Spitzer's No McCarthy

New York Attorney General Eliot Spitzer is a lot of things. Tohis supporters, he is a hero–a crusader rounding up criminals whocheated the public. To his detractors in the insurance industry, heis a grandstander–a publicity hound and political opportunistlooking to ride a tempest in a teapot to the governorship.

Whatever you think of him, Mr. Spitzer is no “terrorist,” and hecertainly bears no resemblance to former U.S. senator and communistwitch hunter Joseph McCarthy. Yet that is exactly what a prominentindustry official charged in a verbal attack last week during asession on ethics at the American Association of Managing GeneralAgents' annual meeting.

The accuser was Ernst Csiszar, president of the PropertyCasualty Insurers Association of America, who switched in the blinkof an eye last year from being the country's most prominentregulator to heading one of the most powerful groups representingthose he regulated.

Mr. Csiszar–who abruptly quit as both South Carolina's insurancewatchdog and top dog at the National Association of InsuranceCommissioners to take over PCI–did cut Mr. Spitzer a tiny bit ofslack. “The reality is that [Mr.] Spitzer did find practices in theindustry that are deplorable,” he conceded, “but he has taken itfurther.”

Mr. Csiszar raised a valid criticism of Mr. Spitzer's standardoperating procedure. Mr. Spitzer loves to beat his targets intosubmission by hammering them in the press–a particularly effectivetechnique with public companies whose stock can be buried with badpublicity. “This is corporate terrorism–using the threat ofindictment. There is no due process and he is ravaging theindustry,” he said, adding “this smacks of McCarthyism.”

This is where I must hop off the bash-Spitzer bandwagon.

First of all, no one should toss around the “T” word socavalierly. Mr. Spitzer is no terrorist. He certainly isn't killinganyone, and he's not attacking innocent victims–given the number ofguilty pleas and big-name resignations his probe has secured forshameless bid-rigging, incentive fee abuse and balance sheetmanipulation. (Ironically, AIG's former kingpin, MauriceGreenberg–forced to quit because of Mr. Spitzer's probes–made thesame insensitive mistake when he once derided trial lawyers asterrorists, for which I took him to task.)

In addition, I always cringe when someone plays the “McCarthy”card. For those of you with short memories or poor grasps ofhistory, Sen. McCarthy's claim to infamy was his penchant forslandering innocent people by falsely accusing them of being acommunist–holding up what was probably an envelope full of blankpaper as “evidence” of their “crimes.”

Mr. Spitzer's envelope is quite full, thank you. Indeed, he hasa paper trail of damning e-mails and memos demonstrating criminalbehavior. He might be a bully (which prosecutor isn't?), but he isnot bluffing or lying. He caught the industry red-handed inoutrageous criminal misdeeds.

Besides the obvious slander, what bothers me about this episodeis how the industry still doesn't get it. The public was blatantlydefrauded by some of the biggest players in the business, and thereform effort is only beginning.

Demonizing Mr. Spitzer won't solve anything. He didn't rig anybids, steer any accounts to earn bonus fees, or cook any books. Ifhe hadn't come along, who knows how long the corruption would havecontinued? Mr. Spitzer is just doing his job. Insurers and brokersshould concentrate on doing theirs–cleaning up their act andgetting this nightmare behind them.

“Mr. Spitzer is just doing his job. Insurers and brokers shouldconcentrate on doing theirs–cleaning up their act and getting thisnightmare behind them.”