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>> Coming up on "Need to Know", a talk with New York state
attorney general element, a man who makes national news and we
have the business section with the Democrat and chronicle and
the first installment of the "Albany Report" report with Karen
DeWitt stay right here for need it know.-
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>> The most they can say is that I'm ambitious, I'm
grandstanding, whatever.-
I say fine.-
If they say I'm wrong.-
Then I think seriously and say are we wrong.-
As long as we are right and the issues are important to the
public we will keep doing what we are doing.-
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[Captioning Made Possible by the U.S. Department of Education]-
(For "Need to Know")-
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>> Thanks for joining us.-
I'm Michael Caputo.-
Attorney general Eliot Spitzer was making news this week
again.-
This time for suing the former head of the New York Stock
Exchange for excessive pay.-
This after his crusade against Wall Street bankers gained him
attention in 2002.-
Democrats in New York think Spitzer can be governor.-
He wasn't always so high profile.-
In 1994 he was fourth out of four Democrats in a run for
attorney general.-
Backed with family finances four years later he won the job and
has held it ever since.-
He uses his authority in far reaching ways going after
corporate polluters outside the state and investment bankers.-
By 2002 "Time" magazine called him crusader of the year.-
Critics say he is grandstanding using his position for higher
office.-
During a 20-minute interview recorded earlier this week he
addressed the critics, talked about his high profile cases and
his stances on controversial issues.-
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>> With us is New York state attorney general Eliot Spitzer.-
Thank you for joining us.-
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>> My pleasure.-
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>> I want to read a quote to you from "Time" magazine.-
William tail who are mentioned as a friend said debating with
Eliot Spitzer is like wrestling with a grizzly wear r bear.-
You don't hope to win just to get out alive.-
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>> I think he won a few of the debates.-
He was a college roommate and you stay up late fighting over
substance.-
I think there's an intensity that I bring to what we do in the
A.G. office or debating a point of politics or philosophy and
the idea is to win and prove your points.-
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>> Where does that come from?-
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>> Being the youngest kid, I don't know.-
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>> I understand you were an athlete.-
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>> I do have a theory that most lawyers are frustrated athletes
and if we had our choice we would be on the professional fields
in tennis, football, soccer or whatever.-
Since I was not close to good enough so I became a lawyer.-
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>> Is it true when you were a child that you would go to the
dip are table and you would have to prepare a topic of debate
for the whole family and you would have this discussion around
the take and that you were leaned on to come up with topics?-
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>> But my dad didn't have great tolerance for small talk so
rather than come home from school and talk about what and
whatever was said or make fun of somebody else, he would say
let's talk about an issue.-
So he would look to each of us on a given day and Eliot come up
with an issue and it had to be serious.-
And it had its virtue Tuesday because it lent to more
substantive and thoughtful demeanor at dinner conversation.-
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>> Do you remember any conversations?-
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>> I repressed them all.-
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>> I'm not going to let this go for a second.-
There are people who say you are ambitious and they use that in
the negative way, competitive and they ice that sometimes
negatively.-
How do you respond to those folks?-
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>> I am what I am.-
I'm not into -- I'm into self-criticism in the sense that when
we bring cases that we are hard on ourselves.-
In terms of my own psychology, I am who I am and what I have
done I believe has been right in terms of cases we brought, how
we pursued them.-
People will always try to impute motive.-
Even the grass grass cases.-
We are doing it because we are right and we are going to win
and get big money from him that shouldn't be his.-
If people want to ascribe an intensity, ambition, I can't
dispute them because only I know who I am.-
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>> That is the news, I suppose, of the week, the Grasso case.-
You are suing Dick Grasso for his compensation.-
You said it was too excessive, the system itself had conflicts
of interest and that there was no information given to the
compensation board that made this decision.-
The question I have for you, this is, this Grasso case, is it
emblem in the particular of problems with C.E.O.'s in general
or unique in some way?-
-
It is emblematic and I began with that point.-
I said this is the first instance where we have actually parsed
the process whereby a C.E.O.'s compensation was determined, in
this case in excess of $200 million for running a not for
profit.-
And that we saw was not at all a pretty picture.-
It was a picture of abuse, conflict of interest,
misinformation, deception, and it makes me wonder whether a
broader issue of C.E.O. compensation, give you a number, C.E.O.
