Gasparino: Spitzer Caused the Financial Crisis

I like Charlie Gasparino. I really do. He used to be a sharp elbowed, hard nosed WSJ reporter that dug for stories. Blood on the Street: The Sensational Inside Story of How Wall Street Analysts Duped a Generation of Investors remains a great read.

But like many pundits on the right, he simply has a hard time imagining that companies could blow themselves up. Its an anathema, a violation of deeply held beliefs that companies do not any need rules or regulations, and that markets somehow can self-regualte.

Here’s Charlie:

“In reality, his work as AG was profoundly uneven. He brought a few good cases, but (as I wrote in Tuesday’s Post) never won in court — not a single one against a major player, Grasso included. He went after headlines, not substance, which is why his record in court was so lousy. He cut deals, allowing big banks to pay fines and escape real reform. Does anyone really believe he “reformed” Wall Street research?

And [Spitzer] he might have actually abetted the crisis. He drove out Hank Greenberg as CEO of AIG over accounting irregularities; it was new management put in place to appease Spitzer that let one unit take insane risks, digging the hole that led to AIG’s downfall — a key ingredient in the broader financial collapse.” (emphasis added)

That is simply a false and misleading statement. AIG had been in the business of writing risky derivatives for a long time. Hank Greenberg’s hand picked Joseph Cassano, the executive that ran AIG FP (immortalized as The Man Who Crashed the World). And keep in mind that in 2003, the big credit mania that drove the housing boom and bust was still in its early innings.

The list of false issues that ostensibly caused the crisis continues to grow longer and longer . . .


The Crisis Was Caused by [Insert Pet Peeve Here] (January 2011)

Gunning for Eliot
Grasso v. Spitzer for mayor?
NY Post, March 2, 2011

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