No, he didn´t agree to an interview, but we have still managed to decipher some of Eliot Spitzer's views on regulatory restructuring. What a capitalist!
Mr. Spitzer, once the governor of New York, now a columnist for Slate.com ("It sucks," he told reporters at a Christmas party), has been pontificating lately on the shortcomings of all things rescued. Writing once every other week or so, he has begun to sketch an outline of the priorities he´d have followed if he´d been able to influence the government´s response to the financial crisis.
Mr. Spitzer´s "if I did it" scenarios involve smaller institutions, harsher bailout terms, and more stringent transparency requirements. What´s interesting is his mix of unwavering demands on banks and other financial firms to spill their secrets and a steadfast faith in the healing powers of market competition.
Observe-his alternative to propping up institutions that are "too big to fail:"
A more sensible approach would focus not just on rescuing pre-existing financial institutions but, instead, on creating a structure for more contained and competitive ones. For years, we have accepted a theory of financial concentration...that capital depth would permit the various entities, dubbed financial supermarkets, to compete and provide full service to customers while cross-marketing various products. That model has failed...our dependence on entities of this size ensured that we would fall prey to a "too big to fail" argument in favor of bailouts.
Two responses are possible: One is to accept the need for gigantic financial institutions and the impossibility of failure ...The better policy is to return to an era of vibrant competition among multiple, smaller entities-none so essential to the entire structure that it is indispensable.
Mr. Spitzer has been paradoxically arguing for the forceful breakup of big organizations alongside the liberation of the marketplace for competition.
He echoed the sentiment in a column condemning Congress´ handling of the auto bailout. "Progress comes from competition, not from oligarchs or bureaucrats," he wrote, and then suggests having the three companies submit competing applications for two bailout packages, with judgments based on "a combination of retained/gained market share, return on capital, jobs retained, and mileage and environmental efficiency gains."
This auction process should be accompanied by radical transparency. Before we fund the auto companies, we need to know whether they will live up to the promises they will be making, and that means discovering how truthful they have been in the past. We should demand immediate public release of the following information: projections, at each point over the past two decades, of what each company then believed it could produce in terms of fuel efficiency if we funded their ongoing research; all information pertaining to why they did not fund such research; all information about environmental measures that might have been taken and their consequences; and all contacts with energy companies and other auto companies about the impact of any of the steps above.
Mr. Spitzer doesn´t seem happy with the way things are going so far. "Every effort to rebuild an economy in free fall has been one moment too late or one step too short," he declared in a piece that ran two days before Christmas. "The remedies, though expensive, have so far at least failed to address underlying structural issues."
In his world, as opposed to the one in which government officials seem to be operating in at the moment, the best of both extremes is possible. Stringent transparency requirements don´t restrict innovation, nor do limits on the size and scope of a financial institution. Competition is key, just like it was in the models of the laissez-faire leaders like former Fed Chairman Alan Greenspan. But somehow, unlike the Greenspan days, a Spitzer regime wouldn´t be accused of being lax. It seems the man still thinks he can have it all.