compensation has expanded from 41 to one with respect to
ordinary works to 500 to 1.-
It has exploded.-
You wonder if we were to begin to pick the compensation
consultants, we would see a similar story and would it be
pervasive.-
One distinguishing factor which is why my office is involved
with grass grass, we wouldn't have jurisdiction to say the
C.E.O. of G.E. is being paid too much.-
That is a matter for the corporation.-
Even though Grasso said this is nothing more than a commercial
dispute between me and my plaur employer.-
He is wrong.-
Because they are a not for profit.-
Our jurisdiction hinges on.-
That they benefited.-
They took advantage of that -
>> You can't go after other C.E.O.'s for excessive compensation
so what should that tell us?-
What should it tell the greater population about C.E.O.'s?-
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>> It should say we have gone through an rather where C.E.O.'s
were the imperial C.E.O.'s, unchecked in their decision makings
because boards, committees, investment bankers didn't fulfill
the mandate they are supposed to in terms of checking the power
of C.E.O.'s in the corporate decision-making process of and
what we have been trying to do in the past three or four years
-- this is the broader sweep of all of these corporate
investigations and cases, civil and criminal -- what we have
been trying to do is revitalize corporate government in a way
to reestablish balance in that decision-making process.-
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>> Why not then if you are seeking to do that, why go after the
compensation board?-
Why not go after -- I mean I know you have heard their
criticism that it is politics because after prominent
Democrat.-
-
>> Let me answer that directly but your larger question.-
We went out Ken langone, the three defendant are Grasso, Ken
and the New York Stock Exchange itself because of improper
governance.-
Ken was the chair of the comp committee and participated in the
improper information knowingly passing incorrect information to
the comp committee and the board.-
So we have named as a defendant anybody with respect to whom we
had evidence of deceiving others.-
Those who were deceived may have failed to live up to their
obligation to ask adequate questions.-
But that is a very different manner than affirm diffle
deceiving.-
That is the distinction 2003 drew.-
Had we wanted to go after being on the committee we would have
named all of the C.E.O.'s of the major investment banks that
were on the committee because they were the reinyents of the
proper information rather than the generators.-
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>> Karl McCall, too.-
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>> Absolutely.-
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>> Some will say they made a mistake, this is a system that is
not working, go after them.-
Make an example of them.-
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>> My job is and I think that I have done this is to highlight
the problems and determine where the responsibility exists, not
living up to your job does not mean you have civil liability.-
There's a distinction there.-
They didn't do the job we would to hope they would do.-
That doesn't mean you sue them.-
You sue them had he they affirmatively deceive.-
They are going to be, they collectively the group that served
on the comp committee and board, rightfully embarrassed by the
fact that not only those in the complaint but those who will
emerge ars the case proceeds because it will become evident
that they were not sufficiently diligent in their jobs.-
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>> Do you see this settling?-
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>> No.-
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>> You don't?-
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>> I do not.-
This goes to trial and we will win.-
The reason for that simple.-
I -
>> Do you think grass grass will go to trial with it?-
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>> I will go to trial.-
I will not settle.-
The reason is we are stashing a principle.-
And the principle is that those who behave the with way Dick
Grasso and Ken langone did deserve to pay back what they got I
will properly.-
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>> Let me ask you about another settlement.-
Richard strong, the founder of strong capital amount who fulet
the mutual funds, he did settle a suit with you.-
He is going to pay $you 60 million out of pocket and not be in
the industry, the financial industry any more.-
You have been criticized for not going after him with criminal
charges.-
Why didn't you?-
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>> Let me make a point.-
I see with this all hubris.-
I don't think there's been any more, anybody more aggressive in
prosecuting the array of corporate issues from the investment
banks, mutual funds, stock exchange, over the last five years.-
That is why you quoted from time and they called me crusader of
the year.-
There will always be some outliars, who say you should have
gone this much harder.-
You should have indicted Merrill lynch and Citigroup.-
And the system would collapse.-
They are wrong.-
There has to be reasoned, modulation and some proportion a
signality between the wrong and how you deal with it.-
And that what we have done.-
We have calibrated so that as egregious as the Wall Street
offenses were and I laid them out and the SEC was asleep and
NYSE was doing nothing.-
We have done more to reveal and highlight and prosecute the
problems.-
But there's a point beyond which you don't want to destroy the
system -
>> Why settle with strong and not Grasso?-
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>> Very different.-
Strong violated his fiduciary duty, gained $1.8 million.-
He's paying back $60 million.-
He is admitting wrongdoing.-
He issued a statement which is almost unique in terms of the
contrition and admission of error and he is banned from the
industry for life.-
Put that on one side and then the legal analysis which is that
the timing which he was doing, timing being the improper
trading, in and out efforts to take advantage of ash tragedy
