NEW Yorkers are being told, more than a year before the gubernato rial election, that Attorney General Andrew Cuomo can deliver the bold, decisive leadership the state needs to address its crises of fleeing jobs and soaring deficits. He is, according to his mostly glowing media accounts, the candidate who can save the state by replacing the hapless Gov. Paterson.
Funny, that’s not what his record shows.
Cuomo may not be hapless as Paterson, but in his years in public office — first as secretary of the Department of Housing and Urban Development for Bill Clinton, and now his two years as New York AG — Cuomo has rarely, if ever, taken any real risk or accomplished much beyond extending the status quo.
Take a case that’s in the headlines now, Cuomo’s jihad against Bank of America CEO Ken Lewis. At issue is whether Lewis properly disclosed the buildup of losses on Merrill Lynch’s balance sheet and the billions in bonuses he agreed to pay Merrill executives before BofA shareholders voted to approve the ill-fated merger last year. Maybe there’s massive fraud here. (For the record, BofA says the opposite is true.) Maybe Lewis purposely decided to hide the losses even after former Treasury Secretary Hank Paulson basically forced him to do the deal — which Lewis tried to back out of.
BofA officials are expecting Cuomo to file at least a civil charge against their CEO for failing to make proper disclosure; it’s the main reason Lewis recently announced his resignation by the end of the year. But for the life of me, I can’t understand why average New Yorkers, burdened by the nation’s highest taxes, have as their highest priority (or even care in the slightest) whether or not their AG goes after Lewis for whether he properly disclosed deal information to millionaire shareholders.
If you think Cuomo’s probe of Lewis is misguided, consider some of his other pet projects. He investigated the bond-rating agencies — which slapped all those Triple-A ratings on near-worthless mortgage debt — without forcing the raters to do anything more than make some marginal added disclosures. The raters’ conflicted business model of being paid by the companies they’re rating remains firmly intact.
His other white-collar probes of the mortgage meltdown appear pretty weak, too, especially since they began with such fanfare. A couple years ago, Cuomo sent subpoenas flying across Wall Street, especially at Bear Stearns, a leading player in selling investors the risky bonds backed by so-called subprime mortgages.
The result: a single civil charge against a small mortgage-appraisal company — while neither Bear nor any other major Wall Street firm has been touched.
Cuomo’s record isn’t all bad. Early in his career, he broke with conventional wisdom and issued a report showing how the homeless were afflicted with mental illness or drug addiction, rather than simply down on their luck. He also doesn’t act like his predecessor, Eliot Spitzer, who went on to become governor by publicly attacking the targets of his probes even before he filed often flimsy charges. Recall, too, that Spitzer’s downfall as “Client No. 9” of a pricey hooker ring began with an investigation launched by Cuomo’s office into the former governor’s use of state troopers to dig up dirt on a political rival.
But that’s where much of the good stuff ends. For all Cuomo’s soaring rhetoric and tough-guy image, what’s most striking about the AG’s office now is its lack of investigative zeal. For better and often for worse, Spitzer was at least willing to take on everyone. Cuomo, by contrast, picks easy targets like Lewis, Wall Street’s laughingstock after he overpaid for Merrill. Even Cuomo’s Troopergate probe never really lived up to its initial promise.
More than this, evidence suggests that for all his recent fury at Wall Street for its role in the housing meltdown, Cuomo himself deserves some blame for helping to initiate and then carry out a housing policy that later sowed the seeds of the mortgage bubble and caused the national recession.
This is his real badge of shame: his days at the Department of Housing and Urban Development. As I show in my upcoming book, as HUD secretary, Cuomo was a major player in prodding mortgage giants Fannie Mae and Freddie Mac to guarantee more risky loans, including subprime loans. Of course, no one person can spark a bubble. Rep. Barney Frank, other congressional leaders and the Bush administration allowed Fannie, Freddie and Wall Street to double down on their risky bets. But Cuomo’s involvement, first chronicled last year in a Village Voice profile, has gone largely ignored by the media.
All of which reminds me of a conversation I recently had with a Wall Street executive who thinks Cuomo is our state’s only hope, and noted that Cuomo recently gave a speech where he came out against more tax hikes to balance the budget.
“Andrew is a conservative when it comes to taxes,” he said.
My answer to him: Watch what he does, not what he says.
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CNBC on-air editor Charles Gasparino’s new book on the Wall Street meltdown, “The Sellout,” is due out Nov. 3.