Legal News

Eric Dinallo: Aping the Boss?s Style?

By Dan Slater

Last month, we shined a little light on Eric Dinallo, the New York State Insurance Superintedent and the former head of investor protection in Eliot Spitzer’s AG’s office, as the savior of the stock market for his effort to bailout bond insurers Ambac and MBIA.

Now the WSJ has a behind-the-scenes look at Dinallo’s tactics which seem to us a bit, well, Spitzerian. To wit, here’s the top of the story:

At 11 a.m. on Jan. 23, more than 30 top Wall Street executives gathered for an emergency meeting called by New York Insurance Superintendent Eric Dinallo, who wanted to cobble together a rescue plan for troubled bond insurers.

Mr. Dinallo left no doubt who he thought was responsible for the mortgage meltdown that has caused securities guaranteed by the insurers to fall in value as the housing market weakens. “You people created this mess,” he told senior officials of Wall Street’s top firms, including Citigroup Inc., Goldman Sachs Group Inc., Merrill Lynch & Co. and Morgan Stanley. “And the headline on this is going to be: ‘How Wall Street Ate Main Street.’”

A day after the meeting, reports the WSJ, Dinallo put out a statement cautioning that the situation may take “some time” to reslove. He also hired Perella Weinberg for advice. A spokesman for Dinallo’s office played down Dinallo’s strong-arm tactics. “He decided that since he was asking the banks for help, he had to have an open and honest discussion of the risks, so everyone could make an informed decision. His goal was to educate, not threaten.”

Full post as published by Law Blog - WSJ.com on February 06, 2008 (boomark / email).