evaluations in the mutual fund context was not clearly
criminal.-
In fact, no criminal case has ever been made with respect to
timing and until I broke the scandal last year no civil case
had been made.-
So you can't bootstrap an offense that had been neither viewed
as a civil or criminal wrong suddenly to a criminal wrong.-
But Grasso, who had benefited to the tune of $200 million is
not only refusing to give a penny back, he demands an apology
from the New York Stock Exchange and refuses to acknowledge
that he abused his position by taking advantage of conflicts of
interest.-
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>> There are insurance brokers who say they have gotten
subpoenas from your office.-
Are you turning to insurance brokers and the compensation that
they pay out?-
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>> I have to be very careful and want to be careful about what
I say.-
It is a matter of market disclosure a certain number of
insurance companies and brokerage houses felt they had to
disclose that they received subpoenas of the issue we are
looking at is whether brokers in the insurance context who have
a fiduciary duty to the individual who comes to them and says I
want you to obtain insurance for me for whatever concern I
have, have that fiduciary relationship Burks then turn around
and receive an income stream from the insurance company -
>> I don't want to say kickback, do I?-
-
>> You can, I can't.-
It is a kickback in that it directs the business this a
particular way.-
I don't want to use a term that loaded with other implications
yet until we have fully investigated this because the brokerage
outfits say we disclosed it.-
I'm not sure how much they do or don't.-
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>> How close are you to being done with the investigation?-
-
>> Far off.-
This is something that -- one of the downsides to what has
happened in the office the last couple years is that when we
serve subpoenas on people they figure, say an S. evident C.
disclosure obligation is every investigation we are doing
becomes known much earlier in the process.-
And the gestation period that is required is not there.-
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>> Let me change the issue slightly.-
Gay marriage is something that is in the news as well.-
Your interpretation of same-sex couples and the law is that it
is not allowed under the constitution, but -- -
>> Not allowed under New York state law.-
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>> But unions could be recognized if they are done outside,
could be recognized here.-
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>> Correct.-
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>> Then we have the Massachusetts situation where they are
performing now same-sex couple marriages Burks they said
basically we are not going to do any for people out of state.-
You have to prove that you are moving to Massachusetts or be
here.-
What does that leave same-sex couples from Rochester or
anywhere else?-
In limbo?-
-
>> In limbo, which is very unfortunate.-
But it will be remedied only when the courts begin to the parse
the fact patterns.-
Let's deconstruct T. the New York state law and I think it
quite clear on this matter, does not recognize or author
solemnization of marriages between same-sex couples in New
York.-
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>> They use the term -- it -
>> It uses the terms husband and wife, man and woman.-
Some advocates have tried to argue and I understand their
desire and I personally said I have no problem, I'm four
same-sex marriage as matter of personal philosophy but the law
is the law.-
I have to enforce it.-
The state law doesn't authorize it.-
New York state has been presented with a question several times
whether or not it should recognize same sex union that was
entered into in another state.-
Civil union this Vermont.-
The courts have thus far said yes.-
The Massachusetts case is one step beyond that because the
Massachusetts legislature passed a law in 1913 that says
Couples can only be married in Massachusetts if the marriage in
Massachusetts would have been authorized in the state where
they actually reside.-
So they are going to have to figure out whether the couple from
New York that goes to Massachusetts could be married in New
York -- -
>> And the give has said I'm going to enforce T. -
>> The governor of Massachusetts.-
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>> Mitt Romney says we are going to enforce it.-
If clerks are going to do it we are going to come down on
them.-
What are you going to say to the same-sex couple that says I
wish the attorney general were far more vocal, far more out
front for us than this because it leaves us in limbo?-
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>> Here is what I have said and had I will continue to say and
I have to say.-
I said one as a matter of personal philosophy I think it is
fine and proper for same-sex couples to exist.-
If I were writing the law and voting for it that is what I
would do.-
But my oath of office is to enforce the law.-
It is not for me to individually write it.-
The legislature does that.-
The courts can interpret it and I say will are constitutional
challenges that had proceedthrough the court.-
So either the legislature has to amend the law or the courts
are to interpret the current law and say it is violative of
various principles of constitutional theory that are embodied.-
Then we will see where we go.-
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>> If you were governor would you call for a change in the
law?-
-
>> Yes, if I are the governor I would say we should permit
under New York law same sex marriages.-
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>> There are plenty of Democrats who think you will be running
for governor.-
Basically what you said I have a job I'm doing now.-
When I do this job I will do it well and we will see where it
goes down the road.-
If I asked you now if you are run for governor is that the
answer you are getting?-
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>> That's the answer.-
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>> You are holding a fund-raiser on your birthday at the E.S.P.
