis, Tue Mar 3, 2009 10:06am EST)
(* Previously, AIG was fined over $100 million for helping other companies cook their books.)
In discussing Greenberg’s maneuvers one of the voices of the people involved attributes as particularly apt to Greenberg the phrase: “All I ask for is an unfair advantage.”
LOL or For Crying Out Loud?
Given that Greenberg and Langone earn the really big bucks* when they play the Wall Street game it is at times howlingly funny in a black humorish way to hear some of their inept disavowals during the movie. Langone maintains that he just happened to know about Spitzer’s purchasing mail orders to pay for escorts because he just happened to have a friend who just happened to be in line behind Spitzer in the Post Office who just happened to look over the Governor’s shoulder and then just happened to guess that what he was seeing would be something Langone would be interested in and know how to interpret. It would be funny were it not for the massive resources these Goliaths can mobilize and misuse.
(* Earlier in the year he left A.I.G., Greenberg transferred A.I.G. stock worth $2.6 billion - yes, billion- to his wife in what one non-Spitzer lawsuit alleged to be a fraudulent transfer.)
Speaking of power, Langone is most recently in the news again for his appointment to Andrew Cuomo’s gubanitorial transition team. (See: Cuomo Names Transition Team and Panels, Spotlighting a Hope for Broad Support, by Nicholas Confessore, November 11, 2010.)
Unequal In the Cross-hairs of the Law
“Client 9" is essentially on the same page respecting the legal investigation into Spitzer’s use of prostitutes as “Inside Job,” another recently released political documentary (still in theaters) that also avails itself of the use of Spitzer as one of its talking heads. Both films propose that Spitzer was suspiciously and unprecedentedly singled out and targeted by the prosecutor investigating the prostitution ring. “Inside Job” which looks at the entire arc of the financial crisis documents the pervasiveness of prostitution and drug use as an accepted part of Wall Street’s high-rolling cooperate culture extending to the very top of the industry and then interviews convicted madam Kristin Davis, who states unequivocally that the prosecutors who shut down her operation had absolutely no interest in leveraging her Wall Street client list into investigations of any Wall Street improprieties. That’s probably true but Ms. Davis is not be the most reliable bearer of such news.*(* “Client 9" tells us that Ms. Davis, interested in publicity, used Roger Stone, the aforementioned Republican operative, as her campaign manager in a recent run as the Libertarian candidate for Governor- that’s at the same time Stone was assisting the Tea-party/Republican Paladino campaign. Stone was apparently attracted by the idea of using Ms. Davis to keep Spitzer’s downfall in the voters’ minds. Davis ran a competitor service to the Emperor’s Club escort service used by Spitzer and with Stone in the wings she has been saying that she too supplied dates for Spitzer. “Client 9" throws cold water on that assertion, reporting: “New York law enforcement says there’s no evidence of any link.” Still, Stone has managed to sow confusion: Ed Koch should know better but when he reviewed “Inside job”- primarily from the standpoint of endorsing its political positions- he misidentified Ms. Davis as “the madam who provided Spitzer . . . with prostitutes.”)
Countries Where the Law is Malleably Used by the “Siloviki”
The bottom line is that Spitzer, like Bill Clinton, was targeted for an abuse of the law. Like Clinton, they got Spitzer on his sex life. When you start with the man, not with noticeable misdeeds, and then figure out how the law can be shaped to get that man it is an abuse. Having gone to the movie just after reading an article about Putin’s trial of Mikhail Khodorkovsky we arrived in a frame of mind attentive to such abuses. (See: Talking Business, Unyielding, an Oligarch vs. Putin, by Joe Nocera, November 5, 2010.) The Joe Nocera Times article linked to describes the newest trial conjured up to keep Mr. Khodorkovsky, a former Russian oligarch, in jail (he has already spent seven years in jail) as as a purely “sham trial” where, as Mr. Khodorkovsky pointed out in his own statement, the “result is absolutely predictable” thus communicating to all watchers with “stark simplicity” the “obvious conclusion . . . that the siloviki [Russian slang in Mr. Putin’s circle of powerful bureaucrats] can do anything.”
