Though the first paragraph may seem a bit misleading since HVCC didn’t give rise to AMCs, they’ve been around for years, there is an interesting point by the author regarding the creation of national policy.
‘First Do No Harm’ Should Apply to Attorneys General
Two articles from June 9 hammer home the same lesson: Nothing good comes from the governance of American commerce through the New York attorney general’s office.
In the article “Appraisals Roil Real-Estate Deals in the U.S.” (U.S. News), we learn that a deal that Fannie Mae and Freddie Mac agreed to last year under pressure from Attorney General Andrew Cuomo has already given rise to an industry of “appraisal-management companies.” The firms take a sizable cut of up to 40% of appraisal fees to dole out appraisals, leaving the appraisers with smaller fees to do more work. All of this will, of course, lead to higher appraisal costs without any evidence that the quality of appraisals will improve.
In the article “Stock-Research Reform to Die?” (Money & Investing), we get an update on the deal that former New York Attorney General Eliot Spitzer cut with big Wall Street firms in 2003 to spend $460 million to provide free, independent research to retail clients. The former SEC official who implemented the program was quoted as saying that “a lot of money was spent and not very many people were using” the research. A grand total of 16 people retrieved reports from Credit Suisse in one year, for example.
The genius of the Founders was in creating a system that, however imperfect, reaches results through the checks and balances of the three branches of government, combined with a system of federalism in which the respective states and the federal government operate within their spheres. The present and former New York attorneys general think that they have designed a better mousetrap: governance by their office alone, for the whole nation, through the threat of indictment or other legal action that the target businesses cannot afford. I’ll go with the Founders. Can anyone stop this before the New York attorney general thinks up the next great idea?
Printed in The Wall Street Journal, page A14