Spitzer Apology to Silda Tops This Lengthy List

March 12 (Bloomberg) — There is a god after all. A god of Wall Street, at least.

That's what many may be telling themselves as they take in the news of Eliot Spitzer. The New York governor, as the world now knows, was caught on a wiretap after allegedly arranging a meeting with a prostitute who traveled from New York to meet him in Washington, in possible violation of federal law.

At a news conference Monday, Spitzer, with wife Silda at his side, apologized to his family. He has also acknowledged that in a vague way he has wronged "the public."

That public is doubtless waiting for something more explicit, perhaps having their lives rewound like a videocassette so the former state attorney general, the man who convicts so juries don't have to, never even appears.

The trouble with Spitzer was that he was never satisfied with halting the wrongdoing of companies or individuals. He had to impugn their motives, their character and their ability to do their work, even as he portrayed himself as pure. He had to collect cash far beyond what the possible crimes might have warranted. And he had to get affirmation for his own action fast, without a trial, or a chance for his targets to reply.

If Spitzer is ever accused of a crime and he decides to work out a plea agreement, a few more apologies might be included, perhaps as community service. Here, in no particular order, is the beginning of a list.

* Merrill Lynch & Co., which lost $5 billion in value in the delicate post-Sept. 11 period, as a Spitzer investigation led to charges that the firm sold tainted investment advice. In an April 2002 press release, Spitzer said Merrill's behavior was "a shocking betrayal of trust by one of Wall Street's most trusted names. The case must be a catalyst for reform throughout the entire industry."

In the Mud

* Theodore Sihpol III, the former Bank of America Corp. broker who bravely sat through his trial until he was acquitted on 29 counts of alleged improper trading of mutual-fund shares after Spitzer chose to prosecute him for larceny and securities fraud. At the time, Spitzer said Sihpol might serve as long as 25 years in jail and that prosecuting him was easy compared with cases he settled pretrial.

* Canary Capital, from whom Spitzer extracted a $40 million settlement after he accused it of engaging in improper trades in mutual funds.

* American International Group Inc., which Spitzer forced into a $1.6 billion settlement. Spitzer told the New York Times scornfully that AIG was all the worse since, unlike Enron, AIG was "a solid company that didn't need to cheat."

'Through the Heart'

* Maurice Greenberg, the AIG chairman who Spitzer forced to resign after intimating some kind of wrongdoing that never led to an indictment.

* John Whitehead, the former head of Goldman Sachs Group Inc., who defended Greenberg in a Wall Street Journal op-ed piece and received a threatening phone call from Spitzer in return. Maybe this one deserves a personal phone call or an op-ed reply — in the Wall Street Journal, perhaps? The Journal would give Spitzer space.

* Joseph Bruno, the New York State Senate majority leader, whom Spitzer called "old" and "senile."

* Ken Langone, the ex-director of the New York Stock Exchange, whose representative told the press that Spitzer had warned that he planned to "put a spike through Langone's heart."

* Publishers Clearing House, whose tactics the attorney general assailed when New York joined other states in a suit against it. "This sweepstakes company has engaged in an elaborate scheme to increase its bottom line, financed on the backs of some who can least afford it: the elderly," Spitzer said.

Sorry, New York

* The Securities and Exchange Commission, which Spitzer went out of his way to cast as wimps when in reality the agency was doing its best to keep matters civil.

* Voters of New York state, 69 percent of whom backed Spitzer for governor in 2006.

* The New York State Assembly of 1921, whose Martin Act Spitzer stretched like a rubber band until it was beyond recognition. The law was intended to limit bucket shops, primitive derivatives exchanges, not bring down large national companies.

* The U.S. economy, to whose relative competitiveness Spitzer dealt a blow when he launched his New York equivalent of Sarbanes-Oxley. At least the laws of Sarbanes-Oxley were written down, unlike the attorney general's next target.

Long List

* Ladies of the Night, Staten Island Chapter, of whom Spitzer said in 2004 following their arrest: "This was a sophisticated and lucrative operation with a multitiered management structure. It was, however, nothing more than a prostitution ring." The ladies' clients, too, might deserve a note.

Readers at this point will already be e-mailing in their additions — former Citigroup Inc. chief Sandy Weill, for starters — for what's above is just the beginning. Others will materialize. The old targets will be watching in coming weeks and months.

Yes, Spitzer probably stopped crime. That was his job as attorney general. But the collateral damage that his projects wrought was unprecedented, and unnecessary.

The best revenge for those on the receiving end of Spitzer's attacks is to avoid descending to his level. Even Spitzer's most damaged targets will find odd comfort in watching him get a deliberate and fair hearing, and measured jurisprudence if it comes to that. May the law accord to him what he denied to others.

(Amity Shlaes, a senior fellow in economic history at the Council on Foreign Relations, is a Bloomberg News columnist. The opinions expressed are her own.)

© Copyright 2008 Bloomberg

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