RLN: We’re going to follow up on a couple of the items that you touched on in the lunch there. So along that line of obtaining higher office, you got any higher aspirations?

JG: Well, sure, I’m going to run for governor in 2010, so that campaign is, I’ve already made my announcement, I’ve already set up the committee, and we’re well under way. I’ve got a very, very good chance of winning the gubernatorial election in 2010. I’m well known throughout the state and I have a solid base.

RLN: You’re probably most noted to the people of California for your work as Insurance Commissioner, which is sort of interesting but tell me how that relates to what we see today with the federal bailout of a national insurance company, AIG, what’s your take on that?

JG: It’s very similar to what I faced in the early 90s, when insurance companies were going bankrupt. the same thing happened then as happened today, that these insurance companies purchased bad assets, junk bonds then, now its called securitized mortgages.  In both cases they were high-risk products they had high-rates of return, high interest rates, which ought to indicate that they’re highly-risky.  So as the savings and loan crisis began in the late 1980s it brought down these junk bonds, the value crashed, so it’s a very similar situation. AIG over the years, AIG,

[interruption]

RLN: So you were talking about insurance...

JG: AIG is much more then just an insurance company; but the thing with AIG that’s important is the insurance companies not be ripped off to save the parent company, which is the role of the Insurance Commissioner is to protect the policyholders.  As I was looking at that I’m going, this is very similar to a situation we had in the early 80s in the early 90s with First Capital that was owned by American Express and there was a question about whether American Express would reach down into the insurance company and take some of the assets. We said no you can’t do that because we need those assets.

RLN: Because the state had at that point a higher level of regulation had then what the federal government has now.

JG: Exactly, and one of the things that happened in the 1930s was the establishment of the Glass-Steagall Act, which separated insurance, investment banking and banking.  What’s happened in the last eight years is those three elements have merged and part of the reason we have this meltdown is that the separation of the three major financial elements of the American economy merged and it became possible to hide the real financial strength of each of the elements...

RLN: or weakness...

JG: That’s correct, the strength or the lack of strength, the weakness, you’re absolutely correct. You take a look at the three large financial crisis of the last 100 years of America:  The 1920s the rip-roaring 20s anything goes and it did; and that was the result of a lack of regulation of financial institutions, which eventually resulted in the Great Depression. The 1980s with Reagan and then Bush the removal, lessening of the regulatory environment led to the savings and loan crisis and the insurance crisis in the 90s. Here we are in 2000, the Republican philosophy of removing the regulatory systems and letting it rip is now resulting in the current meltdown of Wall Street.  The mortgage crisis is a direct result of the non-regulation of the financial markets...

RLN: and you had also...

JG: and again in all three cases it was the Republican philosophy; and I’m an old football player. I played football at the University of California and I know that there were boundaries on the field, those white lines, and there was a rulebook and there was somebody to interpret and enforce the rules; and there was a penalty if you played outside the rules. That kept the game sane and sound and fair; and what’s happened in the last eight years is that the regulatory boundaries were removed the umpire left the field and the quarterback got sacked.
 
 RLN: One of my other editors wanted to ask you, there’s a number of local activists, that basically three concerns that deal with the state lands commission; the first is the practice of disallowing virtually all expenditures outside of the tidelands to mitigate environmental impacts; second is the issue of administration of mitigation funds which many people do not trust the port to do themselves, they prefer that the state lands commission set up an independent entity to monitor those; the third is a comprehensive environmental remediation in connection to the newly authorized round of drilling in the Wilmington oil fields; how do we deal with the state lands commission as a community to get some authority to do some things?

JG: Well, first of all, you invite the commissioners here. I was invited here to hear these issues, to gain a better understanding of these issues so that when I act as a commissioner and soon to be chair of the commission I will act with knowledge and understanding; step two is to develop the argument as to why the effect of the port is not just within the tidelands area and the immediate vicinity of the port but goes beyond it; that was what was imparted to me at this morning’s meeting with the environmental coalitions that they very well explained why these issues go beyond the immediate boundaries, and argued that the mitigation should follow the problem, not just the boundary of the port; those are good arguments, we’re going to take the issue up, I will take this issue up with the other commissioners and the commission staff for the purposes of analyzing and quite possibly modifying the current policies;

RLN: now does that mean that we have to go to the legislature to get... because the state tidelands is in fact a statute of the state; do we literally have to change the statute or can this be a policy change at the level of the commission?

JG: It can certainly be a policy change at the level of the commission as long as it is consistent with the constitutional requirements of the public trust; given that the constitutional requirements of the public trust, how do these elements of economic and environmental mitigation off the tidelands, off the port facility, how can they fulfill the public trust? that’s what we’re going to explore. I’ve asked the environmental community to give me a memo on why they think its possible; I will then take that to the commission and commission staff, and we’ll debate it and see what is possible. It’s too early for me in this process to say it can happen, but my view dating back from my experience in the state legislature and federal government indicates to me, tells me that environmental affects and economic affects are not confined to the project site but go in many cases far beyond the project site so a major expansion of the port here will have impacts, environmental impacts to air quality, impacts beyond the boundary of the port;

RLN: You can’t contain the pollution of the Port as per the MATES II study that shows the footprint of the diesel drifts all the way out to Riverside.

JG: That’s correct.

RLN: One of the things that the Chamber helped sponsor several months ago was the river of trade conference which was a collection of all the municipalities and counties from here all the way to the Canadian border; I thought we were alone in this fight against the Port and this group of county supervisors and city council people, and business people all the way from here, getting up towards Quebec, all had exactly the same issues of infrastructure pollution that we have here in San Pedro, it was a very big eye opener for us.

JG: Well, and therefore the political power of the community is much greater, you’re not acting alone; the issue obviously involves all of the surrounding, all of the LA Basin, and San Francisco and beyond; so because of that, I think that we can move towards a broader definition of what is to be mitigated. A very narrow view that exists today is a relic of a different port, much smaller ports and a time when there were far fewer people, not only in the port area but in surrounding communities; as I said during the speech, the six elements that create economic growth, the sixth, which may be the most important of all, is change. you have to be willing to change as the economy as the circumstances of the environment, the economics change; then we need to change private businesses as well as the governmental sector.

RLN: Great. John, thank you so much for your time.