Mr. Khodorkovsky, once worth $15 billion before he was stripped of his company that was then sold off to political insiders, was viewed as a threat to Mr. Putin because he was willing to back political parties opposed to Mr. Putin. The way Mr. Nocera articulates it, Khodorkovsky was therefore convicted of “Kafkaesque” “trumped-up tax charges brought by prosecutors acting on behalf of Vladimir V. Putin” with “what appears to be the complicity of PricewaterhouseCoopers” who bowed to improper pressure from Russian authorities. As such Mr. Nocera asserts:
He has become in the Putin era what Andrei Sakharov once was, a courageous dissident standing up to an authoritarian regime, a living, breathing rebuke to the absence of the rule of law.Respecting this absence of the rule of law Mr. Khodorkovsky asks in his own court statements whether Russia will be a country “where the law is above the bureaucrat.”
How `Becoming ' is The Legal System’s Malleability to U.S.?
Probably the law in the United Sates isn’t yet so malleable as to be on a true par with the abuses in Russia but the targeting of Spitzer with all the power of the U.S. Attorney’s office is definitely on this slippery slope and anyone who wonders just how dangerously malleable the law has become so as to give our own homegrown “siloviki” unfair advantages need look no further than Atlantic Yards and Columbia University’s seizure of swaths of land by eminent domain abuse. Both those seizures are predicated upon a pretextual use of the legal concept of blight even when Charles Schumer, the U.S. Senator living very near to Atlantic Yards, says he knows there was no blight in the area. Schumer nevertheless tolerates these abuses that are bringing the Ratner mega-monopoly into existence. Watchers of Atlantic Yards progress are likely to have reached the obvious conclusion that ESDC, the bureaucratic sponsoring agency and the NYC-siloviki therefore “do anything.”
But more about Atlantic Yards later; that will be important to the way we intend to wrap up our observations.
Spectacularly-Resourced Investigations Into Hypocrisy
It is not that our Noticing New York perspective is that Eliot Spitzer didn’t do wrong or even that he shouldn’t have been removed from office because of his actions. His hypocrisy was pertinent to his public office holding and his misconduct no mere personal peccadillo deserving of privacy. That is true even if you support the legalization of prostitution. I hate to have to agree with Roger Stone but he puts it correctly when he says in the film: “Don’t bust people who are running call girl rings if you yourself are gonna patronize one.” (The argument that the escort rings were legally selling high-priced companionship rather than illegally selling sex comes across as speciously stretched.) Stone’s being right, however, doesn’t change the frightful inversion of democracy that results if the only way that our public leaders can remain in public office is when power brokers, by their grace, refrain from making adversarial politicians the subject of spectactularly-resourced personalized investigations.
Living by a Two-Edged Sword
There is plenty of complexity of blame for the film to locate in its anatomy. Sorting through some he-said/she-said juxtapositions in the film concerning Spitzer’s famous temper most viewers are likely to come away with the impression that there probably were occasions where Spitzer threatened others with the same kind of personalized vendetta by which his own use of the law and the power of the Attorney General’s office against them would be a concern, for the same very same reasons that the way they later came after him is a problem. Spitzer would apparently refer to being “at war” with those who challenged him. In this there was some `live by the sword, die by the sword’ justice in what happened to Spitzer.
The Emphasis of More Problems That Trooped In
The perception that Spitzer would go so far as to unethically cross boundaries was reinforced by the scandal ultimately refereed to as “Troopergate” where Spitzer made information public about State Senate leader Joe Bruno’s travels, including unflattering information about Bruno’s use of the state's air fleet. The film doesn’t spend much time sorting out the details of this story and is perhaps too kind to Spitzer in its summary. It was no doubt improper for Spitzer to focus on releasing information about Bruno the way he did (including use of the state police force to gather information) notwithstanding the valid public interest in having such information see the light of day (an interest in knowing about all politicians, not just selectively about Bruno). Spitzer made everything he did far worse by the surreptitious way he went about it together with his after-the-fact, ill-fated attempts at denial.
One strange caveat: As the film recounts, Spitzer’s spying?/collection-of-information-about? Bruno’s travels showed that Bruno was meeting with Hank Greenberg. That was almost certainly to plot Spitzer’s downfall. I am sure that some end-justifies-the-means theorists would therefore rationalize what Spitzer did in the name of self-defense.
Critically Needed: Action Not Just Criticism of Wall Street
"Client 9" makes extraordinarily clear that Spitzer in his investigations of Wall Street was performing an absolutely critical function that needs to be championed and needs to continue. You may never want to do business with Bank of America again after you hear the film’s explanation of how, in collusion with Eddie Stern’s hedge fund Canary Capital Partners LLC, the bank used a computer hooked up in its basement to siphon off from the mutual fund market profits belonging to the rest of us. The scheme involved using an illegal manipulation known as “late trading,” trading mutual funds after closing prices were officially closed. And everyone probably remembers Merrill Lynch’s false and misleading stock recommendations.
