Academic

As we wait to see what the G20 will suggest re: regulatory reform (my bet is a college of supervisors; an unlikely alternative is a treaty - and a nonstarter is the UN - creating comprehensive global regulation), let's take a gander at Eliot Spitzer's views on regulatory reform.  Spitzer has done more for the federalization of financial regulation than anything except for the current unpleasantness, given his track record of holdups of Wall Street institutions from Albany.  I'm assuming he enjoyed exercising that authority, because, indeed, the takeout is: let's not throw out the baby with the bathwater, we already had all the regulatory authority we needed.

I also think regulatory reform would dispense with the old system - at least entirely - at its peril. 

So it is odd to agree, to some degree, on a bottom line and think that the reasoning is totally, 100% dishonest.  It is absolutely untrue, of course, that I-banks were subject to all the regulatory authority that Washington needed (they were supervised for capital adequacy only to the degree they wished).  I don't know what Spitzer is thinking with regard to being able to peer inside AIG's counterparties, but the CDSes AIG wrote for them were explicitly left unregulated, and many of those counterparties were unregulated hedge or PE funds.  And acting like we haven't been bailing out those alternative asset classes by bailing out Citibank and AIG is willfully obtuse.  The equity holders have gone to circa zero.  The management has been fired or is working for a dollar.  And the workers are being fired en masse.  These stakeholders haven't been bailed out at all.  The whole point is that we've bailed out the creditors and counterparties, and many of them are unregulated.

Spitzer knows how to begin a screed, I'll give him that.  Indeed, you might argue that he is making Slate interesting again.

It doesn't strike me, however, that he is answering these questions accurately.