• 11 Dec 2007 at 11:07 AM
  • politics

Rudy The Prosecutor: Very Creative With Power

We give Loathsome Eliot Spitzer a hard time around here for the bully boy tactics both he and his staff reportedly practiced when he was New York’s attorney general, tactics that he apparently kept practicing once elected governor. But it’s worth remembering that Spitzer hardly invented the role of the aggressive prosecutor who builds his reputation by going after Wall Street and attacks his opponents with leaks to the press. Credit there probably belongs to Rudolph Giuliani. Yesterday the New York Times ran a healthy reminder of the Giuliani we knew before he became New York’s mayor, and long before he became September 11ths mayor.
“Mr. Giuliani, who was 38 when he became United States attorney in 1983, threatened his targets with long prison sentences, and he infuriated judges with leaks of grand jury testimony to the press,” Michael Powell writes. “His agents handcuffed Wall Street arbitrageurs before prosecutors investigated them. Apology was weakness; skeptics were ‘jerks.’
Powell mentions the case of Princeton/Newport Partners, which was shut down in a raid by 50 armed marshals. They were charged with racketeering, a crime created to prosecute organized crime but which later became a regular feature of financial prosecutions thanks to the zealous creativity of prosecutors, including Giuliani, who realized that just because financiers weren’t mobsters didn’t mean they couldn’t be treated as if they were. Although a federal appeals court later overturned the convictions, Princeton/Newport was ruined.
The prosecution of Michael Milken and the destruction of Drexel Lambert stand out in public memory but its worth remembering that Giuliani’s career as a Wall Street foe hardly began or ended there. Executives from Kidder Peabody to those at Goldman Sachs were led out of their offices in handcuffs. There’s a good case to be made that Giuliani’s aggressiveness retarded financial innovation for years, as many were afraid that any unorthodox financial strategies or products might be deemed criminal by the US attorney’s office.
“He was very creative about wielding power.” Those of the words one law professor uses to describe Giuliani, and we can’t imagine a more fitting epitaph. Except that they were written too early, and Giuliani quite obviously has no intention of vanishing from the scene any time soon. We may yet have to write more about the way Giuliani wields power.
(More on this article from Tom Kirkendall and Larry Ribstein.)
Crime Buster With Eye on the Future [New York Times]

  • 05 Dec 2007 at 2:13 PM
  • politics

Ron Paul: Friend Or Foe?

In the latest Business Week, Maria Bartiromo interviews Ron Paul.

Do you consider yourself a friend or a foe of Wall Street?
If they believe in freedom, free markets, and sound money, they’ll love me. But if they like creating credit out of thin air, they’ll see me as a threat. I was one of three people who voted against Sarbanes-Oxley because I thought it was detrimental to Wall Street. I’d repeal it.

After the jump, take a reader poll on whether Ron Paul is a friend or foe.

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  • 20 Nov 2007 at 12:11 PM
  • politics

“We Have A Subprime Economy”
Ron Paul Blasts Ben Bernanke

One of the great things about having Ron Paul running for president is the attention he brings to economic issues other than the usual tax and spend debates between the Republicans and the Democrats. This video isn’t all that fresh (it’s weeks if not months old, actually) but it is refreshing.

  • 12 Nov 2007 at 9:10 AM
  • politics

Consultant In Chief

Over the weekend, the Wall Street Journal’s editorial board ran its report on their interview with Mitt Romney. Titled “Consultant In Chief,” the essay describes the former Bain executive’s love of data and his approach to governing. Our Monday morning poll wants to know whether reading this interview makes you more or less liekly to vote for Romney for president.

republicansandronaldreagan.jpgOne of the strange aspects of the race for the Republican nomination is that many of the candidates seem to be running to be elected as the next Ronald Reagan while sounding so little like the man who was once called The Great Communicator.
Last night was no different. At least three of the candidates mentioned former president Reagan by name. But not one of them quoted him. It seems that campaign consultants and perhaps the candidates themselves have concluded that part of being Reagan is maintaining a sunny disposition about our economic prosperity—the greatest story ever told, as some like to say. But Reagan didn’t get elected on the greatest story never told. His economic policy was to reduce inflation, cut taxes and cut wasteful and fraudulent government spending.
A closer look at Republican rhetoric versus Reagan reality after the jump.

