Coyote Blog

In a hard-hitting, incredibly researched piece of journalism entitled "Me & Ted", Josh Marshall polled his progressive friends at Princeton and found that they all thought Ted Cruz was an asshole.

Well, it turns out Ted and I went to college together. And not just we happened to be at the same place at the same time. We were both at a pretty small part of a relatively small university. We both went to Princeton. I was one year ahead of him. But we were both in the same residential college, which basically meant a small cluster of dorms of freshmen and sophomores numbering four or five hundred students who all ate in the same dining hall.

As it turned out, though, almost everyone I knew well in college remembered him really well. Vividly. And I knew a number of his friends. But for whatever reason I just didn't remember him. When I saw college pictures of him, I thought okay, yeah, I remember that guy but sort of in the way where you're not 100% sure you're not manufacturing the recollection.

I was curious. Was this just my wife who tends to be a get-along and go-along kind of person? So I started getting in touch with a lot of old friends and asking whether they remembered Ted. It was an experience really unlike I've ever had. Everybody I talked to - men and women, cool kids and nerds, conservative and liberal - started the conversation pretty much the same.

"Ted? Oh yeah, immense a*#hole." Sometimes "total raging a#%hole." Sometimes other variations on the theme. But you get the idea. Very common reaction.

Wow, so this is what famous journalists do?  Hey, I can do the same thing.

I went to Princeton with Eliot Spitzer.  He was a couple of years ahead of me but had a really high profile on campus, in part due to his running for various University Student Government offices.  So I checked with many of my friends back in college, and you know what?  They all thought Spitzer was an asshole.  I was reminded that we all disliked him so much that when one person (full disclosure, it was me) drunkenly asked who wanted to go moon Spitzer and the governing council meeting next door, we got 30 volunteers.  He was so irritating that he actually inspired a successful opposition party cum performance art troupe called the Antarctic Liberation Front (Virginia Postrel also wrote about it here).

Wow, am I a big time journalist now?  Will GQ be calling for me to do an article on Spitzer?

Look, this is going to be true for lots of politicians, because they share a number of qualities.  They tend to have huge egos, which eventually manifest as a desire to tell us what to do because they know better than we do.  They are willful, meaning they can work obsessively to get their own way even over trivial stuff.  And they are charismatic, meaning they generally have a group of people who adore them and whose sycophancy pisses everyone else off.  In other words, they are all assholes.

I liked this bit from Megan McArdle on Elena Kagan because it fit so well with a category of people I saw all the time at Princeton (Kagan and I overlapped somewhat though I did not know her).

But I do think that David Brooks is onto something when he notes that her relentless careerism, her pitch-perfect blandness, are a little creepy. Not in themselves, but because they're a symptom of a culture that increasingly values what Brooks calls Organization Kids: the driven, hyperachieving spawn of the Ivy League meritocracy who began practicing Supreme Court nomination acceptances and CEO profile photo poses long before they took notice of the opposite sex.

The discussion of late is whether these Ivy Leaguers really are representative of the broader country, but I would add that these folks really were not liked even within Princeton.  A great example is Eliot Spitzer.  His treatment of Princeton and its student government as a sort of minor league tryout for future political ambitions drove everyone nuts, to the point that he even triggered an outlandish opposition party, the Antarctic Liberation Front.

Back when I was an undergrad at Princeton, one of my fondest memories was of a bizarre Student Body Governing Council (USG) election.  The previous USG administration, headed by none other than fellow Princetonian Eliot Spitzer, had so irritated the student body that, for the first time in memory, the usually apathetic voting population who generally couldn't care less who their class president was actually produced an energetic opposition party.  Even in his formative years, Spitzer was expert in using his office to generate publicity, in this case frequent mentions in the student newspaper that finally drove several students over the edge.The result was the incredibly funny and entertaining Antarctic Liberation Front.  I wish I had saved their brochures, but their proposals included things like imposing a dawn to dusk curfew on the school and funding school parties by annexing the mineral rights between the double yellow lines of the US highways.  All of this was under the banner of starting jihad to free Antarctica.  The ALF swept the USG election.  This immensely annoyed Spitzer and other USG stalwarts, who decried the trivialization of such an august body.  The pained and pompous wailing from the traditional student council weenies (sounding actually a lot like liberals after the last presidential election) only amused the general student population even further.  After a few student-council-meetings-as-performance-art, the ALF resigned en mass and life went back to being just a little bit more boring.

(Don't miss Virginia Postrel's take on the whole episode, occasioned by Spitzer whining about the episode 20 years later in the New Yorker.)

