Protecting Capitalism Case by Case
By Eliot Spitzer
Rosetta Books, 2013
Former New York Governor and Attorney General Eliot Spitzer is attempting an audacious political comeback. In 2007 the self-styled “steamroller” arrived in the governor’s office promising to reform a state government mired in scandals and ossified power structures (think three men in a room). Then, Spitzer got caught paying for sex and resigned from office in March 2008.
Everyone knows that story but this is only part of the reason his campaign for city comptroller is so brazen. As state attorney general from 1999–2006, Eliot Spitzer investigated, sued, fined and pissed off many of the biggest names on Wall Street. The specter of Spitzer overseeing some $140 billion in city pension funds and using the money to leverage change in corporate structure infuriates Wall Street suits to say the least.
Spitzer’s new book, Protecting Capitalism Case by Case, details his past legal crusades and outlines his vision for elected office. He is the scion of one of New York’s wealthiest real estate families — an asset class whose desire for conservative steady returns clashes with Wall Street’s quick buck casino capitalism. Protecting Capitalism directly confronts Big Finance’s reckless gambling and crimes.
Spitzer writes that one of his first priorities as attorney general was to look into mortgage lending. What his office found was rampant fraud and interest rate manipulation in subprime mortgage lending. “And there was one more thing — one more, ugly, unmistakable, undeniable thing about his whole mess: These wildly overpriced, economically irrational loans were overwhelmingly sold to African-American and Latino homeowners.”
As Spitzer’s office delved into the fine print of subprime loans, it discovered that many subprime borrowers had good credit ratings yet paid the higher subprime rate. In other occasions lenders in cahoots with brokers pressured homeowners to “flip” (refinance) their mortgages to more onerous terms. The banks and mortgage lenders did not care because they made their money on the fees and bundled the mortgages to be sold to institutional investors like pension funds which lost billions when the economy crashed.
In his book, Spitzer argues that instead of being passive investors, public pension funds should leverage their clout to force changes on the companies they do business with such as reining in CEO pay plans. For Jonathan Tasini of workinglife.org, the prospect of a Comptroller Spitzer galvanizing other pension funds around the world to collaborate with him in forcing rogue banks and corporations to change their behavior is one to relish.
“He’s perfect for this,” Tasini notes approvingly. “He’s arrogant. He doesn’t give a …, at this stage, what people say about him.”
Spitzer briefly mentions Occupy Wall Street in Protecting Capitalism and wrote numerous articles praising the movement back in 2011. His is a vision of using strong government regulation and the assertion of shareholder rights to tame the worst aspects of neoliberal capitalism. It’s one that is likely to underwhelm Occupiers and others who believe deeper, more fundamental challenges to the status quo are in order. Nonetheless, Protecting Capitalism makes it clear why Wall Street loathes Spitzer so much and desperately hopes his comeback bid will fall short.