I watched this interview with Eliot Spitzer by Fareed Zakaria from March of this Year on Zakaria’s show called GPS.  I was impressed with Spitzer’s view and his depth on the subject of the economic collapse.  (There are two other portions also on YouTube.)  A few salient points he made:

There was not a want for regulators or regulations. Spitzer felt we had more than enough regulators to do the job, but were missing people with the judgment and creativity to do the job.  New regulations and new agencies will not be a substitute for judgment.  We passed new regulations such as Sarbanes Oxeley after the dot com bubble and it did nothing to prevent the housing bubble.

Spitzer referred to a problem with “libertarians masquerading as capitalists” advocating no regulation.  But capitalism in his judgment REQUIRES prudent regulation.  At the same time he warned against “populist legislation” that would strangle the innovations of capitalism and economic growth.  He faulted the firms on Wall Street for selling self regulation and he equally faulted the legislators for buying it.

He also noted how the financial sector lost its bearings and instead of being a mere conduit to those who actually create wealth, became deluded into thinking they themselves could create wealth.

The bonuses paid by AIG at that time were wrong in his opinion, but the dollars were small compared with the bailout money that was passed on to counter party investors such as Goldman Sachs.  With so many people taking a haircut it was just wrong to reimburse their positions 100%.

Spitzer had investigated AIG as Attorney General of New York (before he was governor) for misleading accounting practices and noted that the board had pushed Hank Greenberg out. He was doing his job more aggressively than the federal prosecutors.

It is unfortunate that Spitzer will be remembered for his sexual indiscretions when his investigative work proved to be prescient.