Eliot Spitzer was lucky that newspapers exposed his yen for high-priced Washington hookers. The scandal that ensued allowed Spitzer to resign in disgrace from the New York governorship in 2008 for sleazy behavior, distracting attention from his egregious abuses of power and skirting of the law throughout his career. Now, because his political downfall is associated in the public consciousness with personal foibles, he has an opening to regain power, which he will no doubt abuse once more.
In 1994, Spitzer launched his political career by cheating and then lying about it. A lawyer and prosecutor without a very public profile, Spitzer had no political experience when he decided to run for New York State Attorney General that year. But he did have a very rich father. Though campaign finance law limited the amount of money that his real estate mogul father could donate to his campaign, as a candidate, Spitzer could use an unlimited amount of his own money. So, Spitzer got around these restrictions by having his father issue him personal loans on favorable terms that the younger Spitzer then transferred to his campaign. He then sold Manhattan apartments that were gifts from his father to help pay off the debt. Over the course of two campaigns for AG (the unsuccessful 1994 one and the triumphant 1998 race), Spitzer effectively received millions in campaign donations from his father, according to the New York Times, even while publicly insisting that he was financing the runs himself. Eventually, he was forced to admit to the Times that he had been receiving help from his father, even while maintaining he had done nothing wrong.
Once installed as AG, Spitzer was able to raise his profile by publicly shaming unpopular targets, even if there was no clear legal basis to support his actions. When the Securities and Exchange Commission was viewed as being too passive in the wake of scandals that rocked Wall Street in 2001-03, Spitzer jumped into the fold. He went after behavior that was improper and publicly indefensible, but not necessarily illegal. Spitzer’s strategy was to keep leaking embarrassing emails to the media until his targets agreed to settle rather than endure the negative attention stemming from protracted lawsuits.
However, when Spitzer’s targets were actually willing to endure the public shaming campaign and fight it out in court, Spitzer’s record as a prosecutor was far less impressive. Years before AIG collapsed and sought a federal bailout, Spitzer forced the ouster of Maurice “Hank” Greenberg as the company’s chief executive after he spent decades building the company. Eight years has passed since Spitzer launched his lawsuit against Greenberg, but it has gone nowhere.
Spitzer also abused power by selectively targeting individuals based on their political party affiliations. When Spitzer sued former chairman of the New York Stock Exchange Richard Grasso for receiving too much compensation, he also went after board member Ken Langone, a prominent Republican donor. But he spared Carl McCall, an influential New York Democrat, even though McCall served on the compensation committee that doled out the pay package that Spitzer charged was illegal. The case against Grasso and Langone was eventually dismissed by a New York appeals court.
Spitzer’s prosecutorial overreach against unsympathetic foes had its advantages, earning him the populist moniker the “Sheriff of Wall Street,” and propelling him to the governorship in 2006. Though Spitzer’s truncated term as governor will always be remembered for his dalliances with prostitutes, even before that, it was an administration rife with scandal. Shortly after taking office in Jan. 2007, Spitzer threatened a Republican assemblyman, declaring ” “Listen, I’m a f – - – ing steamroller, and I’ll roll over you and anybody else.” In July 2007, Andrew Cuomo (Spitzer’s successor as AG and current New York governor) issued a blistering report exposing that Spitzer had asked the state police to keep records on a political rival and then leak that information to the press in an effort to embarrass him.
Roughly five years after his downfall, Spitzer has reentered the political arena. If the signatures he collected withstand court challenges, he’ll be on the ballot for New York City comptroller. An NBC/Wall Street Journal/Marist poll gives him a 9-point lead, with two-thirds of Democrats saying he deserves a second chance.
Though comptroller is a much less impressive title than attorney general or governor, were he to win the election, as CNBC’s John Carney points out, Spitzer would manage New York City’s five pension funds, “which hold a total of about $140 billion in assets.” This would allow him to be an activist investor who could launch campaigns to change corporate behavior. Carney notes that, “it’s very hard to draw a line between political activism and shareholder activism when it comes to pension funds. Just last December, Spitzer was using his column in Slate to advocate leveraging the power of pension funds and university endowments to pressure the private-equity firm Cerberus about its ownership of gunmakers.”
Given his long record of abusing power to inflate his public profile and punish enemies, Spitzer’s reemergence shouldn’t be seen as a joke. It’s downright scary.