How New York's attorney general became the most powerful man on Wall Street.
Eliot Spitzer, who is temperamentally unable to stay out of the headlines for more than 72 hours, is back in them again. Last week, the New York state attorney general accused commercial insurance companies of bid-rigging. In response, the stocks of the biggest players implicated, Marsh & McLennan and AIG, have tanked, losing a combined $38 billion in market capitalization. More alarming for the insurers, Spitzer signaled this was just the beginning of an industry-wide investigation. For when he finds a few bad eggs, Eliot Spitzer cleans out the entire coop and changes the way it is run, as Wall Street's investment banks and mutual funds have learned to their dismay.
In the past two years, in a state filled with big egos—Gov. George Pataki and New York City Mayor Michael Bloomberg on the right, Sens. Hillary Clinton and Charles Schumer on the left—Spitzer has emerged as the most consequential political figure. He may be America's most powerful politician outside Washington. He has transformed a sleepy office into the nation's dominant regulator and re-engineer of the financial services industry—all in the name of protecting consumers.
Spitzer isn't a scalp-taker, as Rudy Giuliani was when he was a prosecutor. Spitzer doesn't like taking cases to trial. Instead, he has devised a more powerful tactic: He exploits the threat of stock declines and business losses to force industries to change.
http://slate.msn.com/id/2108509/