Mr. Greenberg stepped down from AIG in 2005 as the company came under investigation for its accounting practices. In 2006 AIG agreed to pay $1.6 billion to settle allegations of accounting improprieties and other matters with authorities.

Oil and gas states booming

Soaring energy prices have sparked a boom in states that produce oil and natural gas, the WSJ reports on A3.

In states like Texas, Oklahoma, Wyoming, North Dakota, and Montana, personal income is growing faster than the national average, unemployment is far lower, and state treasuries are flush with cash while their peers are struggling with revenue declines. The WSJ reports that consumers in these states are, of course, being buffeted by high gas prices, too, but it doesn’t hurt as bad when unemployment is 2.6 percent and net migration is up five times from a year ago, as it is in Wyoming.

Military thinking green

The Journal on page one reports on the armed forces’ increasing interest in alternative energy sources. It says the military is “increasingly concerned that its dependence on oil represents a strategic threat.”

The paper says the military is aiming for hybrid armed vehicles, thinking about mini-nuclear-power plants and synthetic fuels, and is already using solar power.

Bank that sounded housing alarm goes bust

The Times on C1 writes about Franklin Bank, a small thrift whose chairman spent the last several years warning of the impending housing bust, is being taken under by the housing bust—along with some “accounting errors” in how it values its mortgage portfolio. Its CEO resigned and the SEC is on the trail.

Franklin’s woes are the latest sign of trouble for small banks.

Real estate and construction loan losses have started ballooning. Federal banking regulators are bracing for several dozen bank failures after only a handful during the last few years. And as consumer loan losses rise, balance sheets are being squeezed.

Something’s rotten in public pension funds

On the same page, the Times looks at another accounting scandal, this one in public pension funds, which it says “are promising benefits to public workers on the basis of numbers that make little economic sense.”

The numbers are off-base for a variety of reasons. Sometimes there is a glaring conflict of interest, as there was in Albany, where the consultant was being paid by the workers seeking richer benefits. More often, there is subtle pressure on the actuary to come up with projections that make the pension fund look good.

Most of all, public pension actuaries use old methods that have fallen far out of sync with the economic mainstream. That does not necessarily mean their figures are wrong, but it does make them vulnerable to distortion, misunderstanding and abuse.

Market tanks

In economic news, stocks fell nearly 200 points after the producer-price index renewed fears about inflation and oil hit yet another record. Producer prices are often passed on to consumers later.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.