Spitzer scolds White House over insurance scandals

N.Y. AG criticizes Bush administration for not exposing insurance industry scandals

Excerpted From CNNMoney
May 3, 2005

SEATTLE (Reuters) - New York Attorney General Eliot Spitzer, who is running for state governor in 2006, criticized President Bush's administration Monday for failing to expose illegal practices in the U.S. insurance industry.

Spitzer, who spoke to the Society of Business Editors and Writers, discussed his insurance industry investigation and other ongoing probes, including examinations of the home mortgage industry and executive compensation.

He said that despite 10 insurance industry executives having pled guilty to fraud charges and having paid more than a billion dollars in restitution, "not a word has come out of the White House about maybe there being a structural problem in the insurance industry.

"This is an industry that does drive pricing in many sectors," Spitzer told reporters. "Insurance is integral to what we do."

The prosecutor, a Democrat whose investigations have rankled some in the business community, has been actively raising funds for his campaign, which he announced in December. Republican Gov. George Pataki has not said whether he will seek re-election to a fourth term.

Spitzer asserted that his ongoing investigation into Maurice "Hank" Greenberg, former chairman and chief executive of American International Group Inc. will prove that the executive misled the public about some of the company's dealings.

"I won't cave, and I won't settle in this case," Spitzer said. "The facts are going to be on our side."

In past statements, Spitzer has said he expected to reach a civil settlement with AIG rather than to bring criminal charges, and he has not made clear whether he would indict Greenberg.

Sources have said that Spitzer and the Securities and Exchange Commission are investigating a range of issues, from reinsurance deals with offshore entities to the suspect accounting for a transaction with Berkshire Hathaway Inc.'s General Re.

AIG has said it is cooperating with regulators.

On Sunday, the company said it would restate more than four years of financial reports, slashing $2.7 billion from its net worth. The stock recovered Monday, however, after investors saw the latest disclosures as being less damaging than originally feared.

Copyright 2005 Reuters

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