Want to make a big splash to bolster your chances in a political campaign? A tried and true strategy for some attorneys general has been to champion a populist position by exploiting the legal system for publicity. Just look at the lead up to the launch of former New York AG Eliot Spitzer gubernatorial campaign with his attacks on Wall Street.
And that appears to be the playbook California Attorney General Jerry Brown is using in a lawsuit accusing State Street (NYSE:STT) of cheating the state's two largest pension funds, the California Public Employees' Retirement System and the California State Teachers' Retirement System, of at least $56.6 million.
However, CNBC's Michele Caruso-Cabrera wasn't afraid to ask Brown if that was indeed the case in an Oct. 20 interview on CNBC's "Power Lunch."
"I don't dispute that $56 million is a lot of money, I don't dispute the merits of the suit," Caruso-Cabrera said. "But, you had a big press conference. You're coming on CNBC - all this surrounding publicity over this $56 million. What do you say to people who look at this and say this is a perfect example of the demagoguery that attorney generals use when they want to run for governor?"
That evoked an annoyed response from the California attorney general.
"OK, first of all if you don't want the interview, shut it off," Brown replied. "It was your idea, OK? So that's pretty silly. You feed off this just like any other media outlet."
According to Brown, the CNBC host's query was nothing more than a symptom of the "Eastern financial elite."
"This is real money," Brown said. "This is $56 million. They did not treat the state fairly in accordance to their fiduciary duty. And we're disclosing it, and you're interested in it, and we're reporting it. I think it's kind of symptomatic of the insensitivity and the arrogance of this Eastern financial elite - that you say, ‘Oh $56 million - why don't you just suck it up and forget it?'"
But Caruso-Cabrera broke it down on her CNBC.com blog how much that $56 million is if you look at the pension funds as a whole.
"But in the context of a state that is $26 billion in the hole, and state pension funds of nearly $300 BILLION in assets, this smacks of Attorney General Brown trying to make headlines," Caruso-Cabrera wrote. "$56 million over 8 years? In a state of 36 million people, that works out to 19 cents per person per year. Brown wants another $144 million in penalties too. That's another 50 cents. Shoot, in his heyday, Elliot Spitzer would have used this lawsuit to wipe his nose after sneezing. Can't you hear Spitzer now?: ‘Jerry, how quaint. Let me show you how it's really done when you want to be governor.'"
Caruso-Cabrera responded to Brown's accusation of "Eastern financial" elitism and disputed his claim she wanted the people to "suck it up."
"I did not say, ‘Suck it up,'" Caruso-Cabrera said. "I do not dispute $56 million is a lot of money and good for you."
Caruso-Cabrera's "Power Lunch" co-host, in an effort to show he wasn't buying Brown's notion that this lawsuit was totally isolated from politics asked if the California Attorney General wasn't, in fact, running for governor of California.
"No, I didn't say that," Brown said. "What I got out of this - this is a whistle-blower case that was brought to our office a year ago, whether I was running for governor or going to retirement - it doesn't make any difference. The only difference I guess is you may be more interested."
If publicity for a political campaign wasn't Brown's intention, Jack Chang of The Sacramento Bee is giving him political points anyway. And according to The (San Jose) Mercury News, Brown holds a fundraising advantage over his chief rival, San Francisco Mayor Gavin Newsom. As of June 30, Brown has raised $7.3 million in contributions, compared to Newsom's $1.2 million. And the Mercury News he has continued to outraise Newsom since then, "collecting about $750,000 in contributions of $5,000 or more, compared to about $500,000 taken in by Newsom."