One other data point:  Two years later, after drinking a few adult beverages, it came into my head that it would be a really good idea to moon the USG meeting being held nearby.  I asked for volunteers, expecting a handful, and got over 40.  The episode saddens me only because I did not think of it soon enough to have mooned Spitzer.

Update: Hilarious

An email inquiry I received today:

I am a reporter for the Orlando Sentinel in Florida. I need a comment for a story on prostitution.

I actually think there is an organization with 'coyote' in the name that is more active on this topic, so I presume that was the source of confusion.  Not really sure how my wife would react to this inquiry.  However, since we are on the topic, I have written a couple of rants supporting the legalization of prostitution.  In short, I think there is a good case to be made that most of the abuses of prostitution result from its illegality (and therefore lack of ability of its participants to call on the legal system for help).  While one may find prostitution distasteful, the government should protect our bodies and our wallets from assault rather than worrying whether we are tarnishing our souls. 

I observed a while back that "Eliot Spitzer has been brought down for a crime most libertarians don't
think should be a crime, by federal prosecutors who should not be
involved even if it were a crime, and using techniques, such as
enlisting banks as government watchdogs of private behavior, that
stretch the Fourth Amendment almost out of recognizable shape."

Megan McArdle makes a pretty good point about the last part:

I'm not distressed to hear that the Feds were spying on Eliot Spitzer.
No, not because I don't like the man, but because I think maybe we should
spy on our politicians, all the time. No probable cause, you say? I
fling back at you Mark Twain's observation that America only has one
distinct criminal class: Congress. . . . I think it's entirely
appropriate that the anti-corruption police watch politicians like
hawks. They've chosen public office; that conveys a lot of
responsibility to the public, including assuring them that your votes
aren't being bought outright. I also think that politicians, when
caught in a crime, should automatically get the maximum penalty; if
they think the law is such a good idea, they ought to suffer heartily
when they disregard it.

In a previous post I lamented that Eliot Spitzer was lauded by the press as "Mr. Clean" despite (or because of) abuse of power, but was forced to quit within days of revealing an episode of consensual sex.  If only abuse of power had such an immediate impact on politicians as sex:

The Justice Department and the housing department's inspector general
are investigating whether the [HUD] secretary, Alphonso R. Jackson,
improperly steered hundreds of thousands of dollars in government
contracts to friends in New Orleans and the Virgin Islands.

On Wednesday, Democratic lawmakers also raised concerns about
accusations that Mr. Jackson threatened to withdraw federal aid from
the director of the Philadelphia Housing Authority after he refused to
turn over a $2 million property to a politically connected developer.

Update:  More on the press and its support for prosecutorial abuse of power, in Spitzer's case and others.

With Eliot Spitzer going down for what shouldn't be a crime (paying for sex) rather than what should be (abuse of power), now is as good a time as ever to focus on prosecutorial abuse.  As in the case of Spitzer, the media seems to have little desire to investigate overly-aggressive prosecution tactics.  In fact, in most cities, the local media cheer-leads abusive law enforcement practices.  It makes heroes of these abusive officials, whether their abuses be against the wealthy (in the case of Spitzer) or the powerless (as is the case of our own Joe Arpaio here in Phoenix).

Tom Kirkendall continues to be on the case of the Enron prosecution team for their abuses, which have been ignored in the media during the general victory dance of putting Jeff Skilling in jail and running Arthur Anderson out of business.  But, guilty or innocent, Skilling increasingly appears to have solid grounds for a new trial.  In particular, the Enron prosecution team seems to have bent over backwards to deny the Skilling team exculpatory evidence.  One such tactic was to file charges against every possible Skilling witness, putting pressure on them not to testify for Skilling.  Another tactic was more traditional - simply refuse to turn over critical documents and destroy those that were the most problematic:

The controversy regarding what Fastow told
prosecutors and FBI agents who were investigating Enron became a big
issue in the Lay-Skilling prosecution when the prosecution took the
unusual step of providing the Lay-Skilling defense team a "composite
summary" of the Form 302 ("302's") interview reports that federal
agents prepared in connection with their interviews of Fastow. Those
composites claimed that the Fastow interviews provided no exculpatory
information for the Lay-Skilling defense, even though Fastow's later
testimony at trial indicated all sorts of inconsistencies. 