end stone, just for attorney general?-
-
>> For undesignated state wide office.-
The reason is that what I have said I'm thinking about it.-
And I'm not going to indicate until some time the end of the
year, early next year, what my thinking is on the matter but
I'm raising funds for a statewide race and will determine down
the road.-
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>> You are one of the leading Democrats in the state.-
This sthate is five to three in terms of enrollment weighted
for Democrats.-
Yet Democrats don't have the governor's office.-
Look at the city where the democratic enrollle is larger they
don't have the mayor's office.-
What is wrong with the party.-
Why isn't the party winning?-
-
>> I'm not sure there is anything wrong with the party.-
There is a pen due Lem swing.-
Registration alone is not the only barometer of success and we
have both United States senators Democrats, attorney general is
Democrat, the speaker of the state assembly is a Democrat.-
Republicans have some positions certainly.-
Governor, president pro tem and others.-
The public likes balance.-
They were looking for a Republican after Cuomo.-
We will come back and win the positions.-
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>> How does a Democrat win that position back?-
-
>> I don't think -- -
>> Governor.-
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>> I don't think that the public right now is as partisan as
most of us think it is or thinks of itself as Democrat or
Republican.-
They think of what values do I see in somebody who wants to be
in a position of leadership.-
Has that person demonstrated those values through his to her
actions, their track record, is it an articulation of what the
state needs down the road.-
And if a person, Democrat or Republican, begins to think
seriously about issues of education, infrastructure, job
development, how we will bring the state back that we are once
again an empire state and the hardbed of growth where we have
sagged over the last 20 or 30 years, whoever articulates how we
get back there and thinks creatively about that will be the
next governor regardless of party.-
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>> Talk about critics who say that Eliot Spitzer over time has
been grandstanding because he is so out front and outspoken and
beyond New York eight statement what do you say?-
-
>> Point to one case where we have been either wrong or where
we haven't highlighted an issue of enormous importance to the
public.-
I was grandstanding when we highlighted the research issues on
Wall Street.-
It was the single most important issue with respect to how 100
million Americans invest their money.-
Was I grandstanding when it came to the mutual fund?-
Tens of billions of dollars will be saved in fees and cash back
it investors.-
The issue of Grasso I was asked to do the case by the
co-chairman of Citibank who is now the chairman of the board of
the New York Stock Exchange.-
So in politics you get a thick skin or you don't survive.-
So I read it and I say fine.-
If the most they can say is that I'm ambitious, I'm
grandstanding, I say fine.-
If they say I'm wrong I think seriously and say are we wrong?-
As long as we are right and the issues are important to the
public we will keep doing what we are doing.-
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>> I want to thank you for taking time and spending time with
us on "Need to Know."-
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>> Thank you.-
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>> We are going to go right now to the business section with
the Democrat and chronicle -
>> With us is Ellen Rosen business editor for the Democrat and
chronicle.-
Thanks for being with us again.-
Let's talk about Kodak's involvement in liquid fuel cells.-
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>> What they have been trying to do is use the expertise that
it developed Atco Dakota park, assets that will be needed less
as the film business is declined and find other uses.-
Bring in contract work.-
They have a registry of making and using chemicals so they have
landed the first big contract making chemicals that are used in
fuel cells.-
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>> They can be used, I guess, for cell phones, -- -
>> All kinds of things -
>> Electronic things.-
So clearly that can be a growth industry.-
Do we know that this means work for us?-
It seems the potential is there.-
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>> The potential is will but Kodak says it is too early to know
if it will and or save jobs.-
But they have announced this to continue using the technology
they have developed at the park.-
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>> That is important, just keeping Kodak park moving and viable
is very important.-
But the brookings institution.-
It is looking at Rochester.-
First, what is the brookings institution, and why that
important?-
-
>> Is it a nonpartisan think tank, does studies on the economy,
research on social friends and things like that.-
What they want to establish here is a council.-
They have a few locations in other cities like Los Angeles,
Chicago and they want to establish one here.-
It needs a fair amount of corporate support, individual
investments so they had an event here to test waters to see if
will is a possibility to do that here.-
The benefits would be they would do a couple of research
reports out of here .-
It is a prestige thing.-
