A Fighting Chance

16 out of 23 were bipartisan: The Congressional Oversight Panel built up support from many Democrats as well as a number of Republicans in Congress for its efforts to hold Treasury accountable. For example, Republican senator Olympia Snowe introduced a bill to provide COP with subpoena authority in April 2009, and she criticized Treasury for withholding key information from its overseers. http://www.gpo.gov/fdsyspkg/CREC-2009-04-20/html/CREC-2009-04-20-pt1-PgS4448.htm. Republican senator Chuck Grassley was also a strong supporter of COP’s work. See, for example, his statement from July 21, 2010: http://www.finance.senate.gov/imo/media/doc/072110CG.pdf.

as did the CEO of Ally Bank: Testimony of Citibank CEO Vikram Pandit from March 4, 2010, is available at http://cybercemetery.unt.edu/archive/cop/20110401231848/http://cop.senate.gov/hearings/library/hearing-030410-citi.cfm. Testimony of Michael Carpenter, CEO of GMAC/Ally, from February 25, 2010, is available at http://cybercemetery.unt.edu/archive/cop/20110401231727/http://cop.senate.gov/hearings/library/hearing-022510-gmac.cfm. COP also heard testimony from SVP from Chrysler and Treasurer from General Motors (http://cybercemetery.unt.edu/archive/cop/20110401231815/http://cop.senate.gov/hearings/library/hearing-072709-detroithearing.cfm), as well as the heads of a number of small banks.

focused entirely on the AIG bailout: “The AIG Rescue, Its Impact on Markets, and the Government’s Exit Strategy,” COP report, June 10, 2010.

COP also heard testimony from Robert Willumstad, former chairman and CEO of AIG, on May 26, 2010, available at http://cybercemetery.unt.edu/archive/cop/20110401232000/http://cop.senate.gov/hearings/library/hearing-052610-aig.cfm. The AIG officials were quick to point out that nearly all of the business practices of the insurance giant were conservative and well regulated and that only one tiny portion of the company nearly brought it down. But I always heard that differently: Risk-taking at huge financial institutions could be hidden away from the regulators and the shareholders, but, at the same time, be so dangerous that it could blow up both the company and the entire economy.

New York’s then attorney general Eliot Spitzer: During his tenure as attorney general, Eliot Spitzer was at the forefront of prosecuting white-collar crime, securities fraud, and Internet fraud, and he was willing to tangle with Wall Street institutions. He had sniffed out trouble at AIG years before the company collapsed. In March 2005, AIG’s board forced Greenberg to resign from his post as CEO and chairman, in part under the shadow of an investigation by Spitzer. In May 2005, Spitzer filed a civil complaint against AIG, Greenberg, and former CFO Howard Smith, alleging fraud. In 2013, Hank Greenberg filed a civil lawsuit against Eliot Spitzer for defamation. Greenberg claimed that Spitzer had engaged in a “long-standing malicious campaign,” involving allegedly false accusations against Greenberg on multiple occasions in various media, “to discredit … Greenberg and damage [his] reputation and career.” Chris Dolmetsch, “Ex-AIG Chief Greenberg Sues Eliot Spitzer for Defamation,” Bloomberg News, July 15, 2013. Spitzer called the suit “ridiculous, frivolous and stupid,” Yoav Gonen, “Exclusive: No, You’re ‘Stupid!’ Spitzer Blasts ‘Ridiculous’ Suit from Former Wall Street Foe Hank Greenberg,” New York Post, August 9, 2013.

thousand executives were indicted: Savings and loans were financial institutions that accepted deposits and financed home mortgages and car loans. In the early ’80s, the S&Ls were given broader ability to do more kinds of lending activities—but without as much regulatory oversight. The S&Ls loaded up on real estate loans, and when interest rates climbed, they got caught short with money already committed on home mortgages and not enough deposits, and many faced insolvency. Because they were lightly regulated, some of them turned to various forms of creative bookkeeping or thinly disguised Ponzi schemes. Nearly 750 of the 3,200 S&Ls failed. The scandal was huge, entangling political figures and Wall Street titans.

In the wake of the S&L crisis, regulators referred more than 1,100 cases to prosecutors for indictment, resulting in 839 convictions of bank officials for financial fraud. This is in sharp contrast to the 2008 financial crisis, which has produced hardly any major criminal convictions of individual executives.