This Weekend’s Unanswered Questions (TWUQs for 041605)

The first installment in an irregular series of mysteries and pseudo-mysteries this inquiring mind would like to have answers for:

• Why doesn’t New York Attorney General Eliot Spitzer ever indict any of the “criminal” business types he’s stepping on and over to get to the Governor’s office (or is it the 2008 Democratic VP slot)? I’ll use “criminal” in quotes until I start seeing real trials. (HT to the April 13 Wall Street Journal Editorial Page) *
• Why do many, if not most, company health plans still issue insurance cards with Social Security numbers on them? Don’t these people have lawyers?
• Why is the Small Business Adminstration in the venture capital business, when their efforts have led to $2.7 billion in losses over 10 years, and over $11 billion in exposure on current deals? (HT again to the April 13 WSJ Ed Page–they were having a very good day)
• Why should we believe death/estate tax repeal opponents who now object to how much it will cost (see this post for why it won’t cost as much as feared, and may be a net positive when all factors are considered), when they opposed it in the supposed “surplus” days of 1997-1999? (HT to April 14 WSJ Ed Page–make that a very good week)
• Will we still be talking about asbestos litigation, which first appeared in the 1960s, in the 22nd century?

* - When Business Weak chimes in against a Democrat (which Spitzer is), he must be getting out of control (link may be available briefly, after that requires paid subscription):

So much for innocent until proven guilty. No charges have been filed against AIG. Spitzer had yet even to interrogate Greenberg when he publicly slammed the company’s actions before millions of TV viewers. Instead, Spitzer has been busy serving up red meat to a scandal-weary public — and pressing any corporate director who has ever heard of Sarbanes-Oxley to think about settling. That may be a good way to bring a swift conclusion to the AIG mess, but it’s bad for American traditions such as due process and the rule of law.

It doesn’t take a Harvard-educated lawyer (which Spitzer is) to recognize that winning a battle in the court of public opinion is easier than winning in a court of law. And Spitzer has had an amazing run using the threat of public vilification. Another weapon is New York’s expansive Martin Act, giving him extraordinarily broad subpoena powers in financial fraud investigations, which usually unearth tons of documents that can be used in civil suits. These tools have induced miscreants to settle charges and pay hefty fines. Think Merrill Lynch (MER ), Salomon Smith Barney (C ), and the mutual-fund industry.

We wouldn’t find this expedient path to justice so worrying except that Spitzer seems more and more convinced that the end always justifies the means. Indeed, in a speech in Dublin last week to the Law Society of Ireland, he seemed actually to question the right of AIG executives to refuse to answer regulators’ questions. As any lawyer knows, simply invoking the Fifth Amendment protection against self-incrimination is not an admission of guilt. It’s an option used by many defendants for many reasons — and a tenet of the of the American legal system.

The editorial’s highlight sentence in the magazine (not provided online) says: “No AG ought to be cop, judge, jury, and prosecutor all in one.” Ouch.

UPDATE 2: (April 18) A WSJ letter-writer notes “I don’t recall Mr. Spitzer saying a word about the price of dot-com stocks while the bubble was expanding. No politician stepped into that maelstrom because anyone who did would have faced the wrath of hysterical investors who were making money every day and would have reacted badly to anyone who tried to ruin their party.” And angering a President of his own “party,” I might add. More wealth (hundreds of billions) “disappeared” while NASDAQ dove from 5000 to 1200 than perhaps during any other non-wartime period in human history.