However,
I have spoken with several former federal prosecutors about this issue
and all believe that the government has a big problem in the Skilling
case on the way in which the information from the Fastow interviews was
provided to the Lay-Skilling defense team. None of these former
prosecutors ever prepared a composite 302 in one of their cases or ever
used such a composite in one of their cases. The process of taking all
the Fastow interview notes or draft 302's and creating a composite is
offensive in that it allowed the prosecution to mask inconsistencies
and changing stories that Fastow told investigators as he negotiated a
better plea deal from the prosecutors. 

Similarly,
the Enron Task Force's apparent destruction of all drafts of the
individual 302s of the Fastow interviews in connection with preparing
the final composite is equally troubling. Traditionally, federal agents
maintain their rough notes and destroy draft 302s. However, in regard
to the Fastow interviews, my sense is that the draft 302s were not
drafts in the traditional sense. They were probably finished 302's that
were deemed "drafts" when the Enron Task Force decided to prepare a
composite summary of the 302's.

Note that showing how a person's story has changed over time is a key prosecution tactic, but one that is being illegally denied to Skilling.  Apparently Skilling's team has now seen the actual interview notes, and believe they have found "a sledgehammer that destroys Fastow's testimony" against Skilling.  Stay tuned, a new trial may be on the horizon.

Eliot Spitzer has been brought down for a crime most libertarians don't think should be a crime, by federal prosecutors who should not be involved even if it were a crime, and using techniques, such as enlisting banks as government watchdogs of private behavior, that stretch the Fourth Amendment almost out of recognizable shape.  So why are we libertarians so happy?

He routinely used the extraordinary threat of indicting entire firms, a
financial death sentence, to force the dismissal of executives, such as
AIG's Maurice "Hank" Greenberg. He routinely leaked to the press emails
obtained with subpoena power to build public animosity against
companies and executives. In the case of Mr. Greenberg, he went on
national television to accuse the AIG founder of "illegal" behavior.
Within the confines of the law itself, though, he never indicted Mr.
Greenberg. Nor did he apologize.

In perhaps the incident most
suggestive of Mr. Spitzer's lack of self-restraint, the then-Attorney
General personally threatened John Whitehead after the former Goldman
Sachs chief published an article on this page defending Mr. Greenberg.
"I will be coming after you," Mr. Spitzer said, according to Mr.
Whitehead's account. "You will pay the price. This is only the
beginning, and you will pay dearly for what you have done."

Jack
Welch, the former head of GE, said he was told to tell Ken Langone --
embroiled in Mr. Spitzer's investigation of former NYSE chairman Dick
Grasso -- that the AG would "put a spike through Langone's heart." New
York Congresswoman Sue Kelly, who clashed with Mr. Spitzer in 2003, had
her office put out a statement that "the attorney general acted like a
thug."

These are not merely acts of routine political
rough-and-tumble. They were threats -- some rhetorical, some acted upon
-- by one man with virtually unchecked legal powers.

Eliot
Spitzer's self-destructive inability to recognize any limit on his
compulsions was never more evident than his staff's enlistment of the
New York State Police in a campaign to discredit the state's Senate
Majority Leader, Joseph Bruno. On any level, it was nuts.

As I wrote before, the real crime here is that despite all his history, he was until two days ago a press darling labeled as "Mr. Clean."  In reality, he has always been Mr. Abuse of Power and Mr. Personal Vendetta.  I am happy to see him brought down, even if for the wrong reasons.

Update: A lot more here

I posted this in 2004, but it seems relevant today:

OK, but what is this Antarctica thing?  Back when I was an undergrad
at Princeton, one of my fondest memories was of a bizarre Student Body
Governing Council (USG) election.  The previous USG administration,
headed by none other than fellow Princetonian Eliot Spitzer, had so
irritated the student body that, for the first time in memory, the
usually apathetic voting population who generally couldn't care less
who their class president was actually produced an energetic opposition
party.  Even in his formative years, Spitzer was expert in using his
office to generate publicity, in this case frequent mentions in the
student newspaper that finally drove several students over the edge.

The result was the incredibly funny and entertaining Antarctic
Liberation Front.  I wish I had saved their brochures, but their
proposals included things like imposing a dawn to dusk curfew on the
school and funding school parties by annexing the mineral rights
between the double yellow lines of the US highways.  All of this was
under the banner of starting jihad to free Antarctica.  The ALF swept
the USG election.  This immensely annoyed Spitzer and other USG
stalwarts, who decried the trivialization of such an august body.  The
pained and pompous wailing from the traditional student council weenies
(sounding actually a lot like liberals after the last presidential
election) only amused the general student population even further.
After a few student-council-meetings-as-performance-art, the ALF
resigned en mass and life went back to being just a little bit more
boring.