Proudly Attracted to Defining It Dramatically as “Hubris”
Spitzer is drawn to seeing his fall in the Greek tragedy terms of “hubris.” He has a quote in the film particularly on this point: “You know, it’s like hubris. It’s like those whom the gods would destroy they make all powerful.” (The Greeks also said those whom the Gods would destroy they first make proud and in Euripides’ Medea "Whom the gods would destroy, they first make mad.") Spitzer sees himself as akin to Icarus of Greek mythology who, with his wings made of feathers and wax, fell into the sea when he flew so high that the sun melted the wax.
Icarus: Flying Too High and Flying Too Low- Spitzer’s Successors
People sometimes don’t remember the complete instructions Daedalus, his father, gave Icarus about using the wings he had fashioned for them both to escape from the island of Crete. Daedalus cautioned him not only not to fly too high near the sun but also not to fly too low, lest the sea mists and waves sodden his wings and end his flight that way. Spitzer’s successor in the Attorney General’s office was Andrew Cuomo. Shortly before this month’s election that will promote Mr. Cuomo so that he will also succeed Mr. Spitzer as Governor, the Times ran a story reporting that while Mr. Cuomo as Attorney General was as interested as Spitzer in headlines he was not attentive to the follow through that would take a financial bite out of the misbehaving and compensate those hurt:
. . . the praise is neither universal nor complete, and there are many who assert that Mr. Cuomo has, not unlike his predecessor, been more interested in headlines than in undertaking the tedious chores needed to bring lasting reform, and that he has mishandled, sidestepped or prolonged some public integrity cases.(See: Mixed Views on Cuomo as Attorney General, by Alison Leigh Cowan, October 26, 2010.)
So for instance, when Mr. Cuomo’s AG office got credit for catching “more than a dozen large health insurers . . . routinely using flawed data to shortchange consumers for reimbursements on out-of-network medical costs” the insurance companies two years later were “still using the flawed data to set payments to consumers” with “almost none of the money won in the settlements” going “to those who had been undercompensated.” Accounting for this perpetuation of the same-old is that a “new system is under construction” being overseen by a “handpicked official who had worked for Mr. Cuomo’s father when he was governor” being paid “$183,000 for what amounts to part-time work.”
The article also notes that “an investigation into whether the administration of Mayor Michael R. Bloomberg [who endorsed Cuomo] and some public officials violated lobbying laws in their redevelopment efforts is still unresolved after two years.” Cuomo also did not investigate Atlantic Yards when asked. Instead he accepted and did not return campaign contributions from its developer. A spokesman for Cuomo during the campaign explained that Cuomo’s ability to retain those contributions was all based on the timing of their acceptance.
So if people are asking the question of whether Spitzer flew too high it should probably alternatively be asked whether Cuomo flew too low. If we are lucky, Cuomo’s successor won’t. Cuomo is to be succeeded as Attorney General by Eric Schneiderman who, during his campaign for the AG’s office, offered to investigate projects like Atlantic Yards and eminent domain abuse.
And, as will be discussed shortly, although the film prompts people to ask whether Spitzer flew too high they should probably also be asking whether in his erratic flight Spitzer also flew too low.
Here is another conundrum: Is it that Spitzer soared too high or is it that things on Wall Street are so abysmal he seemed to soar high only by comparison?
Mythological Dichotomy?
With the film trafficking in the grandeur of Greek god mythology archetypes to define what happened when Spitzer fell to earth it would be tempting to construct out of the Spitzer chronicles, a “hyperion to a satyr” dichotomy if I may borrow Hamlet’s comparison of these extremes:
So excellent a king; that was, to this,(Hamlet is comparing his deceased father to the sun god Hyperion and his usurping uncle Claudius to a satyr in Act I, Scene II.)
Hyperion to a satyr; so loving to my mother
That he might not beteem the winds of heaven
In other words it would be easy to see the film as dividing Spitzer into two distinct halves, the hyperion-cusader-for-principle and the sex-obsessed satyr. Indeed the film offers some thoughts specifically along these lines when early on it dreamily posits that while we want our public leaders to be gods, humans might philosophically be only hybrids: half angel and half animal. A plea made near the end of the film, though not necessarily adopted by it, that suggests that Spitzer should be charitably viewed as merely human.
