A very sad story continues to unfold:  The Hon. Eliot Spitzer, once the Sheriff of Wall Street (as attorney general he pursued “the bad guys” in finance on our behalf) falls from grace and into a state of serious disgrace as the sordid story of his private mis-adventures unfolds.  Talk about Accountability!  (In public or private lives.)


The story unfolds, that is, most importantly in the new media environment – living and breathing on thousands of personal blogs, all over the Web pages (including these in Accountability Central), on thousands of pages of print publications, in digital blips on news wires around the globe (this was a front page story in Europe), and everywhere on cable television talking-head programs. (So many readers tuned in to The New York Times Web site it slowed down considerably, reported NPR.)


And this story will live on, and on, and on — thanks to the way [digital] news and commentary / opinion is stored and preserved, in archived versions of all of the above communication channels, and more.


Sad, very sad.  For Governor Spitzer’s family, friends, colleagues, the voters who trusted him with high public office, and for our political process in general.  For those who believed that Eliot Spitzer was a public champion of accountability. This story will do nothing to bolster the public’s trust in government.


Disclosure: We were early supporters of Eliot Spitzer, in his attorney general elections, and in his gubernatorial race.  You’ll find us listed in the financial disclosure files as contributors, and in the paper trails of his campaigns and public offices.


For the high points in his career, consider these (paraphrased) comments that Attorney General Spitzer delivered at the National Press Club in Washington DC, as he was questioned (sometimes harshly) by the inside-the-Beltway-media-mavens about his headlined crusades against Wall Street’s bad guys and the un-accountable leaders in Corporate America.  The AG said:


Now that you know what the financial analysts and investment bankers were doing (in terms of their distorted or misleading stock analysis linked to investment banking), how many of us would like to go back to that system?  (Back to making important personal investment decisions based on faulty or misleading or even fraudulent analyst recommendations.  The bankers and brokers and certain analysts were screwing investors out of billions’ of dollars and taking home fat bonuses.)


Now that you know what the advisory companies were doing with your mutual fund investments, behind your back (late timing, etc.), costing you return on your investments, how many would like to go back to that system?  There was mostly silence in that room filled with journalists and public officials.  No one raised their hand and shouted out, “I would love that system again!” But — Mr. Spitzer could easily irritate the vested interests, including journalists, corporate executives, boards of directors, investment bankers, his fellow office-holders, his own political party leadership, etc.


As attorney general, and then as governor, Mr. Spitzer made many enemies with his official activities.  Many say he squandered a huge reservoir of goodwill in Albany when his staff began backroom smear campaigns against the leading Republican in the Senate, Joseph Bruno.  Those activities were either bordering on, or actually illegal.  There went the political honeymoon most new governors enjoy.


His was a storied career, in many ways.  Growing up in affluence; on to Harvard Law School (with his wife, Silda Wall; they married in 1987).  Law clerking for a prestigious federal judge. White-shoe law firm associate. Crime-buster in the office of the legendary Manhattan district attorney, Robert Morgenthau; chief of labor rackets office there. Members of the Gambino crime family were put away by him and his colleagues, ending decades of corruption in the trucking, air freight and garment businesses of New York.


Elected twice as AG of NY, and in 2001 he moves on Merrill Lynch (first), in the analyst – investment banker scandals; eventually the Top 10 money houses of Wall Street would pony up hundreds of millions of dollars in fines, restitution, and years of reform of financial analysis.  Riding his white horse down the narrow canyons of Lower Manhattan, he moves on another legendary figure – who would also fall from grace – Richard Grasso, chair of the New York Stock Exchange, for violations of NY’s not-for-profit laws, which the AG oversaw.  (It was all about Dick’s outsize compensation.  Disclosure:  Dick and I worked together at the NYSE and I consider him a good friend. He was a brilliant leader of the world’s most important stock exchange.)


And there were AG Spitzer’s campaigns against mutual fund advisors, insurance companies (resulting in the fall of another industry legend at the targeted AIG, Hank Greenberg, forced out by his board after AG Spitzer targeted him).


Many bodies, individual and institutional, lay in the wake of the Sheriff’s ride through the twisting old Dutch NY canyons, the corporate suites, the board rooms, the busy trading floors, the back room processing centers, the powerful law firm offices, etc.  Many adversaries, too many enemies made along the way.


We talked early on with Eliot Spitzer about how he resembled another crusader in New York State, first Assemblyman and then Governor Theodore Roosevelt, who publicly railed against robber barons and tenement slumlords and oppressive employers and corrupt public officials n the first years of the 20th Century.  “Teddy,” also from a family of great wealth, was hugely disturbed by what he saw in government in Albany and at a very early age became a dedicated reformer and crusader.  We shared tales of Teddy and his crusades and Eliot’s crusades…and their [seemingly] shared legacies.  Teddy is your model, I suggested to the attorney general a few years ago. It was all so sweet…for a time.


As of this writing, we don’t know what the future holds for Eliot Spitzer as governor of the Empire State. As The Los Angeles Times’Erika Hayasaki and Stephanie Simon point out in their story today, he built a national reputation as an aggressive, uncompromising prosecutor.  He will need prosecutorial mercy himself now as he negotiates his way out of this mess.  I believe fundamentally in what consultant Hank Sheinkopf said: “…here’s a guy who had one desire in life…he wanted to serve the people…”  That makes the fall all the more tragic, doesn’t it?


But that unanswered question hangs in there – why?  Why, Governor Spitzer?  As Baruch College professor Douglas Muzzio observed:  “I’m stunned that this highly-intelligent, successful prosecutor would be involved in such reckless and risk-taking behavior.  Talk about a great man falling.  It’s the stuff of tragedy…”  And so it is.


We close this commentary with this: the great 26th president, Theodore Roosevelt, spoke directly to the issues we are dealing with today in his April 1906 speech on “muckraking,” touching on both corrupted men in public office and sensational journalists who hounded both the corrupted and at times, honest men.


TR:  “At the risk of repetition, let me say [again] that my plea is not for immunity to, but for the most unsparing exposure of, the politician who betrays the public trust, of the big business man who makes or spends his fortune in illegitimate or corrupt ways.  There should be a resolute effort to hunt every such man out of the position he has disgraced.  Expose the crime, hunt down the criminal, but remember that even in the case of crime, it is attacked in sensational, lurid, and untruthful fashion, the attack may do more damage to the public mind than the crime itself…”


President Roosevelt was cautioning the journalist of the day to be truthful and diligent but to avoid being like the man in Bunyan’s “Pilgrim’s Progress,” who with muck (mud) rake in hand could look no way but downward, turning down a celestial crown for his muck rake, so he could continue to rake to himself the filth of the floor.  From this warning to journalists came an opposite reaction:  The perennial phrase was eagerly adopted and trumpeted by the press of the day and ever since: “We are Muckrakers!” 


Let’s hope that in the end truth wins out in the many digital bits yet to fly as the governor’s story continues to unfold.  Surely We the People will be titillated…and ultimately, disappointed.  An important “accountability” is being trashed – public trust.


An important public governance trust was broken. And the press will have their field day.  But I wonder what TR would say today about “attacks doing more damage to the public mind than the crime itself…?”  While those who choose to may pray for Mr. Spitzer and his family’s well being, let’s also say a little prayer for ourselves – that the public governance system of this great state, and of this great nation, move on and heal after all the digital bits have flown!


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