If you think I am exaggerating in saying that the Spitzer-led
student council types had a whiny reaction to this bit of fun, you
should know that Spitzer was still whining about it 20 years later to the New Yorker magazine.  Virginia Postrel, also a Princetonian at the time, had a similar reaction to mine here, and fisks the New Yorker article.

My novel BMOC included an incompetent and power-abusing Senator who managed to remain a darling of the press as long as he focused his attention on pork-barrel spending and using government power to help and hurt his friends and enemies.  However, the press finally turned on him when it became known he was involved with prostitutes.  The fairly cynical (if not realistic) moral was that it was fine to abuse government power, just don't get caught in a sex scandal.

Well, it seems that we will get to test that notion in real life.  Apparently, NY governor Eliot Spitzer has been dallying with prostitutes.  Now, I couldn't really care less about his purchase of sex -- I have argued many times for legalization of prostitution.  But it will be an interesting test of my book's cynical hypothesis, since to date the press has been in love with Spitzer despite (even because of) his abusive practices as AG and governor.  The radio news a few minutes ago actually said "Mr. Spitzer, who to date has had a squeaky clean reputation..."  Huh?  Only if you read the fawning PR work done for him by the NY Times in the past.

Update: Here is the passage from the book.  Sound familiar?

Taking a deep
breath, Givens said, "Senator, there is a reason that this one is not going
away. I will spell it out: S-E-X. The press doesn't give a shit about a few billion dollars of waste. No one tunes in to the evening news if the
teaser is "˜Government pays too much for a bridge, news at eleven.' The Today Show doesn't interview the
contractors benefiting from a useless bridge."

"However, everybody and his dog will tune in if
the teaser is "˜Your tax dollars are funding call girls, film at eleven'. Jesus, do you really think the CBS Evening
News is going to turn down a chance to put hookers on the evening news? Not just tonight but day after day? Just watch "“ Dan Rather will be interviewing
hookers and Chris Mathews will be interviewing hookers and for God's sakes
Barbara Walters will probably have a weepy interview with a hooker."....

"You guys in the Senate can get away with a lot,
as long as long as a) you don't get caught or b) the scandal is so boring or
complex that it won't sell newspapers. Hell, I saw a poll the other day that a substantial percentage of
Americans to this day don't understand or even believe what Richard Nixon did
was wrong. But if you polled those same
people, every freaking one of them would say that they knew and believed that
Bill Clinton got [had sex with] an intern.

Update #2: Disclosure -- I did not like Spitzer, even at Princeton.  This, however, was not uncommon.  In fact, Spitzer managed to inspire a jihad in response to his governance of the student council there.

Update #3:  ROFL!  I got this email from a reader:

I eagerly await your
comments on the latest imbroglio involving your favorite Princeton
classmate.  Please don't take the high road.

It seems I may not be the only person who does not care for Mr. Spitzer.

Update #4:  I hope the girls paid sales taxes on their transactions and have all their payroll taxes in order.  Certainly Mr. Spitzer has established the principle that illegal businesses still owe taxes.

That seems to be the axiom in New York these days, where Gov. Eliot L.
Spitzer (D), struggling to close a $4.4 billion budget gap, has
proposed making drug dealers pay tax on their stashes of illegal drugs.
The new tax would apply to cocaine, heroin and marijuana, and could be
paid with pre-bought "tax stamps" affixed to the bags of dope.

Update #5:  Libertarians like myself will point out that this is all between consenting adults.  Of course, that did not stop Eliot Spitzer from trying to prosecute Dick Grasso for a pay package that was approved by consenting (and quite sophisticated) adults.

Update #6: It is being reported that Spitzer will resign.  QED folks.  Spitzer uses the state police to spy on political rivals and the press continues to call him a squeaky clean reformer.  But pay for sex with a consenting adult, and your gone. 

Update #7:  Tom Kirkendal has been all over Spitzer for years.  He writes:

But I hope that the most important lesson that
Spitzer's political career teaches us is not lost amidst the glare of a
tawdry sex scandal. As with Rudy Giuliani
before him, Spitzer rose to political power through the misuse of the
state's overwhelming prosecutorial power to regulate business
interests. In so doing, Spitzer manipulated an all-too-accommodating
mainstream media, which never misses an opportunity to take down an
easy target such as a wealthy businessperson. Spitzer is now learning
that the same media dynamic applies to powerful politicians, as well. 