The same Act I, Scene II of Hamlet quoted above, similarly dances later with the concept of viewing men as no more than human when Hamlet responds to Horatio’s comment that Hamlet’s father was “a goodly king” by saying “He was a man, take him for all in all. .” Hamlet then proceeds immediately, in his typical moody contradictory fashion, to grandeurize his father saying. . . “I shall not look upon his like again.”
A Political Piece of Work: Spitzer’s Third Side
View Spitzer charitably as only human? Half angel and half animal? This is where I think the movie falls short. It would be less apt to say that `Spitzer was just a man, taken for all in all’ than to say, `taken for all in all Spitzer was just a politician.’ And, as a flawed politician, we shall almost certainly look upon his like again . . . with tiresome repetitiveness, I fear. Let’s look at it this way: Though it may complicate the narrative, Spitzer had not two sides but three. Spitzer not only had his angelically principled side and a second side of animal temper and appetites: He had a third side which was that of the disappointing business-as-usual politician. To appreciate this you will need to know more than the film tells you. It touches upon what Noticing New York cares a lot about, the real estate industry in New York.
Disclosure: Working For Spitzer (Or Not)
Here is a note of personal disclosure that will lead into our Noticing New York reservations about the film: Spitzer was the last of four governors I worked for at the state housing finance agencies, those in order being Carey, Cuomo (the father), Pataki and Spitzer. Though I worked briefly for the Spitzer administration, the Spitzer administration when it arrived was not interested in continuing my services on behalf of the agencies and, taking that as a given, I did not wish to counter by raising the technicality that, legally speaking, my state service ought properly to have continued. Regular Noticing New York readers familiar with our predilections when it comes to proper process and the public purpose might infer that my departure from the government scene might have had something to do with those predilections. Though that might be a reasonable suspicion, it would be subject to far too many unprovables. One day perhaps, I’ll find out what was on the administration mind.
Twelve Years Difference
Substituting for any inferences I might make about my own departure I can observe some other things. Immediately upon coming in the Spitzer administration decided it wanted to do without the services of the individual I told them was most valuable to the agencies. This was an individual push-the-envelope investment bankers had long lobbied to get rid of. Twelve years before there had been some very deft maneuvering on the part of the nascent Pataki administration to retain this individual during the dangerously political lust-for-blood change-of- administration times that ensue right after an election. Initially, there was an interim “transition” retention of this individual, then a position and title change that kept him out of sight and out of mind and then eventually, as was appropriate, he resumed his climb eventually reaching new pinnacles of position at the agencies. Twelve years later the Spitzer administration took the helm and the bankers got their scalp.
Scrambling When the Crisis Came
I doubt that the Spitzer administration saw the financial meltdown coming when they assumed office in 2007. I credit the caution, skepticism, careful review, and stubborn negotiating of this gentleman to whom I am referring as being much of the reason that when the crisis struck the agencies' transactions fared pretty well. I’d like to think I made my own like-minded contributions to forestalling the kinds of problems that might have occurred. I understand that after the crisis struck the administration scrambled to reinvent the wheel and put back in place the style of safe guards that were second nature to this dismissed gentleman and perhaps myself. In between? I think there is evidence the agencies would have done better had he been kept around.
Spitzer as Reformer?
I also noticed that while the Spitzer administration ran on a platform of reform (along with the Alan Hevesi who never took office and was ultimately indicted) the administration seemed to think more in terms of reform applying to others than to itself. It might be appropriate to take as a just-for-instance, the subject of executive compensation, since that is an important subject in the “Client 9" film. In the film the question is whether or not Mr. Langone as a head of a not-for-profit restricted by New York State’s not-for-profit law’s provisions respecting reasonableness of compensation could properly be considered to have earned $139 million (yes, “million”) the year he left his position as head of the new York Stock Exchange. No laws were broken but I found that the idea of a natural, second-nature transparency on this issue was something the Spitzer administration couldn't accepted without breaking stride.
Spitzer and Atlantic Yards
The worst indicators I saw about whether process and the public were properly valued were in regard to Atlantic Yards. Although I saw an indication that the Spitzer administration was going to jump Atlantic Yards to the head of the line giving it an unearned priority over other projects, which would itself have been a bad thing, the most egregious conduct I saw from the Spitzer administration respecting Atlantic Yards I saw from outside government.
