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By Root 1047 0

He and Lindsay and others have been humiliated. Rockefeller is retired from politics. The city’s bookkeeping methods have been improved. But, as usual, the public pays. As I write, the snow is falling heavily and the city sanitation commissioner is complaining that 40 percent of his snow removal equipment has broken down. The city cannot borrow money and is again pleading with Washington that without federal assistance bankruptcy is inevitable. People have been laid off and the round-trip $1 subway fare can cost more than lunch. City workers’ pension funds are dangerously overextended. The debt is growing and debt service costs consume more of the city’s locally raised revenues than welfare and Medicaid combined.

And, as I write this, Abe Beame is appearing on WNBC-TV as a well-paid urban affairs commentator and has become chairman of the federal Commission on Intergovernmental Relations. John Lindsay is plotting to run for the U.S. Senate in 1980. The banks have escaped—freed of their city notes, most of their city securities converted to more secure MAC bonds, and the statute of limitations for bondholder suits or federal fraud charges is quietly expiring. Harrison Goldin won reelection and is the frontrunner as the Democratic candidate for state comptroller in 1978. Robert Wagner is a venerated political name, an intimate of governors, the new U.S. ambassador to the Vatican. James Cavanagh is employed by a foundation, draws a $29,000 city pension and has been consulted by Mayor Koch. Nelson Rockefeller is writing art books and advising the Saudi Arabian government. William Simon has written a book blasting the city and is scheming to run for President in 1980. Edward Hamilton is California Governor Jerry Brown’s new budget guru and runs a lucrative consulting business.

Neither the SEC nor the U.S. Attorney for the Southern District has pushed the prosecution of former officials. Like the Times editorial, the SEC has focused on the future, quietly summoning all the officials named in their staff report to determine how they have improved their bookkeeping and disclosure techniques. Why had the SEC sought no indictments? According to Andrew Rothman, their Washington spokesman, “The Department of Justice and the U.S. Attorney have all the information. We referred everything to the appropriate federal agency.” There it has remained, buried. Why no indictments? A major SEC official thought a long time, began several sentences, then stopped. “We probably could have sought indictments,” he said finally. “Why were there no indictments? There is a thing called the scienter. It means that someone must do something viciously and willfully. Applying that test to Mayor Beame and Goldin and others, I think that in their heart and soul they really believed the city couldn’t collapse, even though the evidence was there. You don’t indict people for that.”

Perhaps. But many people have gone to jail for less.

Chapter Four

Is Washington to Blame?

IN THE JAPANESE movie classic Rashomon, there are four eyewitnesses to a killing. Each observed the same crime, the same weapon, the same victim. Yet the witnesses offer four very different versions of what they saw.

That is an approximation of what’s happened throughout New York’s marathon fiscal and economic crisis. In this case, the victim is New York City. There are multiple eyewitnesses. There is no dispute that the victim is bleeding. Where witnesses differ, however, is in whether they observed an attempted murder or suicide.

New York officials claim that Washington is committing murder. The city’s economic ills, Senator Daniel Patrick Moynihan exclaimed on July 15, 1977, “are in substantial measure … the consequence of policies of the national government.” The “true cause of the urban fiscal and economic crisis,” Richard Morris writes in his book Bum Rap on American Cities, is the fact that New York and the Northeast do not get their fair share of federal assistance. This is a familiar refrain, sounded by most city officials and, according to polls, by a majority of New York