However, as noted earlier here,
where was the mainstream media's scrutiny when Spitzer was destroying
wealth, jobs and careers while threatening to go Arthur Andersen on
American Insurance Group and other companies? Where was the healthy
skepticism of the unrestrained use of the state's prosecutorial power
to regulate business where business had no available regulatory
procedure with which to contest Spitzer's actions?

For much of my adult life, Ralph Nader was my least favorite living Princeton alum*.  But Eliot Spitzer may be challenging for the title.  Sure, I never really liked Spitzer when he was at Princeton, but I never really liked any of the student government types, as evidenced by the fact that I led a mass-mooning of one governing council meeting (yes, I know, you are shocked that this sophisticated commentator could have been so immature).  Besides, Spitzer was the butt of one of Princeton's great jokes and works of performance art, when he was defeated by the Antarctic Liberation Front.

But since his tenure as AG and now governor of New York, the guy has turned from an irritating joke to a real threat to freedom.  His abuse of the AG job for personal aggrandizement is legend, and, after having been given a free pass by the press in that job, he is finally being cornered for various ethical violations. 

So it is with great satisfaction that I read today that Spitzer was forced to back off his plan to tax out of state Internet sales, abandoning his unique view that an affiliate program created a corporate presence in-state.

Update:  A Spitzer roundup of sorts at Reason.

Eliot Spitzer has been caught using the power of his office to go after his enemies.  Wow, what a surprise.  Frequent readers of this blog will know I don't think much of Spitzer, who tended to overreach his office all the way back to student government at Princeton.  What I found surprising, though, was this quote from the NY Times:

The report was a blow to Mr. Spitzer, a former prosecutor who came into
office less than seven months ago with a reputation for integrity and
who promised to bring a new ethical climate to Albany.

A reputation for integrity with whom?  Mr. Spitzer, as attorney general, was a sort of liberal bookend to George W. Bush, consistently exceeding the limits of his authority to achieve some goal he argued trumped a narrow reading of the law.  His supporters, just as Bush's do, justify his overreaching his office on the grounds that the ends justified the means, in Spitzer's case the assault on various corporate and Wall Street firms liberals were frustrated that Washington would not pursue.  Critics like myself argued that many of his crusades were abuses of his prosecutorial office to pursue personal vendetta's and to generate headlines to position himself for a run for governor.

I would think that any reasonable definition of "integrity" when applied to an attorney general would include a respect for the letter of the law, something that even his supporters would probably admit Spitzer cast aside when he thought it was for a good cause.  The only interpretation of "integrity" I can come up with in the context of this article is that Spitzer had integrity in the past because his abuses of power were in pursuit of causes the author agreed with.

Look, this is the man that began supporting campaign finance limitations, which tend to support incumbents, starting the day after he became an incumbent.  This is the man who described himself as governor thus:  "I
am a fucking steamroller and I'll roll over you or anybody else".  This is the man who involved the State of New York and the courts in a private compensation deal, just to burnish his populist credentials.  In the latter trial, he explicitly left prominent Democrats who had the most involvement with the deal alone and indicted side figures who were Republicans.  Tom Kirkendall has a much longer bill of particulars against Spitzer here.

I propose that we waive the normal waiting period and induct Eliot Spitzer right away into the statist hall of fame.  Few men in modern government have been able to demonstrate such a lack of respect for the rule of law and individual rights vs. their own power than Mr. Spitzer:

New York Gov. Eliot Spitzer was unabashed on Wednesday
about declaring himself a "steamroller" and the most accomplished
governor in the history of the state after three weeks on the job.

"I
am a fucking steamroller and I'll roll over you or anybody else," the
Democratic governor told Republican Assemblyman James Tedisco in a
private conversation last week, the New York Post reported on Wednesday.

"I've done more in three weeks than any governor has done in the history of the state," Spitzer also said, the Post reported. 

Asked at a news conference if the comments were inappropriately boastful, Spitzer replied tersely, "No. Next question."

Twenty-five years ago at Princeton, Mr. Spitzer's uniquely irritating ruling style inspired the normally silent and apathetic majority to rise up in an incredibly humorous coup, let by the Antarctic Liberation Front.

Readers of this blog know that I consider most campaign finance laws to in fact be carefully crafted incumbent protection acts.  Incumbents in major political offices get millions and millions of dollars in free advertising just from their day-to-day ability to get on the evening news.  This free publicity combined with strong name recognition means that upstarts often have to seriously outspend the incumbent to have a chance of defeating them.  So campaign finance laws act as a powerful protection device for these incumbents, limiting the amount upstarts can spend while in no way limiting the incumbents's ability to use their office (and taxpayer money) to shamelessly promote and publicize themselves.

