Bad Boys, Bad Boys: Spitzer vs. Wall Street Round 3
He is back at it, folks. After milking one billion dollars out of the investment banking world for charges related to biased advice, and flipping the mutual fund world on its head in 2003, Attorney General Eliot Spitzer has found a new corporate bad boy to wrestle with. On Thursday, Mr. Spitzer uncovered plots of collusion and price-fixing within the trillion dollar insurance industry. AIG and March and McLennan were the two most prominent names on his 'been naughty' list. Both these firms are under the suspicion of directing clients towards financial products that made more sense for the mammoth companies than it did for the individuals who placed their trust with these corporate titans. In Wall Street parlance, they were simply playing another game of the client shuffle.Detractors have accused Spitzer of taking on the Street as a political prop in case he should decide to run for NY Governor. Advocates of Spitzer range from his former Harvard Law School professors who embraced the whiz-kid when he was knee-deep in research to the millions of Americans who saw their savings blown out of the water during the tech meltdown of Spring 2000 and are now enjoying a vicarious revenge.
Whatever the case may be, this latest addition to Spitzer's playbook portends extremely troubling implications for a Wall Street barely recovering from three long years of corporate wrongdoing, including, most famously, the Enron, Tyco, and Worldcom debacles as well as the oversensationalized Martha Stewart trial (I wonder if she's getting along with her bunk mate). These catastrophic events have been followed by lavish, emotion-targeted campaigns from key franchises like Citgroup and Merril Lynch in an attempt to regain thier client's trust. But as they say, no matter how much lipstick you put on a pig, it is still a pig. Something this unfolding, modern day David-and-Goliath story is revealing.
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