Facts matter: Eliot Spitzer refutes Maria Bartiromo’s claims about case against Hank Greenberg, AIG
When “Viewpoint” host Eliot Spitzer was interviewed by Maria Bartiromo on CNBC’s “Closing Bell” last Friday, they had a spirited exchange about the fraud charges Spitzer brought against former AIG chairman Hank Greenberg while attorney general of New York. Bartiromo addressed their interview in a segment on “Closing Bell” today, and Spitzer responded to her attempt to “rewrite history,” by laying out the facts about the case.
“Maria, every statement I’ve made about Hank Greenberg’s role in these frauds is proven and accurate,” Spitzer says. “It’s too bad Wall Street’s leadership — and some of their favorite voices — can’t learn the lessons from the past and move forward.”
He then urges Bartiromo to: “stick to the facts, not the press releases from Greenberg’s attorneys and press machine.”
Category: Financial Press, Legal, Video
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
Spitzer is full of baloney.
It’s time consuming to rebuild the news accounts of the counterpoints – this is from an op ed by Ken Langone. http://online.wsj.com/article/SB10001424052748703298004574455330275294084.html
“It began in April 2005, when Mr. Spitzer appeared on ABC’s “This Week with George Stephanopoulos” and said that Mr. Greenberg had committed criminal fraud against shareholders for misstating earnings. But he subsequently failed to file any actual charges—not one.
“In March of that same year, Mr. Spitzer’s office threatened the board of AIG with a criminal charge of fraud against the company itself. That too went nowhere. When Mr. Sptizer instead filed a civil case in front of Judge Ramos, the two main pillars of that accusation—that Mr. Greenberg deceived regulators about AIG’s offshore reinsurance and that AIG falsely reported income—were also eventually withdrawn.
“What’s left is a highly theoretical argument over how companies should properly account for an obscure instrument known as “finite reinsurance”—about which there is virtually no existing legal precedent. Persuading a jury that Mr. Greenberg somehow deceived shareholders on this matter will be the legal equivalent of pulling a rabbit out of a hat. Yet Mr. Cuomo’s office has now asked Judge Ramos for summary judgment on the case—in effect, a hope that he will pull the rabbit out of the hat for them. ”
From the NYT: “All the criminal charges were eventually dropped, though some civil charges were still unresolved. And in August 2009, Mr. Greenberg agreed to a deal with the Securities and Exchange Commission to pay $15 million in penalties and disgorgement for overseeing fraudulent transactions at A.I.G. ” http://topics.nytimes.com/top/reference/timestopics/people/g/maurice_r_greenberg/index.html
As for the “fraudulent” reserving practices, Loss Portfolio Transfers (LPTs) were not uncommon in higher interest rate environments. One insurer would offload reserves to another with the latter essentially betting that the investment income would outweigh the paid losses out of the reserves. AIG did such a thing in 2000/2001 – and while it wasn’t called out in their GAAP filings (in the context of AIG it was reasonable to consider it immaterial), it was in their Statutory filings. As Langone mentioned, there was no (and AFAIK remains no) precedent for what appropriate risk transfer is/was. Rules of thumb were a 10% chance of a 10% loss – again in the context of rules of thumb for materiality (5-10% IIRC), below the reportable threshold.
She’s wrong.
bazooka corporate stocks .. there are to many instruments for the world to handle .. go back to a world with a currency for each country .. hense borrow cash and then make or do something real with milleniums old defined barriers to live & die by … (yuck tho – pandora is out of the box)
oh ps http://en.wikipedia.org/wiki/Pandora
thats where that comes from
m.jed Says:
July 16th, 2012 at 10:38 pm
“Spitzer is full of baloney.”
No, he isn’t.
Throughout her angry inquisition she denies Greenberg engaged in any wrong-doing.
Spitzer holds up the Judges 29 page final decision, asks her if she’d read it, she avoids an answer and continues to grill him.
She refuses to acknowledge the courts finding that Greenberg engaged in fraud, instead, telling Spitzer he’s lying.
She’s the liar, period.
“Spitzer holds up the Judges 29 page final decision, asks her if she’d read it, she avoids an answer and continues to grill him.”
Except Greenberg wasn’t a party in that decision. It was United States vs. Ferguson, Garand, Graham, Milton, and Monrad. Greenberg was mentioned in the decision, but continues to beg the question, whether if Spitzer was so convinced on the basis of the ruling in that case that Greenberg had committed fraud, why his office (prior to Cuomo) dropped the most of the criminal charges. There was absolutely no deterministic legal finding that Greenberg engaged in fraud that one could take from that decision. And if it wasn’t political, why the charges were dropped on the Friday before Labor Day with basically no press release vs. the whole dais, press conference, and pomp and circumstance to announce the charges.
Look, Spitzer was very good at what he did – basically conflate things that were patently illegal, e.g., late trading, conflate them with things that were legal but impolitic, e.g., mutual fund market timing, to inflate the issue and exert leverage to get bigger settlements, e.g., mutual fund fee reductions, and then claim that the settlements themselves were evidence of wrong-doing. He was defeated again and again when his cases made it to court in his financial cases, but the companies, for whom a criminal indictment is a death sentence (no financial corporation has ever survived criminal indictment), were extorted into settling and acceding to his demands. He was a mafioso with legal authority to bully his opponents and Bartiromo is right to point that out.
The facts are clear AIG failed, and failed due to the fraudulent actions of the CEO.
Now the backstory will be written by PR shills, and producers desperate for “viewers”, so no surprise the sides are where they are…
But common sense tells me, hank and most CEO look to enrich themselves and shareholders and at times the pressure to deliver forces them to
Do things they might have not normally done…now it’s all about leaving this world in disgrace or not, so hence the pr blitz…but I think he should just go away.
Maria, should leave too…she represents all that is old and in the past
Spitzer
i wish spitzer would acknowledge the technicality that bartiromo was arguing as opposed to just shouting louder
in a contentious back and forth on TV why do even smart people return to the playground as though there are emotional masses who are to vote on the winner after the segment ends, like american idol
this stuff lives forever, be right and calm, then watch your followers grow
Mr. Spitzer is a passionate advocate of his own infallibility and like any good advocate he overlooks those items that are inconvenient for his case. Spitzer told AIG’s board that unless they sacked Greenberg and Smith that he’d indict AIG under the Martin Act. Then, just to drive the point home, Spitzer told the board that no major coporation has survived an indictment. It would have been irresponsible for the board to have called Eliot’s hand, so they didn’t.
With Maria Spitzer argues that the firing by the board was proof of the fraud as was he AIG’s paying of the $1.6 billion dollar fine but all it really proves is that given a rampaging attorney general the board caved, believing their fiduciary responsibility was to put this matter behind them and move on. AIG’s subsequent insolvency had nothing to do with the charges Spitzer made, but quite likely had something to do with the board and new CEO, CFO being distracted by the events that had occurred.
Greenberg’s failing was not fraud, but not having a strong bench, but that’s a tale for another time.
Eliot is 100% correct, and CNBC teleprompter reading bimbo is completely clueless.
Definition of Fraud: wrongful or criminal deception intended to result in financial or personal gain.
Sorry Mr. Greenberg, but you were committing fraud. Period. (If I were a judge, you would be hanging in the streets Mr. Greenberg)