25. Eric Dinallo, New York State Insurance Department
AIG Bailout
The American Lawyer
By Ross Todd
April 01, 2009
As the superintendent of the state of New York's Insurance Department, Eric Dinallo may have a less-than-inspiring job title. But his impact has been impressive. Over the course of 2008, Dinallo's department helped facilitate an $11 billion influx of capital into the insurance industry. And late last fall, when insurance giant American International Group, Inc., faced a liquidity crisis, executives consulted with the regulator about its legal options.
Dinallo, a former Paul, Weiss, Rifkind, Wharton & Garrison associate and lieutenant to Eliot Spitzer in the state attorney general's office, shares a reputation with his former boss as an activist regulator. Dinallo's activism, however, is of a distinctly business-friendly flavor. In November 2007, after troubles surfaced at the companies that insure municipal bonds, Dinallo phoned an executive at Warren Buffett's Berkshire Hathaway Inc. Dinallo suggested starting a new company to offer bond insurance to New York municipalities. In a little more than a month, the new Berkshire Hathaway company was licensed to sell bonds in New York; it made its first sale in early January 2008.
"Doing nothing is accepting the status quo, which may be the right choice at times," Dinallo says. "But I think what people in these crises want to see is their regulators being proactive and solution-oriented."
On the night of Friday, September 12, Dinallo received a phone call from the general counsel and CFO of AIG. The company faced liquidity problems due to a potential ratings downgrade. Dinallo and about ten of his insurance department colleagues spent the weekend at AIG's headquarters working on a potential transaction involving the state of New York and private equity players. As AIG's problems mounted and federal officials were brought into the mix, Dinallo and his staff vouched for the severity of AIG's problems while explaining to federal officials the underlying value of the parent company's insurance subsidiaries. At the same time, Dinallo's team kept other state regulators tapped into the Federal Reserve's evolving plans and voiced their concerns as the Fed stepped in early the next week with an $85 billion bailout.
Dinallo's pragmatic philosophy has roots in his days at Paul, Weiss, where his professional role model was the late litigator Arthur Liman. "Liman said there are two kind of lawyers: those who view the law as a restriction on what can be achieved and those who view it as an opportunity," Dinallo says. "He said whether you're in private or public practice, you should always try to be the latter."
See all 25 of our Dealmakers of the Year, from the April 2009 issue of The American Lawyer.
Photo by Paul Godwin