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  • 09 Oct 2007 at 4:02 PM
  • politics

Republican Economic Debate Starting Now

Goldwater2.jpgIf political fraud were a crime, television networks carrying political debates could be sued for scheme liability. All of the Republican presidential candidates gathering today in Dearborn, Michigan today to debate economic issues are expected to say very much the same things in different words. The only possible exception is Ron Paul, who we half-suspect doesn’t really want to become president anyway. All will claim to be the next Ronald Reagan, who really wasn’t anywhere near as wonderful a president as many Republicans now claim to remember.
When we watch these things we’re reminded of HL Menken’s words on a long-past presidential race. “All of the great patriots now engaged in edging and squirming their way toward the Presidency of the Republic run true to form,” he wrote. “This is to say, they are all … more or less palpable frauds. What they want, primarily, is the job.”
Anyway, the debate has just started and you can watch a live stream of it on CNBC’s site. It ought to come with it’s own warning label, though. “Viewer beware. Politicians speaking.”

  • 09 Oct 2007 at 2:21 PM
  • politics

Private Equity Shakedown Extended To 2008

If you were trying to design the perfect political fund-raising tactic, you probably couldn’t have come up with a better one than the private equity tax-hike proposal that has been haunting Capitol Hill this year. Despite their riches, private equity firms had not been very involved in politics until this year. But in the wake of the proposals they have reportedly spent millions of dollars to defeat the proposals.
And if something is working that well, you don’t just shut it off by bringing the proposal to a vote. Far better to keep the proposal—and the millions in campaign donations and funds for your friends in lobbying—alive for a bit longer. Especially when you have a big election year coming up.
As it turns out, that’s precisely what Senate Majority Leader Harry Reid has announced he is doing. The gullible reports make it sound like a victory for the lobbying efforts of the private equity firms, when in fact it is simply a rent-extraction victory for lawmakers and lobbyists. Basically, it is the political class shaking down the financial class for a bit of the wealth.
Ain’t democracy grand?
Update: Larry Ribstein has much the same reaction.
Buyout Firms to Avoid a Tax Hike [Washington Post]

RepublicanEconomicDebate.jpgThis morning’s Wall Street Journal carried a front page story about the Republican Party “losing grip” on the business vote. The lack of budget discipline by the last Republican Congress was an absolute disaster for Republicans, who have lost their selling point as the economically responsible party.
The media has also made a big play out of Alan Greenspan’s criticism of Republican leadership. There’s no doubt that he is voicing the views of many formerly loyal Republicans when he says he no longer recognizes his party when he looks at the way it behaved in the twenty-first century. (The media tend to underplay his lack of enthusiasm for Democratic proposal for greater regulation, higher spending and higher taxes. But that’s probably just something they accidentally overlooked.) We keep getting reminded of that scene at the end of Animal Farm where the pigs are playing cards with the farmers, and it becomes impossible to tell who is a pig and who is a farmer.
So it should be interesting to see how the Republican presidential candidates handle the debate sponsored by NBC, MSNBC, and The Wall Street Journal on Monday. The moderators will be Maria Bartiromo and Chris Matthews. As a rule, we avoid watching debates but we might give this one a chance. Will the Republican candidates repudiate the spend-and-regulate policies that their party adopted? Or will they play some economic populist card and call for greater regulation in the wake of the recent credit crunch? What is the Republican stance on the troubles in the housing market? Are they going to take a libertarian stance on taxes and regulation or play Democrat-lites?
We honestly don’t know what the Republican economic agenda is anymore. According to Larry Kudlow it seems to involve always being an optimist, lowering interest rates, cutting taxes, opening the borders to a lot more immigrants and talking about the enthusiasm of a girl called Goldilocks who seems to have a fetish for men who use the phrase “supply side.”
GOP Is Losing Grip On Core Business Vote [Wall Street Journal]
Bartiromo & Matthews To Moderate GOP Debate [TV Newser]