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Eliot Spitzer is on his way out as New York's governor, but it will be years before Wall Street and the financial industry forget him.
The changes Spitzer pushed through earlier this decade as New York's attorney general continue to affect how investors and companies buy stocks, mutual funds and insurance, among other things. Whether those changes have helped investors remains disputed.
Spitzer, who announced his resignation today because of a sex scandal, "had an enormously positive impact on the securities industry," said John C. Bogle, founder of mutual fund firm Vanguard Group and a frequent critic of Wall Street practices. "He really wanted reform. It wasn't just for the headlines.
"In my long career, I don't remember anything that left me as deeply and profoundly saddened," Bogle said. "I feel like I've lost an ally and a friend."
- Talk back: How do you view Spitzer's downfall?
While Spitzer's aggressive -- some say ruthless -- tactics were criticized, his supporters say the industries he went after were usually left in better shape.
"Whether for his own purposes or not, he was the one that put the brakes on," said Tamar Frankel, a Boston University professor of law. He "stopped the slippery slope" that many in the financial-services industry were operating under around the turn of the century.
Spitzer's powerful targets don't see it that way, of course.
The first feather in his cap as attorney general -- a $1.4 billion settlement with Wall Street firms for faulty stock research -- led to widespread changes, but some say bad has come with the good. Spitzer's investigation led to a settlement between Wall Street firms and regulators in which the firms agreed to separate research and banking while making independent research available to investors.
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"The net result has been less research than there was five or 10 years ago," said Alan Johnson, managing director of Johnson Associates, a New York executive-pay consultancy.
The settlement resulted in broader disclosure in Wall Street research reports of potential conflicts of interest. Investment banks often reap big fees from the companies their analysts assess. Frankel praises this change, saying investors now recognize research is coming from "salespeople that have a stake" in their recommendations.
Spitzer then started bringing cases against mutual fund firms for giving rich investors and hedge funds trading perks at the expense of individual investors. The investigations led to a flurry of multimillion-dollar settlements and executive resignations. Spitzer seemed invincible.
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Follow the moneyGov. Eliot Spitzer's alleged transfers of funds to an escort service came to light as a result of a law then-Attorney General Spitzer had used to combat money laundering.
"Mr. Spitzer has gone too far," wrote former Goldman Sachs Chairman John C. Whitehead in an April 2005 opinion piece in The Wall Street Journal. "His actions are beginning to do more harm than good."
The attorney general often clashed personally with his rivals. "To be a crusader takes a certain streak of self-righteousness," says Bogle. "But he did some things that were a little too aggressive."
Spitzer's reputation carried him to a landslide victory in the 2006 New York gubernatorial race and emboldened officials in other states to pursue white-collar crime.
Some say Wall Street shouldn't necessarily feel relieved as Spitzer leaves, because his downfall would be unrelated to his earlier prosecutions of financial-services cases.
Spitzer's fall from power won't damp other states' pursuit of improper corporate practices, predicts Connecticut Treasurer Denise L. Nappier, who oversees a $26 billion public-pension fund. "The corporate-governance movement has never been one person's crusade," she says.
This article was reported and written by Aaron Lucchetti and Joann S. Lublin for The Wall Street Journal.
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