Although I arrive at London’s Athenaeum Hotel five minutes early, Eliot Spitzer is already waiting at a table by the bar.
The former scourge of Wall Street hasn’t changed much – at least outwardly – in the year and a half since a sex scandal forced his resignation as New York governor. Tall with an outsized head and jutting chin beloved of caricaturists, he still wears the standard politician’s uniform – blue suit, red tie and white shirt, a combination that works well on television.
When I comment on his choice of clothing, he shrugs. “That’s all I have. I must have 80 of them,” he says.
Now 50, his hair has a few new grey flecks and the wrinkles around the eyes are a bit deeper than they were during his glory years as New York attorney-general in the first half of this decade. Was it only three years ago that his fulminations against Wall Street misbehaviour routinely led the business news? That his investigations of biased stock research and tirades against self-dealing and outsized pay plans led traders and bankers to clench up with anger at the mention of his name?
Spitzer’s meteoric rise and sudden fall were a political morality play. An unknown prosecutor, he won election as New York attorney-general in 1998 on the strength of non-stop campaigning and his developer father’s deep pockets. He then turned that little-known office into an international pulpit for campaigning against polluters, civil rights violators and Wall Street fat cats who took ordinary people to the cleaners. His stern lectures about traders who “bet on horse races after they were over” and public threats to bring criminal charges against Fortune 500 companies made him wildly popular among voters but roundly hated by many of the brokers and bankers he sought to police.
Largely on the strength of his financial cases, he swept to victory as New York state governor in 2006 with the biggest margin the state had ever seen. Some commentators openly wondered whether he could become the US’s first Jewish president.
Less than 18 months later, however, he self-destructed. FBI agents, tipped off by some unusual money transfers, wiretapped him making an assignation with a high-end call girl. Word leaked to the media that Spitzer, who had investigated and castigated prostitutes as attorney-general, was “Client 9” of the Emperor’s Club prostitution ring. He resigned in March 2008, saying, “I cannot allow my private failings to disrupt the people’s work,” and federal prosecutors opted not to charge.
Four years ago, I was writing a biography of Spitzer and we met regularly in his Manhattan office or on the campaign trail. His office was always full of people, with staff popping in and out and visitors stacking up in the waiting room. Now, he has time to spare. He has kept a low profile ever since his resignation, concentrating on making amends to his family and running his elderly father’s real estate business.
Gradually, he is dipping his toes back into more public waters, with a biweekly column on finances for the website Slate and occasional appearances on television. He says he has been careful to avoid situations where questions are more likely to focus on his legal troubles than his political and financial views, and that thus far his appearances have been greeted mostly with polite interest rather than disdain.
This flying visit to London is the latest sign of his re-emergence. He is here to headline the World Council’s 10th International Conference on Corporate Governance on “Realigning the moral compass of the boardroom”, a subject that has been dear to his heart since his first assaults on conflicts of interest in banking. When we meet, he has already given his speech on how “It is time to cut out the act and get REAL about corporate governance” and received a silver bowl as a thank you gift.
We meet at the Athenaeum on Piccadilly because it is convenient for the conference venue in St James. He would have been happy with a sandwich and coffee at my office, but it is halfway across town. “You know food is not a central part of my life,” he e-mailed from New York before the trip. Indeed Spitzer’s crusades against biased stock research and improper fund trading were fuelled by Diet Cokes and takeaway deli sandwiches. His staff remember his weekly doughnut runs with fondness, but he rarely ate the sugary stuff himself.
My restaurant choice proves lucky. Spitzer recognises the hotel as the one where he, his wife, parents and three daughters stayed on the girls’ first trip to Europe six or seven years ago. He is interested enough to inquire at the desk if they keep old guest registers. They don’t.
We opt not to eat from the buffet and instead order off the menu. The choices are long on British classics and seem heavy for a sunny autumn day. I ask for a simple salad of lettuce and tomatoes and select the black bass, mostly because I like the sound of the accompanying lemon gnocchi.
Spitzer, remarking that he rarely eats pasta for lunch, nonetheless chooses the daily special of carrot soup and then ravioli. Typically American, he waves off the wine list and we both have Diet Coke.
