Commentary

Occupy Albany: New York’s Far-Left Attorney General

Eric Schneiderman had no prosecutorial experience when he became New York attorney general in 2011. But he did have the unwavering support of progressives. As Ben Smith noted in a Politico profile, Schneiderman had “spent his career building an ideological infrastructure for the left.”

In a 2008 article for The Nation, then-state Sen. Schneiderman declared that the left needed to pursue a more “transformational” style of politics. The real challenge was to “slow down the bone-crushing machinery of the contemporary conservative movement.”

The Occupy left was smitten and helped make the difference in 2010’s five-candidate Democratic AG primary. Schneiderman went on to win by 11 points against Republican candidate Dan Donovan.

Last year, he won re-election against GOP challenger John Cahill, this time by a 13-point margin.

Since becoming the state’s top prosecutor, Schneiderman has made a show of remembering the people who put him in office.

Since becoming the state’s top prosecutor, Schneiderman has made a show of remembering the people who put him in office — labor advocates, community activists and the sorts of Upper West Siders for whom progressive ideology is not just an Election Day predilection but a way of life — and helping them get what they want.

For his chief of staff, the newly sworn-in attorney general chose not some career legal type but the up-and-coming political director of Unite Here, the hotel union. His director of advocacy, like his top campaign advisor, had previously worked for the politically formidable Service Employees International Union, or SEIU.

One of Schneiderman’s biggest publicity hits came early in his tenure, when he derailed an all-but-finished deal between the other 49 attorneys general and large mortgage servicers over “robo-signing” and related practices, saying it wasn’t punitive enough toward the companies and should be renegotiated.

After winning concessions in that battle, he pulled a sequel by barging into a nearly completed settlement between investors’ lawyers and Bank of New York Mellon, bringing new allegations against the bank. New York state wasn’t even a party to that case; Schneiderman’s office said that it was representing the public interest under what is known as the doctrine of parens patriae, or the state suing on behalf of its citizens.

Many of the lawyers who had negotiated the deals — including, in the robo-signing case, some of Schneiderman’s fellow state AGs — were furious. But the body of opinion leftward of Sen. Elizabeth Warren rejoiced.

Beyond the confines of Washington, DC, the attorney general of New York is, in some ways, the public official most feared by America’s business community. What’s more, New York’s AG can draw on the uniquely prosecutor-empowering Martin Act of 1921.

Nicholas Thompson, now of The New Yorker, summarized the scope of the Martin Act in Legal Affairs 11 years ago: “It empowers [New York’s AG] to subpoena any document he wants from anyone doing business in the state; to keep an investigation totally secret or to make it totally public; and to choose between filing civil or criminal charges whenever he wants.”

Like his predecessors, Schneiderman has doggedly pursued what’s now a decade-long dispute over charges filed by Eliot Spitzer against Maurice (Hank) Greenberg, former chairman and CEO of insurance giant American International Group. In 2005, Spitzer charged Greenberg and others with fraud over a reinsurance transaction between AIG and Berkshire Hathaway’s General Re that allegedly was set up to confer no real risk, thus evading accounting rules.

Spitzer used the splashy charges to pressure the AIG board into removing Greenberg as chairman and CEO. In the years since, all the criminal charges and most of the civil ones against Greenberg have been thrown out or dropped, as has the monetary relief sought — leaving only two remaining civil charges, which may reach trial this summer.

Schneiderman’s remaining civil charges against Greenberg rest heavily on the testimony of a former General Re executive whose credibility a federal appeals court panel has questioned. Attorney

David Boies, representing Greenberg, gained access in February to formerly sealed investigators’ notes that his firm says cast further doubt on the executive’s testimony.

The Wall Street Journal editorialized that the revelations were “reason enough to throw out the entire case,” a position echoing that of former Gov. George Pataki and the late former Gov. Mario Cuomo.

Though his office has given up its fight for criminal penalties and for damages, Schneiderman is still seeking to bar Greenberg, now 90, from working in the securities business or serving as director of a public company.

Politically, it’s hard to argue with Schneiderman’s success. Bill de Blasio is just starting to explore a place on the national stage, but the New York attorney general is already there, with a high-profile job not limited to a city constituency.

Walter Olson is a senior fellow at the Cato Institute. This article is adapted from the Summer 2015 issue of the Manhattan Institute’s City Journal.