When one door for a misguided investigation closes for Aspiring Governor Eliot Spitzer, he just opens another one. Although misdirected, no one can say that Mr. Spitzer is not persistent.
On Thursday, U.S. District Judge Sidney Stein of the Southern District of New York denied Mr. Spitzer’s request for more information from the Office of the Comptroller of the Currency as a deadline approaches for Mr. Spitzer to respond to the OCC’s recent lawsuit against him. The OCC is seeking an injunction against the Lord of Regulation from using his subpoena power to obtain nonpublic credit score and loan information from national banks that are involved in the sub-prime mortgage market.

Meanwhile, in public filings made on Friday, Moody’s Corporation disclosed that Mr. Spitzer’s office had issued subpoenas in May seeking documents and other information about the ratings of certain mortgage-backed securities and credit enhancement evaluations that the company conducted between 2000 and 2003, and also requested information more recently related to Moody’s ratings of the financial strength and subordinated debt of reinsurance companies going back to 1999. Guess which other Spitzer investigation that latter request relates to?
Although one can only speculate as to Mr. Spitzer’s purpose in all of this, my bet is that he is developing a theory that American International Group, Inc., Berkshire Hathaway’s General Reinsurance Corp. and other reinsurance companies misled Moody’s and the other rating agencies — who then turned around and misled the investing public — regarding the true financial nature of the finite risk insurance transactions that have been the focus of Mr. Spitzer’s witch hunt of AIG and Maurice “Hank” Greenberg.
Given the large number of Mr. Spitzer’s witch hunts of various business interests these days, Moody’s and the other rating agencies will probably soon begin issuing ratings on the quality of his various investigations. Then, Mr. Spitzer could investigate the rating agencies’ ratings of his investigations. The loop would be complete.