What strikes me most is how much his life has changed. After a decade of non-stop public attention, he is in the backwater now. Instead of investigating Wall Street malfeasance and breakfasting with the great and the good, he buys and runs office buildings for his father, feeds the dogs and supervises his two younger girls – aged 15 and 17 – as they get ready for school.
His wife Silda, who gave up a legal career to support his run for attorney-general, has gone back to work raising money for a hedge fund. Having exposed her and the girls to international ridicule, he is now very protective of them, saying only that they have been “fantastic”, about last year’s scandal and the dramatic change in their circumstances.
But the spectre of Ashley Dupré, the 22-year-old prostitute who became Spitzer’s downfall, hangs over the conversation. At one point we are comparing notes on skiing, and I make a pitch for how nice it was to have a catered chalet with what I refer to as a “houseboy or housegirl” to cook all the meals.
“Housegirls I can’t do,” he says bluntly.
I notice too that some of the self-righteousness that saw him widely described in the tabloids and on television as “the sheriff of Wall Street” has gone, replaced by a bit more tolerance of human frailty.
It is most noticeable when the topic turns to Hank Greenberg, long-time chief executive of American International Group and subject of one of Spitzer’s most controversial investigations – a 2005 probe of AIG’s accounting that led the company to force out Greenberg and pay a $1.64bn penalty. The two men and their allies have been sniping at each other in the media ever since, but when Greenberg’s efforts to rebuild his reputation come up, Spitzer volunteers a surprising defence of him.
“Nobody or very few people should be judged exclusively based on that one thing. Hank built an amazing company, He was always very authoritarian and that led to some very good things in building the company. It also led to some very unfortunate things. It’s no surprise that he wants to get back in and resuscitate his reputation.”
When I observe that he would have said something different two years ago, he acknowledges that his perspective has changed. “Maybe it’s maturity or distance from the case,” he says.
Coming from a man who all but accused Greenberg of criminal wrongdoing, the words sound positively mellow. Greenberg would be unlikely to return the sentiment.
As we talk, it becomes clear that Spitzer is itching to get back in the policy fray. He is fiercely interested in the debate raging on both sides of the Atlantic on how governments can avoid having to rescue the biggest banks when they get into trouble. Paul Volcker, the former Federal Reserve chairman, and Mervyn King, governor of the Bank of England, have both argued that government should consider splitting up institutions seen as “too big to fail”. They suggest a mandatory separation of basic banking, such as taking retail deposits and making loans, from more complicated, lucrative and dangerous activities such as trading in stocks and derivatives with the bank’s own money rather than for clients.
Spitzer finds the idea of a split attractive.
“Banking should be boring,” he says. “When banking isn’t boring, you’re asking for trouble long-term. The razzle-dazzle stuff is great but leave it to people who have raised their equity differently, who don’t go to the government.
“A bank is supposed to raise money and lend it to sectors that need it. It’s not supposed to be a hedge fund. That’s a different beast. If you want to set up a hedge fund, that’s wonderful but I have no societal interest in subsidising it.”
While he has been talking, I have been doing most of the eating, so now we switch roles and he spears his ravioli as he quizzes me on the economic and political situation in the UK. He shares the concerns of Lord Turner, chairman of the UK’s financial regulator, that the global financial services sector may simply have become too big. “I don’t think you can build an economy that is only financial services advisers,” he says. “Who is going to bring the manufacturing back?”
Always critical of the US watchdogs that regulated banks and the securities industry, Spitzer has grown even more scathing in this area: “Regulators get to the point of their incompetence and create the crisis because they fail to regulate, and then use the crisis as the argument for more power, and so now you have the Council of Regulators made up by the very same people who created the crisis in the first place.”
The financial crisis has also convinced him that he was right about bankers, even when he did not win. Spitzer drew widespread criticism for his 2004 lawsuit to force Dick Grasso, head of the New York Stock Exchange, to return his $139m pension on the grounds that it was “simply too much” to pay the head of what was then a not-for-profit institution. A judge threw out the case, but reining in Wall Street bonuses has now become almost an article of faith for many politicians.
“The last thing I ever want to do is say, ‘Gee, we got everything right’. We didn’t get everything right,” he says. “But do I think we were right in the larger strategic decisions? I actually think we were. The lightning rod cases, whether it was Grasso or AIG ... we were ... this is an awful thing to say ... but we were right.”
