Friday, July 31, 2009

Andrew Cuomo: Elliot Spitzer Without the Hooker Problem

New York Attorney General Andrew Cuomo just issued a report on the billions of dollars in bonus money given out to employees at financial firms that received federal bailout money.

I know, it looks horrible. It seems that companies are taking a golden tin cup provided to them by the feds and handing it over to their already well to do employees.

But let's take a step back and see what's really going on here.

As New York Attorney General, Andrew Cuomo has the authority to investigate and prosecute violations of New York civil and criminal laws.

In this case, he is investigating firms that received federal bailout money. The State of New York did not kick in a penny towards the bailout of any of these firms.

Therefore, Andrew Cuomo has no jurisdiction over what these firms did with the bailout money. Nor does his report allege any possible violations of federal law that can be used by federal officials to investigate further.

Cuomo issuing this Wall Street bonus report is tantamount to him investigating bank robberies that took place in Missouri. Actually investigating Missouri bank robberies would be a more prudent use of the New York Attorney Generals time, because with a bank robbery at least a violation of some law occurred. With the bonus money, before his investigation began, Cuomo knew that he would find no violations because the feds did not put bonus restrictions as a requirement to receive bailout money.

So what is really going on here? Two things: One, Andrew Cuomo is a bright man. Before his investigation began, he knew he had no jurisdiction, and that he would find no violations of New York law. But he investigated anyway. Why? For purely populist reasons. Andrew wants to be seen as a man of the people. A man who looks out for the little guy. You think the common man gives a rat's ass about jurisdictional issues? Of course not. But he does care about millionaires receiving handouts.

The second thing is that Andrew thinks that all banks should pay their employees based on the bank's overall results. Banks on the other hand, want to be free to pay their people what they want, free from government intervention. This bonus report is meant to embarrass banks and to encourage lawmakers to make Wall Street like the NBA: by installing a salary cap courtesy of our modern day populist David Stern wannabe-Andrew Cuomo.

Every second that Andrew Cuomo spend on investigating Wall Street bonuses was time he should have been spending on possible violations of New York law. Moreover, as Attorney General, he should be glad about the bonuses: with a shrinking tax base, a lot of that cash ended up as NY tax revenues. Would Andrew Cuomo prefer that instead of paying bonuses, the firms put that cash into studying wind mill usage in Guam?

First Elliot Spitzer and now Andrew Cuomo. Both had geography problems. They thought the capital of the United States of America was in Albany.

Its still in Washington.

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