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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.
Scott Elliott is an editorial writer and columnist for the Dayton Daily News opinion pages. He writes about education, city and suburban issues, politics, business, workforce and consumer issues.Home > Blogs > A Matter of Opinion > Archives > 2010 > July > 26
Monday, July 26, 2010
Editorial: Ohio wins, but how much can it collect?
Ohio Attorney General Richard Cordray’s settlement with AIG is a good win for Ohio. But how big a win isn’t clear yet.
AIG has agreed to pay $750 million to three Ohio public pension funds (the ones for state and local government employees, teachers, and police officers and firefighters).
The announcement came at about the same time that the federal government settled with Goldman Sachs over that company’s alleged misleading of investors about debts linked to subprime mortgages.
The Goldman Sachs case was the much more ballyhooed one, eyed as the possible debut of a new toughness at the Securities and Exchange Commission. And yet the feds got less, only $550 million.
And, as the Ohio attorney general is quick to note, the AIG $750 million comes on top of other money AIG has already agreed to pay in connection with the litigation, bringing the total to roughly $1 billion.
Unfortunately, AIG doesn’t have that kind of money sitting around. And it can’t use taxpayer bailout money without raising a lot of eyebrows. So, to pay off Ohio, it will have to sell stock, an iffy proposition. Ohio could still end up not getting all it’s owed.
Looking at the big picture, one might reasonably ask if the general public benefits from the settlement. After all, the general public is the main owner of AIG. The government took an 80-percent share as part of the bailout. This settlement isn’t likely to raise the value of AIG stock.
But the settlement is certainly in the interest of Ohio. State pensions have taken a beating from the collapse of Wall Street financial institutions (to the tune of about $800 million for five different pension systems). Then came the beating from the collapse of BP stock after the Gulf catastrophe. All that comes atop the growing recognition that the plans face major long-term problems — because they can’t keep paying the generous benefits retirees get — even in the absence of specific investment catastrophes.
The AIG lawsuit was actually filed by then-Attorney General Jim Petro in 2004. But it is much in the Cordray vein. He’s won a leading national role in a pending suit against Bank of America. He’s won almost a half billion dollars from Merrill Lynch.
The AIG case involves charges of stock manipulation, bid-rigging and accounting fraud dating as far back as 1999. A former AIG executive has already been convicted. That raises questions about just how much credit Mr. Cordray deserves for winning a settlement. A central part of his case was made for him.
Still, his useful aggressiveness cannot be denied.
Now he has joined with New York Attorney General Andrew Cuomo to seek “lead plaintiff” status in a case against BP. The idea is to show that BP misled investors with statements about its safety precautions and its ability to handle a major mishap. That sounds harder to prove than some of the charges against Wall Street firms. But, on the basis of the outcomes so far, nobody can charge that Mr. Cordray is proceeding frivolously.
He’s getting likened to Eliot Spitzer, whose successful pursuit of misbehaving corporations vaulted him from attorney general of New York to governor, before certain misbehavior on his part relegated him to the role of cable television talker.
Mr. Cordray has not simply decided to go after corporations as an easy way to get the government some free money. He’s responding to specific harm done to specific state institutions by specific behavior. That’s fair enough.
Still, if he could come up with a way to address the looming crisis in the state’s general fund — the much-noted deficit of $6 billion to $8 billion — listening couldn’t hurt.
Permalink | Comments (5) | Post your comment | Categories: Editorials, Martin Gottlieb, Ohio government
Editorial; Shuttle vote right for all, not just Dayton
In a front-page headline Friday, July 23, a newspaper near Florida’s Kennedy Space Center said “KSC Bid for Orbiter Hits Snag in House.”
The snag, which was good news for Dayton and Ohio, also happened to be good policy-making from a national viewpoint.
It certainly didn’t mean that Dayton will get the retired space shuttle it wants as a tourist attraction. But it does mean that Dayton remains in the running. And the selection process won’t necessarily be hopelessly distorted by the political power wielded by legislators from Florida and Texas, who have long focused on space matters.
The House Science and Technology Committee was considering the annual bill on NASA, the space agency. A version had been drafted by the committee leadership and staff. Not long before the deadline for submitting amendments to the draft, Ohio congressional staffers noticed a minor provision. It said that, in distributing the shuttles that are becoming available for display, NASA should give preference to communities with a “historical relationship with either the launch, flight operation or processing” of shuttles.
In other words, forces from Florida and/or Texas were trying to get a leg up.
The office of Rep. Charlie Wilson, a Democratic committee member from eastern Ohio, got busy. Rep. Mike Turner, not a member of the committee, called fellow Republicans who are on the committee. Michael Gessel, the Dayton Development Coalition’s man in Washington, provided staff work.
In the end, the committee’s 18-14 vote to undo the preference for Florida and Texas - a vote which surprised some advocates - wasn’t primarily a triumph of Ohio over those states. A lot of other states want to be in the running for the shuttle, too.
The vote represented a rare uprising against committee leadership. It was the closest vote on any amendment; usually amendments win big with leadership support or lose big with leadership opposition.
The Ohioans approached the fight the right way. They didn’t offer an amendment that would have favored Ohio by, say, giving an edge to a community connected to the “development” of the shuttles. (Some such work was done at Wright-Patterson Air Force Base). They basically left the choice of sites up to the head of NASA.
Also “geographical diversity” was added as a criterion.
This doesn’t mean that Congress is now out of the action. The legislative process isn’t complete. A pending Senate bill has a provision much like the original House provision. And, anyway, members of Congress find indirect ways to have impact, given their power over agencies’ budgets.
Still, in the end, a statement that Congress as a whole doesn’t want to limit consideration to Florida and Texas would be useful.
Dayton has a stellar case in the battle to bring a shuttle to the Air Force Museum: the popularity and importance of the free museum; the need for the space program to be visible in the Midwest; the crucial role of aviation in the history and economy of Dayton and Ohio. And Dayton has the Air Force behind it.
But other communities have their cases, too. NASA Director Charles Bolden (who did four shuttle flights himself) has a tough decision.
The decision should be decided on merit, not the outcome of a congressional brawl between states and sections of the country.
Permalink | Comments (11) | Post your comment | Categories: City of Dayton, Local History, Martin Gottlieb, National government, Wright Patterson Air Force Base
