You've seen some of the major actions you orchestrated as attorney general rolled back or under attack in one way or another. Independence of Wall Street stock research. Contingent commissions for insurance brokers. The Grasso case has ended. What do you make of this happening at a time when there's a Democratic congress, a Democratic president, and we just survived a near-meltdown of the global financial system?
The lesson I would take away is that we were right in our fundamental premise. Which is that the structure of finance was increasingly hazardous to our economy ... Having said that, the power of capital to push back and get what it wants continues almost unabated ... Look at how weak the proposals for financial services reform really are...look at the unbelievable subsidy we've given to the banks ... [Yet] they continue to be incredibly powerful and successful ... in getting what they wish ... conflicts of interest are so pervasive and so deleterious to the economy and consumers that we haven't even begun to unravel them ... Most people aren't willing to stand up and say, Enough! Reform is incredibly tough ... It's not very often you can really create a movement that really pushes back on these things.
I don't believe the Grasso case would have come out the way it did if I'd still been governor. Those judges would not have had the guts to issue that opinion ... That was politics ... This was not a dispassionate legal judgment. And the failure to appeal that case [by Attorney General Andrew Cuomo], where there's an automatic right of appeal, was malpractice.
How do you make economic reform happen?
It should be happening, but it's not. I really do think the next movement should be using the power of ownership as a way to reform. There are real limits to what litigation and regulation can do. But where have the shareholders been? Where have the state comptrollers been, in saying, 'We own you guys, here's how we want you to reform [corporate] compensation' ... That is ultimately where the buck stops.
You've talked about the potential of the job of state comptroller. What's there?
It is the great underutilized position in government right now. If there has been some substantial perceived increase in what AGs have done, comptrollers should be the next powerful voices. Those who control the big pools of equity.
If you could go back and do things over as AG, what would you do differently?
I'd be much tougher. Much tougher. I'm now more persuaded than ever that we were right ... that the structural issues on Wall Street were so dangerous to our economy and the way business was being conducted that I would have pushed harder for greater resolution, greater transparency, and greater disclosure of what was going on, and moved at even a faster pace ... I say this with hindsight.
It took me a while to develop either the evidentiary base to persuade myself that I was right or the credibility to be able to bring these cases. And we had no allies at the beginning ... So now it's easy to look and back and say 'I wish been tougher from the get-go.'
But I would be tougher -- I wish we had. I could have tried ... The regulatory process was even worse than I imagined. I was butting heads with the SEC and the OCC and all of them on a regular basis. But it went even deeper. If there's a critique I have, it's that we should have done more, not less.
Would you have a different tone?
Would I change a few conversations? Absolutely. Would I change the larger tenor of my conversation with Wall Street in which I was saying, 'You're not living up to your duty to the public'? Not at all.
You've been sharply critical of the Obama administration for failing to accomplish more in reining in Wall Street. Why?
When you've got Larry Summers and Tim Geithner at the top, who gave away the opportunity for fundamental reform at the very moment when they had Wall Street there begging for trillions of dollars and then, after the fact, have to argue for an independent consumer protection agency -- or don't push Wall Street to agree to the reformation of mortgages when Wall Street is receiving trillions of dollars -- something is wrong.
I read a transcript of Geithner on [MSNBC's] Rachel Maddow the other night where he said we couldn't negotiate the counterparty payments from AIG to Goldman (GS, Fortune 500) because there was a contract. The taxpayer wasn't a party to that contract. That is an absolutely moronic answer. Moronic. It's stupid.
A first-year associate who came to me and said that, I'd fire them. I'd say "Show me the contract! What contract did a taxpayer sign that obligated us to give Goldman 12.9 billion dollars? None." He misunderstood his position and his job. And he's still parroting those words. That's what I'm amazed at. But that's where we are.
Facebook
Twitter