The New York Pension Probe: So What Else is New?

I hate to be cynical, but I'm trying to understand all the outrage over the pay-for-play scandal erupting in New York, encompassing everybody from the former head of the Liberal Party to Steve Rattner, the reporter-turned-investment banker-turned-Obama advisor.

Folks, pay-for-play is the rule, not the exception, in municipal finance. I wrote about it at length in (self-promotion deleted). It's the way the muni-bond game is played, politicians being politicians and Wall Street bankers being Wall Street bankers, and party hacks being party hacks.  Bear Stearns was big in pay-for-play, naturally enough.

The difference is that people are being caught in the New York probe, and that criminal charges are being brought against Raymond Harding, the Liberal ex-boss. Usually, pay-for-play is totally, completely legal. It's one of those things that are slimy, disgusting, yet somehow were forgotten when the laws were written. Damned if I know why. Maybe it's because part of pay for play is that lawmakers line their pockets with investment bank campaign contributions.

It's wonderful that Andrew Cuomo, New York's increasingly kick-ass attorney general, is pursuing pay for play. But let's not kid ourselves that this is anything more than a slightly more extreme version of "business as usual."

Bear Stearns, for instance, is up to its keister in the Rod Blagojevich mess over in Illinois. A former Bear managing director pleaded guilty in February "in a wide-ranging indictment that accused him of helping convicted influence peddler Stuart Levine in a pay-to-play scheme at the state hospital planning board." The IRS is probing whether Bear and other banks "conspired to overcharge municipalities such as Atlanta; Fargo, North Dakota; and Johnson City, Tennessee, for contracts to invest bond proceeds and then split the profits."

Etc. etc. Old news. Still, it's nice to see some pay-for-players marching off in handcuffs.