When Eliot Spitzer was rampaging in New York issuing scathing press releases, making childish demands, calling people names he seemed like a fire on the other side of the river. A problem for those people over there.

But it turns out he created problems for people right here in Los Angeles, too. Important people.

The background: More than three years ago, then-Attorney General Spitzer went on the warpath against American International Group, the New York insurance company. He accused AIG’s longtime chief, Maurice “Hank” Greenberg of fraud on national television. Of course, Spitzer never backed up his accusations against Greenberg with any criminal charges. But that was not surprising; Spitzer’s record in court was dismal. Instead, his main strategy was lots of public bullying, which, thanks to a compliant and generally unquestioning press, was quite effective. So when he threatened to file a criminal charge against the company if it didn’t fire Greenberg, directors pushed out their patriarch in March 2005.

Now, Greenberg was the guy who operated the company for 38 years, who methodically built it from something puny to something huge. It’s been said that he may have been the only person who could effectively run it. That may have been pretty close to accurate. AIG discovered its new CEO simply wasn’t up to the task.

AIG’s stock has been chopped in half, going from the low to mid-$60s before Spitzer began creating problems to the upper $20s last week. It’s lost a third of its value in the last two months.

And that’s when the floating embers from Spitzer’s fire landed in Los Angeles. AIG stock is widely held here.

Eli Broad, who had sold his SunAmerica financial company to AIG and has a good deal of AIG stock as a result, is down about $750 million, including trusts and foundations, since early last month alone. As Deborah Crowe reported in last week’s Business Journal, Steven Udvar-Hazy, and Louis and Leslie Gonda are among others on the Business Journal’s Wealthiest Angelenos list who have taken haircuts, at least on paper, because of the AIG problems.

That’s why Broad, with good reason, agitated for change and got it. AIG swapped out chief execs a couple of weeks ago.

Greenberg has said he will not return to the company, but Broad sounded wistful when he talked to the Wall Street Journal. He praised Greenberg, saying he “built AIG into an international insurance and finance service company without peer.”

Regardless of who runs AIG, Angelenos could be forgiven for crossing their fingers for the renewed success of the company, considering that Broad has been generous with his money locally and a good portion of his wealth depends on AIG.

Now, of course, you could make a counterargument. You could say AIG may have run into problems even if Spitzer had never made Greenberg a target. Maybe so. We’ll never know what might have happened. But to make that argument is kind of like saying your dog might have fallen off a cliff if Spitzer hadn’t run over it.

A better counterargument is that Greenberg, an aging man, should have done a better job of grooming a successor.

Still, the best argument is that since Spitzer didn’t exactly have a smoking gun and maybe not even a warm gun, he should not have made Greenberg a target.

Charles Crumpley is editor of the Business Journal. He can be reached at

[email protected]

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