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>> It does give us a high profile.-
-
>> They say they would even do some research on this area to
help the universities, help some major companies here.-
They would do some things that we would be interested in.-
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>> So the answer for us in that regard is press team.-
Maybe it gives us better press team.-
The Infotonics center which has just started in Canandaiga,
Duncan Moore will be leaving there.-
Why?-
Was it expected that he would be leaving?-
-
>> It we'll was a surprise to a number of people.-
Basically what the board of the Infotonics center says this
represents is a move from being a start-up company to a
full-fledged running entity.-
Duncan Moore is on loan from the university of Rochester and he
is going to return to his professorship.-
He got the place up and running and now they want somebody to
devote full-time efforts.-
So David Smith, who will retire from Kodak in July, will be
stepping up and taking over.-
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>> So did you expect him to be leaving this early?-
-
>> I think it came as a surprise but they say it is a Strategic
move on the part of the center to manufacture to the next
level.-
That Duncan got them to where they are now.-
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>> Jillian's Jillian's, in the high falls area T. actually a
chain I suppose.-
And the chain is filing bankruptcy and reorganizing.-
But not in Rochester.-
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>> They are based in Louisville and they have 33 outlets.-
They have arranged for buyout of 30 of them by two other
restaurant chains.-
Rochester is not among them and they say it is because this
particular outlet is underperforming, not doing the kind of
business they needed to do.-
So they are looking for an independent buyer.-
They seem pretty optimistic had they can find one and keep it
open.-
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>> So we don't know when it will close.-
We know it will, I guess -- -
>> No, bankruptcy doesn't mean you are closing.-
It means your reorganizing your assets so they are open and
looking for a buyer.-
No changes is in sight now.-
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>> I hate to bring it up but we have seen places come and go
down in high falls.-
We saw a change over with empire brewing company with a big
restaurant that opened and a lot of fanfare about on the ground
up that particular place and it left suddenly.-
So I don't know what it means for high falls aid guess we are
still in that watch and see period?-
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>> Probably to certain extent but you have to remember the
restaurant business in general is risky and as many or more go
out of business as stay N. A.C.C. longtime restaurant is a
novelity.-
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>> Tell us what you have this Sunday in the Democrat and
chronicle.-
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>> This Sunday we are looking at the rise of the credit unions,
they are giving the commercial banks a run for their money.-
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>> Thank you, he willen.-
Today begins a new feature, a discussion about how New York
state works or doesn't work, it is called the "Albany Report".-
We would like to bring in Karen DeWitt corporate for WXXI
AM-1370 and NPR stations around the country how are you.-
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>> I'm good.-
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>> We talked to the attorney general and Eliot Spitzer
certainly has the aura with Democrats feel how does he do it?-
-
>> Well, I think it is pretty interesting that Eliot Spitzer
has really stayed above the fray of Albany politics.-
As you know, the budget is late for the 20th year in a row, a
lot of dysfunction, mini-scandals keep popping up with
lawmakers being indicted, some going to jail for bribery,
questions with respect to sexual misconduct.-
Previous attorney generals would propose bills and get them to
the legislature and he stays away from the whole Albany mess.-
But it was interesting, I was vacations in Maine last summer
and I picked up the bane gore Maine news and there was a big
picture of him talking about the latest crusade he was doing on
Wall Street.-
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>> Yes, he is ever are I where D. ever where I -- he is
everywhere.-
There is no budget.-
So what are lawmakers doing?-
-
>> They are having a lot of fund-raisers.-
They are on track for breaking the record of 200 fund-raisers
in a session.-
They had 198 that they had or scheduled feel they are kind of
paralyzed over the budget and, more importantly, this court
case, court decision that says they have to reform school aid
and probably pay billions more into the schools and they have a
July 30 deadline and they have just unable to come to agreement
between governor Pataki and the assembly Democrats on that
issue and it getting late.-
-
>> Just few second left but what do you think, will we see a
budget in the next few weeks?-
-
>> It is hard to say at this point.-
It may end up that the courts are going to do school aid and it
will go to a court appointed special master that will do their
job for them.-
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>> Karen, thanks E. we will check this with you next week and
next time around we will feature a look at the progress made in
fighting lead poisoning.-
We hope you join us.-