I have previously written about how the Spitzer administration ignored critical comment it was receiving about the Forest City Ratner mega-monopoly (including comments relating to state agency reform) and how, beyond that, it was deceptively burying negative comment it was receiving within the bowels of the executive office. (See: Thursday, February 26, 2009, Dear Eliot, . . . other things kept undercover may bear investigation.) That was consistent with what we heard about Spitzer’s reaction when he was approached about the megadevelopment by community advocates who came with New York City Council woman Tish James to meet with him in May of 2005. Back then everyone knew he was on the way to gubernatorial office.
Spitzer met the group bringing an entourage in tow. Reportedly losing his legendary temper Spitzer yelled, apparently willing to use his anger to make his visitors feel wrong for even darkening his doorstep with the issues presented to him. He said he didn’t care about process and he didn’t care about the community. (What I believe is a belated, somewhat inaccurate 2006 reporting of that meeting can be found in the Daily News.)
Why was Spitzer drawing the line and not dealing with the extreme improprieties concerning this major real estate project? Was it because he came from a real estate family himself? (Family real estate money financed the political campaigns that put Spitzer into office. Family real estate money also paid for Spitzer’s phenomenally expensive trysts with escorts that would otherwise have been totally out of the reach on a public official's salary.) Was Spitzer, as a politician, simply picking his fights and retaining allies?
The Goldman Rule: Lines That Shouldn’t Be Drawn
One explanation won’t hold up: You can’t easily differentiate the misconduct on Wall Street from the misconduct in the real estate industry. And, when it comes to real estate finance and the issuance of bonds, a lot of the players are the same: The Goldman and Barclays of the nation’s financial crisis are also involved with Atlantic Yards. Goldman Sachs is also swings over to the ownership/development side: It owns a huge new building in Battery Park City for which it was unfortunately allowed to override the Battery Park City master plan while receiving special subsidy deals and a zoning change to build bigger.
The subsidized, regulated, special-exception world of New York City real estate (and to an only somewhat lesser extent New York State real estate) is unforgivably complex in all its myriad nooks and crannies and, like Wall Street, it is increasingly a world where the power players take advantage of the average Joe and the mom-and-pop operations that represent the economy and livelihoods for the rest of us. Just as there are those who recommend that small players not turn their investment money over to Wall Street investment advisers because it is a rigged game, there are those who give similar advice about not investing in the city’s real estate.
There is a small club of big operators. Tools like eminent domain are discriminatorily wielded to benefit that small group who regularly dine with the Mayor and attend the same “charity” functions but will never be wielded against those in the big boys club. So, for instance, eminent domain is wielded to give Bruce Ratner (together with his Russian oligarch partner Mikhail Prokhorov) a 30-acre mega-monopoly over most of Brooklyn’s major subway lines, but eminent domain can’t be used in Manhattan against the powerful Dolan family to relocate Madison Square Garden to a new facility and give the citizens of New York a new and suitable Penn Station (the long-planned Moynihan Station).* What’s worse is that these government interventions to redistribute wealth from the rest of us to this small club of already supremely wealthy powerful insiders is poor resource allocation. Like so many other artificial interventions to transfer more wealth to the wealthy in our economy, it’s a drag on our economy that holds us back.
(* The spectacular gift that was the old Penn Station was destroyed and replaced by the current rabbit warren to effect real estate deals the industry wanted. The replacement station is pitifully decorated with pictures of the one that was destroyed- see picture.- Click to enlarge. Amazing what the real estate industry will do to the rest of us for the sake of one of their "deals"!)Did I mention the regulation? The biggest players like Forest City Ratner, Columbia University (or Goldman) have nothing to fear from it. The financial crisis befell us partly because of a neutralized SEC (Securities and Exchange Commission). In both the financial industry and the real estate industry “agency capture,” industry takeover of the regulatory agencies is a problem that simply tilts the playing field more in their favor. (See this definition and discussion.)
Putting the Question of Eloquence Front and Center
As the film notes, we have been seeing a lot more of Spitzer again recently. Spitzer’s reemergence into public life after his fall from grace was predicated almost entirely upon his having something to contribute to the public dialogue. First, there was his Slate Column (does that mean he is competing with the rest of the world of bloggers including Noticing New York?) and then he began appearing regularly as a talking head on the televised media. Now he has a regular program on CNN. Is he up to the job?
