The Rise of Eliot Spitzer

The Rise of Eliot Spitzer

7 Mins
May 21, 2010

November 2006 -- BOOK REVIEW: Brooke A. Masters. Spoiling for a Fight: The Rise of Eliot Spitzer (New York: Henry Holt and Company, 2006), 353 pp., $26.00.

How do you take a smug child of wealth and portray his moral denunciations of self-made men as admirable? How do you relate the career of a politician who recklessly violates the rule of law and make him look like a statesman?

When Washington Post reporter Brooke Masters set out to write this thorough account of Eliot Spitzer’s career as attorney general of New York, she probably did not confront those difficulties consciously. But in Spoiling for a Fight: The Rise of Eliot Spitzer, Masters solves them by relying implicitly on her readers’ acceptance of two beliefs: that self-interest is evil (altruism) and that the rule of law is expendable (pragmatism). It is this aspect of the story Masters tells that I want to focus on here. For the particulars of Eliot Spitzer’s three major anti-capitalist crusades, readers should consult my article “Eliot Spitzer: Ayatollah General” in The New Individualist, April/May 2005. The details Masters adds to that history have only strengthened my conclusions, and her accounts of Spitzer’s other attacks on businessmen (such as Hank Greenberg and Richard Grasso) only reinforce my picture of the man.


By background, Eliot Spitzer is the very model of the “limousine liberal,” a familiar figure in New York, where Theodore Roosevelt, Franklin Roosevelt, and Nelson Rockefeller all served as governor. Spitzer bodes to be the fourth in that line. Born to a real-estate tycoon, Spitzer attended the elite Horace Mann School, Princeton, and Harvard Law. Although he got a job at the prestigious Paul, Weiss law firm, Spitzer found it “unfulfilling” and left to join the Manhattan district attorney’s office. Six years later, he returned briefly to private practice and then jumped into the 1994 Democratic primary for attorney general. After finishing fourth in a four-way race, he immediately began running for the 1998 election, using his father’s money in a way so sleazy that even the leftist New York Times was reluctant to endorse him in the general election (p. 44). A year after he was sworn in, however, the cheers of the Times had begun; within two years, they had reached deafening levels. Spitzer had made it clear that he intended to use his legal powers not chiefly to prosecute obvious fraud, but to force businessmen to conform to the left’s ethical notions of “fair dealing and fair play” (p. 5).

A principal element in this notion of commercial fairness is that business must behave as though performing a public service for its customers. Spitzer does not demand asceticism of businessmen; he just wants them to look upon work as a duty (pp. 111–13). This is very similar to the medieval view of business: Each person has a job to perform; if he does it well, the people he deals with will benefit and the economy will reward him with a suitable amount of money. It is a clockwork view of the economy, and it might sound innocuous enough. Indeed, it might even sound like Adam Smith’s “invisible hand.”

But what turns the “invisible hand” insight into clockwork oppression is that the latter depends upon a static concept of “doing a job.” In the Middle Ages, doing a job was performing a static and traditional role. It could be carried out as a duty, and its performance could be legally enforced. Today, beyond the lowest levels, “doing a job” is a sprint through an obstacle course of ever-shifting market forces, keeping an eye on customers and competitors, juggling supplies and sales, relying on hype and hustle, engaging in back-scratching and back-slapping, mixing pressure and pricing. Evidently, Spitzer’s self-made father knows how the world works. He reputedly won every game of Monopoly that he ever played with his children by contriving unheard-of arrangements and deals utterly at odds with the game’s official rules (p. 24). Nevertheless, since coming to office, Eliot Spitzer has used an utterly vague anti-fraud law (the Martin Act) to criminalize free-wheeling capitalism and force businessmen back into his static model of a public-service economy.

Spitzer’s medieval view became evident in his first major case, the attack on the securities industry in 2002 (pp. 73–102). His allegation was that Merrill Lynch and other firms tended to give higher recommendations to companies in which their investment-banking divisions had an interest. If they did (on page 84, Masters quietly admits it is debatable), the fact would not surprise anyone who admires the stock marketas a boisterous Middle Eastern bazaar writ large. But that was not how Spitzer thought it should operate, and he decided to use the Martin Act to criminalize hype. A month after Spitzer announced his legal war on Merrill Lynch, the company’s stock had dropped by nearly one-fourth, a loss of $11 billion in value. The management of America’s most storied securities firm decided that the company was not rich enough to obtain justice and capitulated to the Spitzer creed.


The altruist premises of our culture make it easy to glamorize a politician who attacks wealth-seeking. But even given our culture’s pragmatism, it is less easy to glamorize an attorney general who violates the rule of law. And, to be fair, Masters sometimes quotes a voice opposing Spitzer’s lawlessness. But not often.

"People called in for questioning during Martin Act investigations do not have a right to counsel or a right against self-incrimination."