I ask him whether he thinks politics is out for now and he nods and, after a long pause, says “yes” rather sadly.
For you or because of the family?
“Both. It’s been really tough. They’re doing great, all things considered, but I ... I can’t.”
He starts to reminisce, but he does not mention the cases that made him famous or the speeches or the lunches with powerful people. Rather he starts talking about an old railroad right of way that he, as governor, arranged to have renovated and converted into a state park. When “The Walkway over the Hudson” opened this year, he went privately to see what he had helped create.
The waiter appears, asking if we want dessert or coffee. Spitzer waves him off. He is through with food. So, I ask, what else does he do with his time? He replies that he spends his free time teaching an undergraduate course in law and public policy at the City College of New York and playing racquet sports.
“The only two things that really get me really relaxed are playing tennis and squash,” he says. “The problem with running is that you can still think.”
With most of his peers busy with their careers and families, Spitzer says most of his games are with the pros at the club where he plays. But he says he doesn’t lack for friends at other times. After a horrible period right after the resignation, which he calls “the quietest day in my life”, he began reaching out to people who knew him before his election as New York attorney-general.
He is rediscovering the friends from his undergraduate days at Princeton, law school at Harvard and early career as a law clerk. They are, he observes, his “real friends” rather than the “transactional friends” he made as a politician. “When you go through a period where suddenly you’re so important and all this, you don’t have time as much to see your real friends,” he says. “And then you come through this at the end and see who your real friends are. So you get to start seeing them again, which is nice.
“But you almost feel guilty because you feel like, ‘Wait a minute, where was I the last decade, suddenly hanging around with the people who thought they were important, going to breakfast at the Regency [a posh New York hotel], instead of seeing my real friends.’”
The bill arrives and Spitzer asks for directions to Regent Street, where he wants to do a little shopping for his wife and daughters.
We shake hands and he walks off slowly, a man who has all the time in the world.
Brooke Masters is the FT’s chief regulation correspondent
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The Athenaeum
116 Piccadilly, London
Diet Coke x 2 £6.50
Green salad £3.50
Wild black bass £26.00
Daily two course lunch:
Carrot soup, ravioli £19.00
Total (including service) £55
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A life in brief: From a brush with McEnroe to credit crunch crusader
1959 Born on June 10 in the Bronx, New York, to property mogul Bernard Spitzer and Anne, an English teacher.
1973-77 Attends New York’s Horace Mann High School and achieves a near-perfect Sats score of 1,590 out of 1,600. A keen tennis player, he plays a kid named John McEnroe, who attends a nearby school. Soundly beaten, he tells his parents he’s seen “the kid who would be number one in the world”.
1978-81 Attends Princeton University.
1981-84 Attends Harvard Law School, where he meets Silda Wall. They marry in 1987.
1986-92 Works in district attorney’s racketeering prosecutions office and launches investigation that brings down the Gambino family, which controls Manhattan’s garment and trucking industries. Thomas and Joseph Gambino avoid jail sentences but are forced to pay a $12m fine.
1990-94 First daughter Elyssa is born, followed two years later by Sarabeth and by Jenna in 1994.
1998 Defeats incumbent Republican Dennis Vacco to become New York state attorney-general.
2002 Pursues Merrill Lynch over links between their investment banking and research practices, calling their actions a “betrayal of trust by one of Wall Street’s most trusted names”. He then oversees a settlement that sees 10 leading banks pay out $1.4bn to sever the ties between their research and investment arms.
2004 Brings prosecution against several prostitution rings. Announces the arrest of 16 people for operating a high-end prostitution ring.
2006 Elected governor of New York state in November.
2007 Report by attorney-general Andrew M Cuomo finds that governor’s staff misused New York state police to gather information on Republican state majority leader Joseph L Bruno.
State senate votes down his radical plans to allow driving licences for illegal immigrants. The New York Times calls it Spitzer’s “single most unpopular decision since he took office”.
2008 Reported to be a client of a prostitution ring. Resigns as governor on March 12.
2009 As a columnist for Slate.com, criticises US government bail-out of AIG, calling it an “inside job”.
Will Holloway
