Opinion

A record of failure

Eliot Spitzer’s campaign ads tell us the love gov is an “old friend” of the average New Yorker, who spared nothing to take on “billion-dollar companies.”

Keep in mind, beating up on billion-dollar companies on Wall Street has almost nothing to do with the job Spitzer is seeking — city comptroller. In fact, a big part of the comptroller’s task is to work with Wall Street to help manage the city pension funds and balance the city’s budget, which make the anti-Wall Street thrust of Spitzer’s campaign more than a litte odd.

And, while Spitzer’s made his work policing Wall Street as state attorney general the centerpiece of his post-hooker political comeback, he wasn’t really all that effective a Wall Street cop.

He brought a lot of weak cases and won some comparatively piddling settlements — and, thanks to his narcissistic approach to law enforcement, also left some serious wreckage behind.

That’s not to say Spitzer didn’t have his moments. Perhaps his best cause involved a practice long overlooked by federal regulators: the wholesale inflation of analyst stock recommendations, where Wall Street brokers would use hyped recommendations to entice investors to buy stock in your company if you paid them lucrative investment-banking fees.

It was a real scam; countless average people who bought the hyped-up shares were left holding worthless stocks when the Internet bubble burst back in 2000 and 2001. But Spitzer, far from being a tough sheriff, ultimately whiffed: The firms most at fault paid fines that paled in comparison to the money they’d made from the scam.

No one was indicted, and research practices still stink — as evidenced by Wall Street’s handling of the Facebook public offering, where Wall Street analysts gave preferential guidance to large institutions while average investors were left to fend for themselves. But Spitzer got his headlines and a stepping-stone to becoming governor.

Then there are his celebrated cases against two Wall Street titans, then-New York Stock Exchange chief Dick Grasso and Hank Greenberg, the former CEO of insurance giant AIG. Spitzer loves to tout these to show how he’ll take on anyone, regardless of power, in the pursuit of justice for the average New Yorker.

Sorry, no. Look deeper and you’ll see how warped Spitzer’s sense of justice really is.

Start with Grasso, who Spitzer sued for making too much money. The suit used a state law that gives the state attorney general power to regulate (and demand the refund to the source) the “excessive” pay of executives at nonprofits, as the NYSE was at the time.

But the NYSE wasn’t a charity. It was a nonprofit in the form of a club, a very exclusive one made up of very rich people. In other words, Spitzer used taxpayer money for a case to force Grasso to give his compensation back to other equally rich people.

Oh, and in the end he lost: An appeals court threw out the case.

On Greenberg, Spitzer likes to claim he was early in uncovering the problems at AIG that ultimately led to its demise — one of the root causes of the 2008 financial crisis. The reality is much different: Spitzer bullied the AIG board to remove Greenberg as CEO after uncovering a series of accounting problems that had nothing to do with the firm’s ultimate meltdown.

In fact, it was after Greenberg was ousted for Spitzer-approved management that the real trigger of AIG’s implosion — excessive risk-taking — began to build. And the courts have dismissed the majority of the charges against Greenberg; he continues to fight what’s left.

But all that came after Spitzer won his headlines for “bringing down” a Wall Street fat cat.

Spitzer also lost big the only time he brought a criminal case against a Wall Street big shot. Actually, the big shot wasn’t very big: He was a mid-level broker who enabled a big-shot hedge-fund investor to allegedly violate laws through the trading of mutual funds.

Spitzer tried to put the broker, Ted Sihpol, in jail after some of the genuine fat cats (including the hedge-fund manager and the firm he worked for, Bank of America) basically bought their way out of serious trouble. But a jury found him not guilty on 29 counts brought against him, and deadlocked on four others. Spitzer ultimately decided to drop the matter, probably sensing further defeat.

If that’s not enough, consider his short stint as governor — where he achieved almost nothing other than constant controversy and vitriol, plus the odd out-of-town trip where he’d cavort with a prostitute.

I’ll give “the Sheriff of Wall Street” this much: He ran a great press office, manipulating reporters and editors into buying his self-promotion. But now he wants to be the city’s chief fiscal officer — and who wants a headline-hungry accountant?

Charles Gasparino is a Fox Business Network senior correspondent.