David Paterson has been a constant presence throughout the financial service industry’s unravelling. Yesterday, he announced a plan for New York to regulate the credit default swap market, which is the market used for short selling corporate bonds. This comes a week after Paterson allowed AIG to borrow $20 billion from itself.
If his plans succeed, in an ironic twist, Paterson might leave the office of New York State governor with the reputation as a Wall Street reformer when his predecessor was elected for that exact reason.
If Eliot Spitzer hadn’t cracked under Albany’s pressure and cheated on his wife with a high-priced whore, he’d still be in office and perhaps riding this financial meltdown to a presidential nomination in 2012 or 2016. It’s not hard to picture Spitzer thumping his chest, deriding Wall Street’s greed and deception, boosting his national profile while the financials withered away. Instead, it’s the previously low profile blind governor who might improbably gain enough attention to easily secure a second term in office.
Would Eliot Spitzer be able to negotiate with Wall Street firms as deftly as Paterson, while they collapsed? We’ll never know, but it’s hard to imagine the process going smoothly, considering the enmity between the street and Spitzer. Perhaps saying something like, “I’m putting a spike” through Dick Fuld’s heart might not go over so well right now. Then again, when a former Goldman exec is offering to pay above market value for toxic assets, it might be nice to have a loud, nasty contrarian voice in the room.
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