Weird, maybe, but not quite unexpected. The attorney general of New York hasn’t exactly kept a low profile. Spitzer has used the once obscure office to launch a relentless public assault on some of the state’s, and country’s, most powerful institutions. He’s gone after crooked car dealers and gunmakers, the electric-power industry and sweatshop owners. His latest target: spammers. Last week Spitzer and Microsoft filed joint lawsuits against three marketing companies, charging they sent millions of fraudulent e-mails. Spitzer is seeking up to $20 million in fines. “We will drive them into bankruptcy,” he told reporters.
But it’s his crusade to expose Wall Street’s grimy side that has gotten the most attention, and not just in New York. In 2002 he revealed how some of the nation’s most respected investment firms cynically pushed on clients stocks that their own analysts had privately ridiculed. He forced the firms to pay a $1.4 billion settlement. In 2003 he tore into the mutual-fund industry for allowing big-dollar clients to make trades that were off-limits to ordinary investors. He’s now battling to force the funds to cut their fees, which Spitzer says are too high and soak average people.
Spitzer’s Wall Street war has made him one of the most envied politicians in the country. He is hailed (outside lower Manhattan, at least) as a hero for the little guy–a straight-talking, law-and-order Democrat who tilts at windmills, and wins. In person he comes off as the smartest kid in the class, but not an irritating know-it-all. He sprinkles his sentences with legalese and odd anachronisms–he talks about the financial system’s being “torn asunder” and refers to greedy Wall Streeters as “plutocrats” –but somehow manages to come across as earnest and self-deprecating. He has an impressive knack for finding the camera, but doesn’t register as a shameless media hog. When he speaks of his achievements, he tends to use “we” instead of “I.”
Spitzer has become so popular that even Republicans, including New York Gov. George Pataki, have avoided criticizing him–if only because they don’t want to give him any more publicity. His most vocal enemies are chastened brokers and fund managers, who bitterly protest they are the victims of his political ambitions. “He is ruining our industry,” says one senior investment adviser for a major New York firm, who worries that now investors wrongly assume everyone on Wall Street is dishonest. “In a way, he’s doing the same thing the people at the funds did. Enriching himself at the expense of others.” (If Americans are now more wary of Wall Street, it hasn’t seemed to have affected their appetite for buying in. According to the Investment Company Institute, through October 2003 investors had poured $186 billion into mutual funds–up 75 percent from the same period last year.) Spitzer is used to the complaints. “If folks want to challenge my motivation, all I can say is we’re right on the facts.”
It’s no secret in New York that Spitzer is positioning himself to campaign for governor in 2006. The attorney general himself seems to be the only one in the state who doesn’t know he’s running. “I haven’t made a decision,” he told NEWSWEEK. “But I think I’d lose credibility if I didn’t say I was thinking about it.”
Albany isn’t likely to be his last stop. At 44, Spitzer comes up on any Democrat’s shortlist of future presidential candidates (something he says he has given no thought to at all). Joe Lieberman, John Kerry, Richard Gephardt and Wesley Clark have all gone to see him, hoping for his endorsement, NEWSWEEK has learned. Clark let it be known he’d consider asking him to join his cabinet, or even to be his running mate. Spitzer isn’t backing any of the candidates yet, though people close to him said he toyed with coming out for Kerry, who impressed him when they met. “Everyone is talking about him, not just Democrats,” says Donna Brazile, who managed Al Gore’s 2000 campaign. “What he does resonates with ordinary people.”
Spitzer would seem an unlikely champion of the common man. He grew up rich in Riverdale, N.Y., the son of an engineer who made a fortune in real estate. He was intense, and a good student. He attended the exclusive Horace Mann School, then went on to Princeton and Harvard Law. But in the Spitzer household, privilege came with demands. “Though I had it very easy,” Spitzer says, “I knew that my dad had not, and that there was an expectation of hard work.” The atmosphere was proper: asked what kind of kid his son was, Spitzer’s father replied, “The application of the word ’normalcy’ would be appropriate.” Spitzer learned verbal combat at the dinner table, where the children were required to lead discussions about a chosen topic. His father, Spitzer says, was quick to pounce on any failure of fact or logic. “Every dinner was a debate forum.” Spitzer and his wife, Silda Wall, who was a law-school classmate, have similar–but less intimidating–round tables with their own three daughters.
After law school he tried private practice, and worked as a prosecutor in Manhattan, where he ran a sting operation to shut down the Gambino crime family’s stranglehold on trucks in the city’s garment district. He opened a fake sweatshop run by undercover cops and manned by real workers who didn’t know the place was a setup. “Here is Eliot Spitzer, of Harvard Law School–he’s so proud showing me how good the buttonhole is that his workers have sewn, how good the zipper is,” says Michael Cherkasky, Spitzer’s former boss. “And I’m thinking, Eliot, we’ve gone too far with this.”
That kind of intensity can make Spitzer intimidating to work for. Those close to him say he isn’t the kind of boss who lords over his underlings. But his temper can get frightening when he believes someone has let him down. “He only flashes it on the rarest of occasions,” says Cherkasky. “It’s ‘I’m trusting you to get this right. That’s your job. You’re endangering my work and all these other people’s work with your sloppiness’.”
Spitzer spent millions on his first attempt to become attorney general in 1994, but lost. He won the second time out four years later, in a race so close it took six bitter weeks to count the votes. At first he worried that taking on the investment industry might actually spell the end of his political career. “He thought that it could absolutely dry up his financial resources to be an implacable enemy of Wall Street,” says a close friend. “He was crossing swords with his people–the Harvard people, the Princeton people, the people he grew up with.”
Spitzer admits he’s probably lost a few of his many friends who work on Wall Street. Cliff Sloan, a longtime friend, recalls Spitzer’s puncturing the tension at a dinner with a group of people who were upset with him. One of them asked why he hadn’t started eating, says Sloan. “He said he was waiting for them to taste the food first.” Spitzer also finds himself the occasional target of spontaneous rage. At a recent dinner party a woman walked up to him and threw a fit. “What you’re doing is outrageous; it’s wrong,” she fumed. He listened politely, then deadpanned, “Where do you work?”
If Spitzer does run for governor, he’s likely to face some tough competition. Rudy Giuliani is also said to want the job, and Spitzer may have to battle any number of Democrats–including popular Sen. Charles Schumer–for the nomination. But Spitzer has won a huge following of his own. One recent poll showed his approval rating at 62 percent–among Republicans. “The only thing he hasn’t done is advocate hanging an investment banker on a lamppost every night,” says former New York City mayor Ed Koch. “If he did that, he might sweep the election.”
