Whatever Eliot Spitzer may have done in Room 871 at the Mayflower Hotel in Washington on Valentine's Day, he was the right person at the right time on Wall Street in the early 2000s. Of course Wall Street does not acknowledge this.
"I have never had any doubt about his lack of character and integrity, and he's proven me correct," former New York Stock Exchange director Kenneth Langone told the Associated Press after Spitzer was reportedly caught on tape summoning a hooker. (Langone was one of Spitzer's targets.)
Impugning the prosecutor, however, changes nothing about the shenanigans he uncovered. That gleeful sound coming from Lower Manhattan yesterday? It's a direct measure of how much Spitzer accomplished as New York's attorney general.
When Spitzer started upending rocks in 2002, America knew there was something sleazy in corporate finance. Enron was in bankruptcy. WorldCom and other telecom companies were imploding. People were losing homes, in some cases, on bad bets on over hyped Internet stocks.
But it took Spitzer to unearth the pipes that transmitted Wall Street's sewage to your brokerage account. While the Securities and Exchange Commission and Justice Department focused on the slimy product, Spitzer went after the dealers.
It was Spitzer who showed that analysts were recommending stocks they knew were terrible so investment-banking colleagues could land the companies' business.
Spitzer exposed Salomon Smith Barney's Jack Grubman putting a "buy" rating on a stock that every smart investor, Grubman admitted privately, "feels is going to zero."
Spitzer found the e-mail from Merrill Lynch's Henry Blodget calling one stock he had recommended "a piece of crap." (Actually Blodget said this or something similar about numerous stocks he covered, but never in public.)
The attorney general found link after link between disingenuous recommendations and business steered Wall Street's way. The supposed investment "experts" were lying to American investors, and if it hadn't been for Spitzer nobody would be any wiser.
His investigation led to a $1.4 billion settlement against Wall Street and a permanent separation of the people who research stocks from the people who create them.
It was Spitzer who found corruption in the mutual-fund business, used by more investors than any other vehicle for stock investments. Strong Capital, Janus and other companies allowed wealthy investors to rapidly move money in and out of mutual funds. This privilege was denied to regular investors and cost them money as transaction costs rose.
Bank of America and other companies went one better for hedge funds and other rich clients: According to regulators, they essentially allowed trades today at yesterday's price -- every investor's dream. That, too, hurt regular investors. That, too, would never have come to light if not for Spitzer.
Spitzer went after computer-chip makers accused of fixing prices. He took on music companies allegedly paying disk jockeys. And, perhaps most famously, he confronted Langone and New York Stock Exchange Chairman Richard A. Grasso.
After it became known that Grasso would pocket deferred compensation of about $140 million, Spitzer sued to recover much of the money. Grasso's pay was excessive because the exchange was a nonprofit corporation, Spitzer alleged. One year, Grasso's pay was nearly equal to the exchange's net income.
The matter is still in litigation. Spitzer's light on Grasso's pay, however, was a public service. Not least it showed how public investors were again at risk with Grasso's gargantuan pay being set by some of the people he was supposed to be regulating.
In short, while other regulators played pinochle during the worst wave of corporate sleaze in decades, Spitzer had the guts and -- yes -- the overweening ambition to expose it at its headquarters. Now the guy is humiliated and disgraced. But schadenfreude often says more about the people feeling it than those it is directed against.