Wednesday, March 12, 2008

TTFN Eliot

Greetings from Miami, where it's warm, and orange figures in blue blazers stalk the night spots of South Beach. And two beers and a scotch will set you back $38. Ouch.

I've been slipping in and out of a conference yesterday and today, so it was only through the ministrations of the Times-reloading Mrs Cutesome, that I learned of the admission of New York's governor, Eliot Spitzer, that he'd done something, on the same day as prosecutors were letting us know they had the dirt on Spitzer's visit to Ladies of the Night.

I ain't gonna say I'm not disappointed. More than a few people have noted that Spitzer was one of that small number of people (as opposed to events) that frightened Wall Street people, and anyone who's experienced the sharp end of financial types' hubris couldn't help but cheer him on.

Then there is my nagging sense that he was the last great hope of reformers to Albany, New York's funny-looking and disfunctional state capital. If you were perplexed at the iron grip that Shelly Silver (D-Downtown pork) and Joe Bruno (R-Upstate Pork) held on state government, the prospect of Spitzer, in his arrogant and inelegant way, threatening to upset their cozy existence was very exciting.

But New York's pool of dynamic political talent is shallow, as evidenced by Marty Markowitz leading the pack of Democratic mayoral contenders. It's with not a little sadness that I suspect that we won't see the like of the chinny little whore-hopper again.

So what happens to two of my obsessions: bond insurers and the Atlantic Yards project? Well, Mr Norman Oder has done the most dignified attempt to discuss what happens to the Ratner boondoggle. Short answer is: no idea.

Ratner's development plan was a text-book example of how to exploit political inertia, with a secretive approvals process, targeted panders and fake grassroots support. Spitzer, in theory, could have upset that, though the evidence is that AY was not a huge concern of his. It was, after all, real estate money that gave Spitzer his taste for the high life.

Unless Spitzer's replacement turns out to have the animus and personality to take down the cozy consensus around the project, or Letitia James gets appointed Tyrant of Brooklyn (Tish the Tyrant! Give Me Liberty or Give Me Tish!), I can't see how much a political solution can accomplish right now. It's easy to criticize the AY opponents for taking a judicial approach to challenging the project, rather than becoming more active politically. But the lack of attention to the project following the ascent of self-styled reformer Spitzer to the governorship shows how unlikely a politically-driven shift is.

The bond insurers is another issue. It's interesting to note that when Spitzer was dallying with courtesans at the Mayflower hotel in DC, he was in town to testify about bond insurance. Spitzer's attempt to refloat the bond insurers can be viewed as one of several attempts to make nice with the financial services industry. A couple of short-sellers aside, most of Wall Street has an interest in keeping the monolines, a reliable conduit to the pockets of retail investors, open for business,

It's not as if Spitzer's departure is likely to end efforts to rescue the bond insurers, and it could be that the role of New York state's government in the effort has already been superceded. But while the Spitzer/Dinallo wrangling was designed to deal with continuing issuer access to market rather than protect investors, stabilising the market is an area where the interests of the two coincide.

Leadership of the effort is already shifting, in particular to California. But California has an almost innate distrust of the financial services industry. Any investment banks that are currently cheering the downfall of their nemesis should remember that moment when Bill Lockyer manages to get their monolines dismembered.

I have, it must be said, a truly appalling track record in growing fond of mouthy, hyperkinetic pols that flame out of office in lurid scandals (see also one McGreevey, James). Spitzer's sex-downfall I will recover from. I can't help but think, though, that the city's moneyed interests will miss having a real estate scion in charge. Anyone with an interest in stopping moneyed vandals from hollowing out neighbourhoods? Not so much.


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