New York state issues are rarely dealt with in this space, but when they are, two words invariably appear: “Eliot Spitzer.” His previous appearances here were chiefly concerned with Spitzer’s “how the mighty have fallen” plunge from being governor of New York and a potential Democratic presidential contender to Emperor’s Club Client Number Nine dallying in a Mayflower Hotel room with a high-priced prostitute and clad only in his socks. Since then, Spitzer tried to start a new career as a cable TV host and combatant, but that went nowhere because audiences didn’t warm up to him. Except apparently for one person — the present New York attorney general, Eric Schneiderman.
Owing to being the AG most directly able to go after bad guys on Wall Street and his aggressive tactics in doing so, Schneiderman was tapped last year for a major role in the federal probe of mortgage fraud in causing the Great Recession of 2008. As the Wall Street Journal recently reported, Schneiderman pointedly reminded the world earlier this month that the just-concluded $25 billion settlement with the five largest national mortgage banks preserved his authority to continue investigating and prosecuting potentially related securities fraud allegations. And thanks to his Washington friends, he will be able to summon the vast resources of the federal government, including the Justice Department, FBI, Internal Revenue Service, Securities and Exchange Commission and Consumer Financial Protection Bureau.
Nobody questions whether financial fraud on Wall Street or anywhere else should be exposed and prosecuted to the fullest extent of the law. And Schneiderman wisely demurred not long ago when offered the opportunity by the media to appropriate Spitzer’s former title, “Sheriff of Wall Street.” That doesn’t mean, however, that Schneiderman isn’t plotting a future course for himself that follows at least in important particulars the Spitzer template, especially with regard to using the threat of investigation by his office to bludgeon his targets into settlements that may or may not reflect guilt or innocence. Given his enthusiasm for going after allegations of mortgage securities fraud on Wall Street and his background as a favorite of the powerful trial lawyers lobby, seeing Schneiderman become Spitzer’s doppelganger in the near future would come as a shock only to those few souls who remain naive about such matters.
Consider that, according to the New York Post, Schneiderman received $50,000 in contributions during his successful 2010 campaign for the AG job. The trial lawyers lobby doesn’t give such sums of money to just anybody. It writes big checks to candidates from whom it expects much in return in the form of laws or regulations that create profitable new fields of litigation opportunities (often at the taxpayers expense, by the way). So it stands to reason that the $50K resulted from the fact that, as a Democratic state senator from the Upper West Side of Manhattan, Schneiderman had pushed a bill enabling private lawyers to file securities fraud actions on behalf of the New York state employees pension fund, which under current law can only be done by the AG. He clearly understands the way it works with the trial lawyers. And now he has a powerful national platform, thanks to another favorite of the trial lawyers, President Obama.
