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Eliot Spitzer, the Unloved Crusader

By Amey Stone Some crusaders just can't seem to catch a break -- at least not yet anyway. A recent dinner with the financial media is just the latest example of the reluctant credit granted New York State Attorney General Eliot Spitzer. After all, hasn't he all but single-handedly made the investing world safer for the little guy, providing business journalists with reams of copy along the way?

The guy has taken on some of the biggest financial institutions in the country -- from investment banks to giant mutual-fund firms (insurers are next on his list) -- and made them clean up their acts. And he did it when other regulators shied away from the task, simpering to him, "We can't do it, the industry won't like it." At least that's how he characterized their response when he spoke to the New York Financial Writers Assn. spring dinner on June 1.

POKING AND PRODDING. It turns out that helping the little guy in the financial markets can be a thankless task, especially if you have high-profile political ambitions. Even though it would be hard to deny that Spitzer has done a huge public service by making Wall Street a cleaner, fairer place, he has yet to bask in the glow of adulation. Publicly, he's granted only grudging respect from the financial community and the media. Behind closed doors he's probably despised and ridiculed.

The general public hasn't exactly leapt to his side. Traditionally, prosecutors usually make plenty of political hay pursuing crooks, thieves, and bad guys. Former prosecutor Rudy Giuliani used this as a springboard for becoming mayor of New York City. But despite all the headlines Spitzer gets, he still doesn't seem to have a lot of visibility or political momentum outside the financial world. Fact is, it's not easy to make the jump from financial-rules enforcer to vote-getting, baby-kissing politician. Spitzer says he's considering a run for governor of New York in 2006, and few doubt he will eventually declare his candidacy.

At the dinner the other night, the audience seemed more ready to poke and prod than to praise. The main thrust of much of the questioning was over how politically motivated his cases have been, particularly the current one against former New York Stock Exchange Chairman Dick Grasso.

ISSUING "SPEEDING TICKETS". In an introduction, Arthur Levitt, the longest serving Securities & Exchange Commission chairman in history -- and arguably one of the most revered -- meted out more jibes than compliments. Levitt offered up a reading of Spitzer's (fictitious) e-mails, including one to Grasso that said the ex-Big Board chief had been "worth every cent" he was paid.

Another was to Citigroup Chairman Sandy Weill, asking for help getting his kids into the famed 92nd Street Y nursery school. Levitt even invented an e-mail Spitzer wrote to himself which reminded him, "be measured...gubernatorial." The crowd roared with laughter. Only at the end did Levitt cite Spitzer's "heroic willingness to take on the Establishment," carefully adding that he didn't necessarily agree with everything Spitzer had done.

Spitzer, perhaps preparing his political chops, seemed to be ready for a not-so-friendly audience. His remarks, which came with a hefty dash of humor, explained why he went after Wall Street: to reestablish clear boundaries between right and wrong, to shore up the "slippery slope" of petty crime in the investment community, and to remove the "lassitude" of the prior decade. He didn't claim to have changed the world. He said he had just issued a few "speeding tickets" that would slow down corruption for a while, but never eliminate it. He earned polite applause, but no cheers.

ROCKY ROAD AHEAD? To be sure, Spitzer likely deserves more credit than he's getting. And maybe someday he'll get it, although many a successful prosecutor before him has tripped up on the path to public office.

If Spitzer proves to be as able a politician as many already claim he is, he's going to be around for a long time. He clearly has big plans for his future, and the work he has done already to clean up Wall Street may ultimately prove just a stepping stone in a long political career. But Spitzer seems to already know it won't be easy. Stone is a senior writer for BusinessWeek Online in New York

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