New York's attorney general, Eliot Spitzer, has earned the reputation of being the scourge of Wall Street wrongdoers, writes Conor O'Clery, North America Editor.
On the wall of Eliot Spitzer's office is a portrait of Theodore Roosevelt, the US president who earned a reputation as a "trust buster" by forcing the dissolution of a great railroad combination.
The New York attorney general has earned a similar reputation as the scourge of Wall Street wrongdoers and has, like Roosevelt, come under fire from powerful adversaries, including the US Chamber of Commerce and the Wall Street Journal editorial page.
"I keep the picture there, not because I have delusions of grandeur," said Spitzer in his spacious 25th-floor office in a building that appropriately towers over Wall Street, "but because Roosevelt also was attacked viciously when he was attacking illegal market behaviour.
"He was attacked as an enemy of capitalism and yet nobody today would argue that his actions were anything other than the most important step to ensure that capitalism survived."
The similarity with Roosevelt does not end there. The former US president ran for Republican governor of New York before winning the White House in 1901. Spitzer, the fastest-rising star in Democratic politics, has declared his intention of running for governor, as a Democrat, in 2006, against struggling Republican governor George Pataki, and people are already beginning to see him as a future presidential candidate.
"I want to fix what's broken," he says, explaining that if he can do that in the financial sector he can do it in government.
Anyone seeking high office in New York needs to acquaint himself with the issues that concern the three traditional ethnic power bases, the three "Is" - Israel, Italy and Ireland - which is why Spitzer, son of a wealthy Jewish family from Riverdale, is making his first visit to Ireland this weekend with his wife Silda, and a group of New York lawyers and activists.
The interview begins in fact with Spitzer quizzing me about Gerry Adams and the latest developments in the Northern Ireland peace process.
He is already well-versed in the details thanks to his top aide, Marty Mack, and his friend, Richard Haass, former US envoy to Ireland.
Spitzer's reputation precedes him. For the past three years, the softly spoken (he never raises his voice), lean and sharp-faced prosecutor has struck terror into the heart of the practitioners of corporate malfeasance, of which there are apparently a great number. Slate magazine describes him as the most powerful politician outside Washington.
His 2002 investigation of Merrill Lynch, which he found guilty of a "shocking betrayal of trust" in hyping dud stocks to investors, resulted in a $1.4 billion (€1.05 billion) settlement involving 10 major investment firms.
He has forced mutual funds to pay out more than $2.3 billion in restitution and penalties.
In January, insurance giant Marsh & McLellan had to establish an $850 million fund to compensate clients affected by bid-rigging.
To his critics he is the last in a long line of grandstanding prosecutors, who rewards his friends and punishes his enemies. To Chamber of Commerce president Tom Donohue, he is "judge, jury and executioner", a prosecutor whose zeal has damaged great companies.
To his fans, the attorney general is the champion of the little guy, the John Wayne of Wall Street. His investigations led him to the conclusion that the 1990s business model, whereby stock analysts were fully integrated into the investment banking operations of brokerage houses, was fundamentally corrupt and fraudulent.
The most dramatic proof came in the discovery of e-mails, such as that written by Merrill Lynch analyst Henry Blodgett who confided to a colleague that a tech stock he was promoting was a POS (piece of s**t). Another e-mail, written by analyst Jack Grubman, described how Citigroup chairman Sandy Weill helped get Grubman's children into an exclusive Manhattan nursery school by boosting his rating of AT&T. (Spitzer's ability to turn up supposedly deleted e-mails has sent Wall Street villains back to the pre-computer era, where possibly incriminating communications are voice only).
However, Spitzer insists he should not be portrayed as an enemy of business.
"I believe this very deeply that I am a protector of America, that I am the opposite of one who wants to attack capitalism a propos the marketplace.
"I'm trying to protect it from manifestations of illegality that almost inevitably result when people have too much power and don't observe the fundamental rules of the marketplace."
The government's role in regulating the market is hugely important, he believes.
"We set the parameters and the rules; the market then creates wealth, generates jobs, permits capital to flow into sectors where there would be job creation, wealth creation. The role of the government is to define the rule of law and set boundaries, both ethical and legal, in terms of contracts that permit the market to survive. Otherwise, you would have anarchy."
His critics in the Wall Street Journal represent "very often a mindless voice in an ossified system," he maintains. "They have not once acknowledged that the corruption that was there needed to be addressed.
"They have not once been able to argue that I was wrong factually, whether it's analysts, pharmaceutical cases, insurance cases or mutual fund cases. Time and time again, they have needed to acknowledge we are factually correct, that they are merely defenders of a status quo that is clearly broken and we are trying to create a rule of law that permits capitalism actually to succeed. And everybody understands some of the obvious implications of the wrongdoing that we have tried to stop.
"Let me give you a more subtle example that is equally important in my view. Imagine if, during the days when analysts were pumping up stock, you were trying to go to the market to raise capital and everybody said: 'Why should we invest with you? WorldCom is generating these wonderful numbers. WorldCom is clearly the hot stock.'
"The legitimate companies that were playing by the rules couldn't compete because the playing field was not level and there were expectations that were based upon fraud that people didn't understand. They were distorting capital flows, distorting the allocation of capital.
"If you were in a more traditional business to raise money to create a steel mill, you couldn't do it. So, we are trying to say the market works efficiently and properly when there is integrity, when there is honesty and transparency.
"We have to ensure those are the principles that guide the marketplace, not the plutocracy of the corruption."
The Bush administration acted at first spasmodically and with "enormous hostility" to even an acknowledgment that there were problems, he says. "But when things reached a certain crescendo and crystallised in a particular way, they felt compelled to say 'yes, we do have to do something to resuscitate confidence'.
"Now that they are facing a second term they are beginning to swing back, because they have been persuaded by business leadership - OK we did that."
Spitzer once said that millions of Americans invested on bad advice. Is this still the case?
"From a technical point of view, if I give somebody bad advice but I believe it, then I'm not committing a crime. It's just bad advice. The crime we're focusing on is knowingly giving somebody bad advice.
"I think it's got better. I think that the fact that we have studied the problem and shone a spotlight on it has forged a change in the marketplace. The investment banks are trying much harder to protect the integrity of the research they generate.
"PG Waterhouse now has an ad that says: 'You can trust our advice.' The issue is one that people are sensitive to and that means the market will begin to respond."
His current target is the insurance industry, which he says is rife with corruption, but "we will keep going until we find it".
He is outraged by chief executive pay, which has risen from 43 times to 530 times ordinary employees' pay in the past quarter century, and he is going after Richard Grasso, former chairman of the New York Stock Exchange, for the almost $200 million he received in compensation.
Yesterday, Spitzer had an appointment in his office with Maurice Greenberg, the powerful executive who built American International Group (AIG) into a global insurance giant. The attorney general was investigating complex transactions that may have artificially boosted the company's financial position. The heat was too much.
Greenberg stepped down as company chief executive on Monday to join a lengthening list of corporate giants felled by the prosecutor who would be Teddy Roosevelt.
FACTFILE
Name: Eliot Spitzer
Position: New York attorney general
Background: Age 45. Graduate of Princeton and Harvard. Since elected attorney general he has focused on corporate crime, with dramatic results
Family: Son of well-connected real-estate owner in New York. Lives in Manhattan with wife Silda and three daughters
Why he is in the news: Visiting Ireland this weekend
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