-Legal Affairs

For example, nowhere in her 300-page text does Masters take a hard look at the Martin Act and what it means for liberty and the rule of law. At the point where she is building up Spitzer’s credentials to be part of the TR/FDR tradition, she merely notes that the law came out of the Progressive Era (p. 8). True enough. But she might have elucidated the full meaning of that tradition if she had quoted the description of the Martin Act given by a senior editor of Legal Times:

It empowers [New York’s attorney general] to subpoena any document from anyone doing business in the state; to keep an investigation totally secret or to make it totally public; and to choose between filing civil or criminal charges whenever he wants. People called in for questioning during Martin Act investigations do not have a right to counsel or a right against self-incrimination.

Now for the scary part: To win a case, the AG doesn’t have to prove that the defendant intended to defraud anyone, that a transaction took place, or that anyone actually was defrauded  (Nicholas Thompson, “The Sword of Spitzer,” Legal Affairs, May/June 2004).

According to Masters, Spitzer hired Eric Dinallo to head his Investment Protection and Securities Bureau precisely because he had “‘really creative ideas for using the Martin Act’” (p. 50). Like threatening to destroy Merrill Lynch, as it turned out.

Masters does occasionally note that Spitzer’s team is not above rank thuggery. David Brown IV, a Harvard Law School classmate of Spitzer’s, quit Goldman Sachs to become an assistant attorney general because he felt he had “totally sold out” by pursuing wealth. His concept of idealism was well conveyed by a remark he made in New York magazine: “We will come to your house at night” (p. 258). Masters also tells the story of Steven B. Markovitz, who had engaged in “after hours” mutual-fund trading (an act whose illegality is by no means certain [pp. 149, 259]): “Under pressure to produce results, the lawyers in Spitzer’s criminal division gave Markovitz less than twenty-four hours to plead guilty. If he didn’t, they said, he would be arrested at home in front of his child and pregnant wife” (p. 160).

But the principal way in which Spitzer has abandoned the rule of law is by using the threat of legal penalties to effect the overnight regulation of industries, bargaining only with people whom he can send to jail if they balk. Since 1900, businessmen have come to accept the existence of a regulatory bureaucracy and have pinned their hopes on semi-reasonable regulators who will try to follow congressional intent, solicit public opinion, pore over legal arguments for months, and give serious weight to economic concerns. Spitzer has shown them how fragile their pitiful procedural “rights” would be in the administration of a Robespierre. Said one lawyer involved in negotiating a settlement of the research-analyst case: “‘[It] flushed down the toilet notice and comment; it also flushed down the toilet regulatory history’” (p. 127). And that is how Spitzer likes it. When national regulators said the securities industry was complaining of the damage Spitzer’s proposed reforms would wreak: “‘My response was, so what, who cares? You’re the ones who are supposed to tell them what to do’” (p. 97).

As for charges that he should not be engaged in legislation and regulation at all, never mind his reckless methods, Spitzer has one reply: He has been forced to legislate and regulate through his power to imprison because those who have the power to legislate and regulate are not using it. Thus, the solution to his exceeding his authority is: Give him the authority to do what he wants. That imposing his own concept of virtue may be wrong seems beyond his comprehension. He views arguments emanating from pro-capitalist think tanks as hired-gun rationalizations for lawless selfishness. “‘The financing behind the [libertarian] Cato Institute and the Federalist society is a group that doesn’t want and never wanted any government enforcement of the rules’” (p. 269).


Spitzer’s accession to the governorship of New York is now considered a foregone conclusion, and he claims to be looking no further. But in 2012 he will be only 53. No wonder, then, that “his supporters and even his campaign rhetoric suggested a higher ultimate goal” (p. 290). Were he to be elected president, Spitzer might well become this country’s fourth powerful anti-capitalist president, joining TR, FDR, and LBJ. Indeed, given his coming of age in the post-sixties era, he might well be the most anti-capitalist of them all.

Not everyone targeted by Spitzer has fallen victim to him.

But this ascension is anything but a foregone conclusion, Not everyone targeted by Spitzer has fallen victim to him and Masters inadvertently reveals his weak point. She quotes what a gun-control lawyer said in a post-mortem on Spitzer’s total failure to revamp the gun-manufacturing industry: When it comes to Wall Street, Spitzer “‘goes in and he finds out all kinds of things and they [his targets] all fold because you can’t have that kind of adverse publicity. . . . [However,] he goes in with the gun makers . . . and they don’t care what the New York attorney general thinks’” (p. 70).

Exactly. Spitzer fails when his victims spurn his moral premises. He cannot control businessmen through “public shamings” when the businessmen are not ashamed.

And that is why people opposed to Spitzer need to attack the moral foundations of his career. Not his publicity-seeking. Not his vaulting ambition. Not even his procedural missteps. Spitzer’s opponents must uphold the morality and legality of pursuing one’s self-interest. To stop the rise of this American Robespierre will require a moral confidence equal to his own.

This article was first published in the November 2006 issue of The New Individualist magazine.