And there is no one better at using elected office to shamelessly publicize himself than new NY Governor Eliot Spitzer.  So absolutely no one should be surprised at this:

Moving swiftly in his efforts to change the culture of
Albany, Governor-elect Eliot Spitzer said Thursday that he would
unilaterally stop accepting campaign contributions greater than
$10,000, which is less than a fifth of the $50,100 in individual
donations currently allowed by state law.

Mr. Spitzer also said that from now on he would refuse to take
advantage of several notorious loopholes in the state's campaign
finance laws that allow corporations and limited liability companies to
circumvent donation limits by contributing through subsidiaries and
other related entities.

Note that he only took these steps just days after he was elected governor the first time.  Spitzer knows that no one can probably offset the PR advantage he wields, but to be on the safe side, this is the opening shot to make sure that no future challenger is going to have the cash to threaten his position in office.

Generally, Eliot Spitzer irritates the hell out of me.  But I will say for one brief period in college, Spitzer, as the butt of a huge campus-wide joke, brought be great mirth.

Aspiring Governor, self-proclaimed substitute for the SEC, and enemy of Antarctica Eliot Spitzer is about to start a criminal trial against Dick Grasso, former head of the NY Stock Exchange (NYSE). 

And I have no idea why. 

Certainly it has something to do with Mr. Grasso's pay, which Mr. Spitzer thinks was too high.  The NYSE, for those who may be confused, is a private institution owned by some of the richest and supposedly financially savviest people in the country.  The owners or seat-holders select a board of directors, who in turn approved Mr. Grasso's pay package.  I imagine that there are folks who think that the stock exchange is a public institution or uses public money, but it is not and does not, though it does have some quasi-regulatory responsibilities.

The best I can figure it, Mr. Spitzer is arguing that Mr. Grasso somehow tricked these babes-in-the-woods on the board, which include naive and inexperienced people such as CEO's of Fortune 50 companies, heads of investment banks and brokerage firms, and a former US Secretary of State.  Now, I can imagine that the government might have an interest if Mr. Grasso somehow cooked the books to inflate his pay fraudulently.  In fact, the director of HR has admitted he did not give the board all the relevant information, but board members have already said that they did not rely on this person for their information.  Remember that most of the folks on the board themselves get paid in a similar league as Mr. Grasso's pay, so most saw it as a competitive offer, at least until negative publicity caused all the cockroaches to run for cover.

So Mr. Spitzer is starting criminal proceedings against people who he thinks negotiate too well for themselves or are paid more than they are worth.  I am sure glad he wasn't doing this 15 years ago.  I remember getting hired as a new Business school grad at McKinsey & Co. as a consultant for some ridiculous amount of money, and thinking "I can't be worth that!  I don't know anything!  Are they really paying me to tell experienced CEO's what to do?"  Boy, what panic I would have had if I had known there was an AG out there looking to send overpaid people to jail!

The WSJ has a really fascinating editorial that I will link to, though a paid subscription is required (update:  Try this link instead, it may get you there free or maybe here).  The overall picture is one of, if there was a crime at all, the wrong people are on trial.  Here is a taste:

In early June of 2003, when the
membership of the [NYSE] compensation committee changed, the Webb interviews
begin to tell a story of wider board dysfunction. And if there was a
screw loose in this new operation it appears to be not Mr. Langone --
who by all the interview accounts ran a tight ship -- but his
successor, [former New York State Comptroller Carl] McCall. This is a vital point, given that Mr. Spitzer, a
fellow Democrat, did not name Mr. McCall in his lawsuit. What toppled
Mr. Grasso was not the $139 million payment the board approved in
August of 2003 but the later news that Mr. Grasso was owed $48 million
more. Many board members said they didn't know about this payment and
for that many blame Mr. McCall.

The interview notes are rife with comments that Mr.
McCall had little inclination or ability to understand the contract he
took over negotiating. An outside consultant, William Mischell, said
that when he and Mr. Ashen explained the contract to Mr. McCall, "the
meeting . . . lasted somewhere between 15 to 30 minutes, with McCall
making or taking phone calls throughout and not really focusing on the
details." Mr. McCall himself told investigators that "the subject of
executive compensation was entirely foreign to him" -- yet he refused
offers of help to explain the contract to others. When asked why Mr.
McCall was chosen to chair the committee rather than someone more
knowledgeable, Mr. Karmazin told the Webb team that it was an "image
thing" (the NYSE had just instituted new governance standards).

