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Spoiled Goods: The New Spitzer Biography Fails to Challenge the AG’s Reputation : The Daily Deal

August 14, 2006 In The News

Eliot Spitzer, the self-fashioned “Jimmy Stewart of Albany,” hardly needs a campaign push to coast into the governor’s mansion. With the election just months away, he leads by double digits in the polls and can’t be faulted if he already is mulling fabric samples for his new digs.

So a book that merely reinforces Spitzer’s popular misperception as a “Champion of the Little Guy” is hardly breaking any new ground. Most New Yorkers already mistakenly believe their attorney general is indeed a crusading populist driven by moral ideals; “Spoiling for a Fight: The Rise of Eliot Spitzer,” by Washington Post reporter Brooke Masters reinforces this view.

First, let’s give Masters her due. She is a hard-working reporter with considerable integrity, and “Spoiling for a Fight” is a prodigious effort. The book is extremely well researched and filled with rich personal anecdotes from family members and friends. And Masters does grant Spitzer’s critics, including me, an opportunity to lob a few shots, though his supporters are afforded considerably more space, and Spitzer always is granted the last word. Spitzer is a master media manipulator, and one has to give him credit for convincing such a seasoned reporter that he is cast in the same mold as Theodore Roosevelt and William Jennings Bryan.

Unfortunately, Masters does not take a strong or critical point of view. Her book is laden with facts and color, but in her attempt to be fair and balanced, she shies away from taking a stand and providing her own interpretation and analysis. Instead, she relies on third parties, such as the op-ed page of The Wall Street Journal, to challenge Spitzer’s actions. One suspects that Masters views Spitzer as a reformer just as she understands the structural and corrupt corporate practices Spitzer brought to the forefront.

Sadly, she mistakenly believes that Spitzer’s actions have led to real reform. The $1 billion settlement Spitzer (with the much-needed help of former New York Stock Exchange chairman and CEO Dick Grasso) wrangled from Wall Street for publishing fraudulent research was not even a wrist slap; the stock markets arc still rigged against individual investors and, increasingly, comparatively smaller institutional investors. The latest evidence of the settlement’s futility surfaced this week as the NYSE Group Inc.’sregulatory arm and the National Association of Securities Dealers released a joint memorandum stating that fixed-income research is still conflicted. Instances were found “in which firms failed to include tailored disclosures in research reports specific to a subject company and/or did not include all of the necessary relevant disclosures.” Worse yet, firms were found to have issued reports that analysts failed to certify as truthful.

Masters’ claim that Spitzer reformed the mutual fund and insurance industries is certainly debatable, but her apparent belief that Spitzer’s goals justify his questionable legal and strong-arm tactics, due process be damned, is most alarming. Masters fails to appreciate that, at the end of the day, Spitzer is an ambitious politician who has used the vast legal powers afforded him to shake down major corporations and garner headlines for himself His settlements have come not from his brilliant legal acumen – indeed, he lost the one major case he tried to argue in a court of law – but from malicious and unproven leaks and comments about his adversaries to the media.

Case in point: Spitzer’s case against Grasso. It is extremely naive to believe that Spitzer’s motivation in taking the case was a concern about possible violations of New York’s not-for-profit law. Before it went public, the New York Stock Exchange was owned by millionaires; it was not some charitable institution. The case is especially absurd because if Spitzer prevails, New York state will ultimately have to refund tens of millions of dollars Grasso has paid in taxes. The truth is that Spitzer mistakenly calculated that Grasso, and his pal Ken Langone, would settle rather than fight charges against them.
In a telling example of how the media allows Spitzer to malign someone with reckless abandon, Masters recounts how Spitzer asked Grasso to rescind the nomination of former Citigroup Inc. CEO Sandy Weill to the NYSE board, but the former NYSE boss said he didn’t have the power to do so. “That was the moment when I had the first significant moment of real doubt about the leadership [of the NYSE] and the decision process there, and had some significant doubts about the veracity of Dick Grasso,” she quotes Spitzer as saying. The fact is that Grasso’s leadership has never been called into question. Indeed, at his news conference announcing the charges against Grasso, Spitzer referred to Grasso’s leadership as “superb.”

Masters does provide some insight as to the forces that shaped Spitzer’s “character.” Masters offers convincing anecdotal evidence that Spitzer, the son of a wealthy New York real estate developer, was a spoiled rich kid prone to throwing fits when he didn’t get his way. We learn that Monopoly was the Spitzer family’s favorite game and the elder Spitzer used it to educate young Eliot about the ways of business.

Some interesting but superfluous tidbits: Spitzer once lost a high school tennis match to John McEnroe, and Spitzer’s mother was dating comedian Jerry Stiller before his father ‘”stole” her away. Just think: Were it not for the elder Spitzer, Ben Stiller might never have been born.

Masters does a commendable job of giving us blow-by-blow accounts of Spitzer’s shakedowns of Marsh & McLennan Cos., Aon Corp. and American International Group Inc., and she dutifully notes that these companies respectively hired Spitzer’s former boss, law partner and major campaign contributor to represent them. But she is apparently unfazed by the brazen conflicts of interest, leaving any criticism up to sources.

Perhaps most disappointing of all is that, despite Spitzer’s ethical shortcuts and questionable prosecutorial tactics, Masters still views her subject with considerable reverence. Once upon a time, journalists prided themselves for holding overly zealous politicos accountable; there would be an institutional rage about an attorney general who accused someone on national television of engaging in fraudulent activities (in this case, former AIG CEO Hank Greenberg) but never followed through with criminal charges.

They would demand that he be held accountable for failing to prosecute widespread Medicaid fraud, which he is constitutionally obligated to do. And they would be skeptical of a politician who fashioned himself as a watchdog on corporate ethics and integrity hut who himself had egregiously violated campaign finance laws (Masters devotes a mere three paragraphs to this issue).

When it comes to Eliot Spitzer, our media watchdogs aren’t barking.