In three days time a new Governor will ascend to his position in Albany, replacing the highly controversial Eliot Spitzer. Right now he is known for his personal failings. Prostitution, moving money around to finance the multiple $4300/hr rendezvous and paying to transport the call girls across state lines as well.
Now that he has declared his St. Patrick's Day resignation, the media is turning its lust to "Kristen" and other facets of the tawdry story. Yet, besides the explosive end to his career, people should still be aware of who he is and what he has done for New York and the nation as a whole. The fact that Wall Street acted with glee at his fate should tell people that do not work on Wall Street (most of us) that there is a reason for that.
From The Guardian:
Financiers have good reasons to hate Eliot Spitzer. In his heyday, the square-jawed, abrasive politician was one of the very few government figures with the guts to challenge Wall Street's cosy, profitable games played out at the expense of small investors.
After the dotcom boom at the beginning of the decade, Spitzer went after supposedly objective analysts who blatantly pumped second-rate stocks to bolster the fees of their colleagues in corporate broking.
One Merrill Lynch analyst, Henry Blodget, was famously caught recommending a stock to clients while describing it in an email to a colleague as a "piece of crap". In 2002, Spitzer won a $1.4bn settlement from 10 institutions including Goldman Sachs, Merrill Lynch, Morgan Stanley and Lehman Brothers.
With a zeal sadly lacking among so-called regulators at the Securities and Exchange Commission, he followed up by pursuing mutual funds which used subtle trading tactics such as late trading and so-called "market timing" to maximise profits for large, favoured institutional clients at the expense of the humble private investor.
"Wall Street expects that if it's going to be poked, prodded, examined, to have it done by the SEC," says Charles Geisst, an expert in Wall Street history at Manhattan College. "Here comes a New York attorney general – a very unusual avenue from which to be investigating the financial markets."
Consumer advocates say Spitzer had a clear-headed ability to challenge longstanding practices which, however dubious, had become the accepted norm."Everybody knew Wall Street analysts were treating investors like cannon fodder for the benefit of investment banking clients," says Barbara Roper, director of investor protection at the Consumer Federation of America. "Everybody but the poor, unsophisticated retail investor knew how the game was played. He brought the retail investors into that picture."
She adds: "Spitzer brought serious attention to abusive practices that had been ignored for years – and he tried to do something about them."
It's an open question whether Spitzer's initiatives yielded lasting reforms. The mutual funds have tidied up their acts. But equity analysts still recommend that punters "buy" far more often than advising them to "sell". Perhaps Spitzer's main legacy is that hardly anybody takes them seriously any more.
I highlight such a large portion of their article because there was so much to what Spitzer did for those who looked in on Wall Street from the outside. He worked tirelessly to expose the corporate barons for the crooks that they were. Unfortunately he worked too hard to disguise his lust for prostitutes and his bank became suspicious. For his many enemies in the corporate (and inherently within the government because of the revolving door between corporate and regulatory worlds) arena, this was their manna from heaven in slaying the beast that tried to ruin their unadulterated lust for greed.
So while a tainted political career goes down in flames from immoral and possible criminal activity, so does a legacy of fighting against the ruthless corporate world.
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