We have always wondered about Spitzer’s eloquence. He surely has his well-scripted moments. I saw his campaign speech in its entirety three times. It was a good one, all about attorney general activism. He spoke about how, if the federal government wasn’t going to regulate Wall Street, he as Attorney General of New York was going to use a state’s rights rationale to step into the vacuum.* Hearing the speech three times I was able to notice what others probably couldn’t: Each time the speech was word-for-word, virtually the same. I voted for Spitzer but I was worried about this rigidity and limited range. It should be noted that Spitzer, like Cuomo in the last election, was never tested in the crucible of the campaign because it was a foreordained conclusion that he was going to win. We seem to have had a lot of elections like that in New York recently.
(* Ironic that this film is now partly about the vacuum Spitzer leaves behind him.)
Here is an observation about eloquence: It is often assisted by clear thinking and it is often impeded by an avoidance of obvious connections and analogies. By and large I wasn’t especially impressed by Spitzer’s appearances as a talking head or his grasp of the overall economic picture about which he ventured to talk, for instance, when in September of 2009 he appeared on Real Time with Bill Maher alongside Paul Krugman, a Nobel Prize-winning economist and writer who truly can be incisive and eloquent about the economy. It was Krugman who provided us with his brilliant column, The Madoff Economy, (December 19, 2008). The column showed how easy it was to make connections and analogize what has been going on with the economy as a whole with Bernard Madoff’s Ponzi scheme (including a misplaced idolization of men walking away with a lot of money and assumptions that they know what they are doing):
. . . surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole?Spitzer may have brought most of his Wall Street prosecutions under the Martin Act, the same act used to prosecute Ponzi schemes, but his own eloquence didn’t take flight, making the obvious connections.
* * * *
. . . surely those financial superstars must have been earning their millions, right? No, not necessarily. The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion.
The film does contain a Spitzer interview snippet that shows off the kind of talking head stuff that Spitzer was dishing up on the networks as he spoke about reining in Wall Street to address the problems of the economy as whole. While it is not bad, it is about the best we have heard from him:
The issue of CEO comp was something I was trying to get people to take a look at, It was off the rails.It is not that the above isn’t true, but it is fragmentary and rather vague when there is so much more needing to be pointed out and said by those put on the airwaves as insightful spokespersons.
* * * *
The ratio of CEO comp to average worker’s comp had gone from about 40 to 1 to about 550 to 1. CEOs began to just take everything they could. And ultimately that was going to destroy our economy because instead of running the companies to create long term wealth and long term investment, all the games we’ve seen, everything from backdating stock options to maximizing short term profits without sufficient investment for the long term, these are things which are cancers inside the economy.
Outing Comes To Ouster: A Well Run Dry
Darren Dopp, who resigned as Spitzer’s director of communications over his own role in the Troopergate scandal, suggests that a primary reason Spitzer’s outing lead to ouster was that the “reservoir of good will was empty” drained by Spitzer’s “combative style.” That is probably largely true, especially if the phrase “combative style” incorporates Spitzer’s near vendetta-based crossing of ethical lines in pursuing his adversaries together with his hypocritical holier-than-thou superiority. Still, Spitzer might have had access to a deeper “reservoir of good will” if he had also not been hypocritical about the basic principles for which he was elected. Noticing New York would have been much more reluctant to see him hurried out of office had he been doing and saying the right things with respect to Atlantic Yards. He wasn’t and David Paterson, the Lieutenant Governor, was standing promisingly in the wings with a history of opposing eminent domain abuse. (David Paterson is obviously another politician whose hypocrisy helped usher him quickly out of office.)
Superman Returns?
Go see “Client 9." Just to leave you curious: Do you think you know who Ashley Dupre is? Maybe you don’t. Check out the film. And do you think you know the story about the “black socks”? Even if you think you do you might want to check out the film.
Here is one thing we won’t leave you curious about. Interviewed outside of the context of the film, Alex Gibney, the film's maker, has answered one question that a lot of people will probably leave the theater wondering: Gibney thinks Eliot Spitzer wants to get back into politics.
Eliot Spitzer back in politics? If that’s ever going to happen it is going to take more than Spitzer’s foreswearing call girls and mastering his splenetic rages. Having once promised us a set of Hyperion principles worthy of a sun god, it’s going to take Spitzer’s true adoption of a set of principles that apply honestly across the board. If Spitzer ever adopts such a set of principles perhaps he can then find a voice, the eloquence he has not yet mastered, the eloquence that is there to be claimed by those willing to tell the whole story, including how the New York real estate industry is like Wall Street. Sequestering the satyr won’t be enough. He’ll also need to banish that third side, his less talked about politics-as-usual blind-to-real-estate-industry-abuses side.
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