Mr. McCall's excuse for not giving directors
"additional details" about the $48 million or other aspects of the
contract -- which were clearly stated in the text -- is that "he was
not aware of any." That's because, as he admitted, he didn't read the
full document, even before he signed it. Moreover, at least one
director, Van der Moolen's Mr. Fagenson "asked McCall twice to make
certain that all pension plans and other plans were going to terminate
on this date, but stated he never received any updates from McCall on
these issues."

As Mr. McCall went to brief the full board on Aug. 7,
2003, he was given talking points that referenced the extra $48 million
but didn't read these or tell the board. J.P. Morgan Chase CEO William
Harrison noted that Mr. McCall "did not appear to understand the
proposed payout very well. . ." Avon CEO Andrea Jung noted that "McCall
struggled" and that "others were more able to answer questions." Mr.
Karmazin described Mr. McCall as "flustered," and said he did a
"horrible job" of explaining the numbers. Leon Panetta, former Clinton
White House chief of staff, speaking of a later McCall performance, was
blunt: "Carl knew nothing."

The article sums up the Board this way:

The board, which was often
dysfunctional, was stocked with celebrities from diverse
constituencies, many of whom didn't understand the NYSE or take their
responsibilities seriously. Former New York State Comptroller Carl
McCall, who brought Mr. Grasso's contract to fruition, was viewed by
his colleagues as incompetent and, in the words of Goldman Sachs CEO
Henry Paulson, not "financially sophisticated." Former Secretary of
State Madeleine Albright felt she shouldn't "question" the pay; Bear
Stearns CEO James Cayne admitted he "tuned out" of the pay proceedings;
and Van der Moolen Vice Chairman Robert Fagenson suggested the only
real concern was "how this was going to reflect on the Board."

But the interviews also make clear that more astute
board members, such as Mr. Langone, former Viacom President Mel
Karmazin, and former Merrill Lynch Chairman David Komansky, took it
upon themselves to understand Mr. Grasso's contract, and offered strong
arguments for why they'd paid him as they had. "We knew what we were
doing when we paid him. We did it purposely, and we believed it was the
right compensation," Mr. Komansky said in his interview

In this environment, Grasso is culpable, how?

I have often criticized Aspiring Governor Eliot Spitzer for his overreaching tactics aimed more at keeping himself on the front page (and in the hearts and minds of voters) than in really catching bad guys.  However, one of the reasons Spitzer gets support for his tactics is that there seems to be an enforcement vacuum at the SEC in pursuing corporate and banking fraud.  The Adelphia case brings us a great example, courtesy of Professor Bainbridge.  It appears that the Rigas family is going to get off with forfeiting some of the assets they plundered - no jail time and no fines!

The Securities and Exchange Commission today announced that it and the United
States Attorney's Office for the Southern District of New York (USAO) reached an
agreement to settle a civil enforcement action and resolve criminal charges
against Adelphia Communications Corporation, its founder John J. Rigas, and his
three sons, Timothy J. Rigas, Michael J. Rigas and James P. Rigas, in one of the
most extensive financial frauds ever to take place at a public company.

In its complaint, the Commission charged that Adelphia, at the direction of
the individual defendants: (1) fraudulently excluded billions of dollars in
liabilities from its consolidated financial statements by hiding them on the
books of off-balance sheet affiliates; (2) falsified operating statistics and
inflated earnings to meet Wall Street estimates; and (3) concealed rampant
self-dealing by the Rigas family, including the undisclosed use of corporate
funds for purchases of Adelphia stock and luxury condominiums. The USAO also
announced that it had entered into a Non-Prosecution Agreement with Adelphia and
had settled forfeiture claims against Rigas family members.

Under the settlement agreement, which is subject to the approval of the
District and Bankruptcy Courts for the Southern District of New York, the Rigas
family members will forfeit in excess of $1.5 billion in assets that they
derived from the fraud, including the Rigas family's interests in certain cable
properties.

This is absurd.  The stay-at-home wife of the treasurer of Enron is in the slammer right now but the Rigas's get to walk?  Note that the Rigas's last year were convicted of numerous criminal charges, but there sentencing was delayed so they could negotiate.  I guess they negotiated pretty well.  In my understanding of the cases, this is a much worse case of fraud than Enron.  These guys looted the company for personal gain, and raped their minority stockholders.   Shame on the SEC.

