Wall Street cheers Spitzer's fall from grace

By The Wall Street Journal

It's schadenfreude time on Wall Street.

Eliot Spitzer, the New York governor who made his name taking on the titans of finance, apologized Monday in vague terms after reports that he used the services of a prostitute in a case being investigated by federal prosecutors.

The news stunned traders on Wall Street, where Spitzer long has been viewed with fear and contempt. Some view the revelations as a huge hypocrisy for a man who, as New York's attorney general, had aggressively pushed for ethics and fair play on Wall Street earlier this decade. People who clashed hardest with Spitzer are among those crowing the loudest.

"He actually believes he's above the law," said Ken Langone, a former New York Stock Exchange director who now heads a small investment-banking firm. In his role as prosecutor, Spitzer sued Langone for his role in doling out the large pay package of former New York Stock Exchange CEO Dick Grasso. "I have never had any doubt about his lack of character and integrity -- and he's proven me correct."

• Talk back: Is Spitzer's downfall a good thing?

His political rivals, too, jumped into the fray.

"This is not a victimless crime," said U.S. Rep. Peter King, a Republican from Long Island. "I've never known anyone who was more self-righteous and unforgiving than Eliot Spitzer."

Spitzer's fall from grace could mark the end of the public career of a man who has had a profound impact on corporate America. Amid the rash of corporate scandals that plagued Wall Street early this decade, he was the single most visible force trying to weed out abuses and bring down wayward chief executives.

Spitzer brought fines against some of America's largest companies for industry practices that were routine, if not accepted. He rarely sent anyone to jail in these cases, but in the process, he changed corporate behavior in lasting ways, putting many industries on alert that state officials would take a more aggressive role.

"I'm a huge fan of Eliot Spitzer, and I'll be very sorry if this is the end of his political career," says Nell Minow, a corporate-governance expert. "Wall Street is singing, 'Ding, dong, the witch is dead,' but Spitzer set an expectation of better oversight by officials that will continue."

Spitzer has been governor for a little more than a year, and has struggled to adapt his combative approach to a job requiring more tact. After early gaffes, he appeared to be making some progress, as state Democrats picked up momentum in New York's legislature and Spitzer assured voters that he had learned from his early months in office.

Monday, in a brief news conference, he didn't specifically address the prostitution allegations, and said: "I do not believe that politics in the long run is about individuals."

But in his eight-year run as New York attorney general, ending in 2006, Spitzer appeared at times to get personal in pursuing individuals. Critics said he bullied opponents, threatening to publicly reveal embarrassing details of a company's business or an executive's conduct to force management changes or headline-grabbing fines.

In the case against Grasso, lawyers working for Spitzer asked the former Big Board chairman in a deposition about personal relationships and collected information about Grasso's spending habits and his family's travel.

Continued:  A man of contradictions

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