Okay, how could you resist that title for a post.  My thoughts on this subject were spurred by an article by Fox News about pirates that won election to the NC State student government:

By an overwhelming majority, the Raleigh school last week elected a candidate
called "The Pirate Captain" student body president, giving the old sea dog 58
percent of the vote.

"We're quickly goin' to bae getting our plank started, get the simple things
out of the way," The Pirate Captain (), real name Whil
(or maybe "Will") Piavis, a junior, told supporters after election results were
unveiled Wednesday night.

Many outlets have reported this story with incredulity that such an unserious person could be elected to so lofty an office.  Several student government weenies at NC State agreed:

More sober student-government types seemed appalled that a character straight
from "SpongeBob SquarePants" had crashed their party.

I was not surprised in the least, for two reasons.  First, I think many Americans in general are fed up with the self-importance of most legislators.  This goes double for students and the student government.  In fact, I think it is nearly a law of nature that the more trivial the government post, the more self-important the occupants of that post are.

The second reason I was not surprised was that we had a similar event twenty years ago at Princeton where the student government was taken over by the Antarctic Liberation Front:

Back when I was an undergrad
at Princeton, one of my fondest memories was of a bizarre Student Body
Governing Council (USG) election.  The previous USG administration,
headed by none other than fellow Princetonian Eliot Spitzer, had so
irritated the student body that, for the first time in memory, the
usually apathetic voting population who generally couldn't care less
who their class president was actually produced an energetic opposition
party.  Even in his formative years, Spitzer was expert in using his
office to generate publicity, in this case frequent mentions in the
student newspaper that finally drove several students over the edge.

The result was the incredibly funny and entertaining Antarctic
Liberation Front.  I wish I had saved their brochures, but their
proposals included things like imposing a dawn to dusk curfew on the
school and funding school parties by annexing the mineral rights
between the double yellow lines of the US highways.  All of this was
under the banner of starting jihad to free Antarctica.  The ALF swept
the USG election.  This immensely annoyed Spitzer and other USG
stalwarts, who decried the trivialization of such an august body.  The
pained and pompous wailing from the traditional student council weenies
(sounding actually a lot like liberals after the last presidential
election) only amused the general student population even further.
After a few student-council-meetings-as-performance-art, the ALF
resigned en mass and life went back to being just a little bit more
boring.

Yes, that Eliot Spitzer, the overreaching Aspiring Governor of New York.  He is STILL mad about getting dissed in this student election, and whined about it twenty years later in print.  And don't miss fellow Princetonian Virginia Postrel's reflections on the ALF and Eliot Spitzer.

The "news" today is that Eliot Spitzer has announced he is running for governor of New York.  This is about as surprising as the "revelation" that Barry Bonds took steroids.  Duh.  The "AG" job is not nicknamed "Aspiring Governor" for nothing.  Also, Spitzer represents the worst of a new trend of AG's using their prosecutor role to engage in lawsuits more for their media and publicity value rather than an sense of public service.  Why else would Spitzer involve himself and the AG office in a compensation dispute between two private parties, except for the fact that the two private parties are very high profile in NY.

OK, but what is this Antarctica thing?  Back when I was an undergrad at Princeton, one of my fondest memories was of a bizarre Student Body Governing Council (USG) election.  The previous USG administration, headed by none other than fellow Princetonian Eliot Spitzer, had so irritated the student body that, for the first time in memory, the usually apathetic voting population who generally couldn't care less who their class president was actually produced an energetic opposition party.  Even in his formative years, Spitzer was expert in using his office to generate publicity, in this case frequent mentions in the student newspaper that finally drove several students over the edge.

The result was the incredibly funny and entertaining Antarctic Liberation Front.  I wish I had saved their brochures, but their proposals included things like imposing a dawn to dusk curfew on the school and funding school parties by annexing the mineral rights between the double yellow lines of the US highways.  All of this was under the banner of starting jihad to free Antarctica.  The ALF swept the USG election.  This immensely annoyed Spitzer and other USG stalwarts, who decried the trivialization of such an august body.  The pained and pompous wailing from the traditional student council weenies (sounding actually a lot like liberals after the last presidential election) only amused the general student population even further.  After a few student-council-meetings-as-performance-art, the ALF resigned en mass and life went back to being just a little bit more boring.

If you think I am exaggerating in saying that the Spitzer-led student council types had a whiny reaction to this bit of fun, you should know that Spitzer was still whining about it 20 years later to the New Yorker magazine.  Virginia Postrel, also a Princetonian at the time, had a similar reaction to mine here, and fisks the New Yorker article.