| NEW YORK, July 13
NEW YORK, July 13 If elected New York City
comptroller, Eliot Spitzer has vowed to wield power as
aggressively as he did as state attorney general, leading some
in the financial community to worry that the "Sheriff of Wall
Street" might be back.
Both Spitzer and his critics, though, may be over-estimating
the impact that the comptroller of New York can have beyond
matters of budgeting and contracting.
No one questions Spitzer's ambition or his ability to use
his powers to the max. He has already leaped to the top of the
polls less than a week after announcing his candidacy, and the
comptroller's office would give him a pulpit from which to decry
It would also offer him rehabilitation from the prostitution
scandal that forced his resignation as governor of New York in
2008 and a possible springboard to higher office.
But an examination of the actual tools and powers available
to the comptroller and interviews with a former holder of that
office and others suggest that Spitzer would be hard pressed to
have much influence on the behavior of Wall Street or
As the city's chief financial officer, the comptroller is
the watchdog of a $70 billion budget, with the power to audit
city agencies and spending. The comptroller also signs off on
New York's bonds and oversees the city's five employee pension
funds, which have a total value of about $139 billion.
In interviews this week, Spitzer has pointed to the role of
pension fund administrator as one he could use to pressure
corporations to change their practices.
Top priorities would be pushing to separate the positions of
chairman and chief executive, remove anti-takeover "poison
pills" and scrap staggered boards, another arrangement that
hinders takeovers, he said on a New York Public Radio program.
Spitzer might be able to use his stature to persuade other
states and institutions to join him in shareholder activism, but
any change could be only incremental to the ongoing efforts of
the New York comptroller's office.
The current comptroller, John Liu, filed 61 shareholder
proposals at 58 companies in 2012. Twenty three were adopted or
settled. Of 31 proposals that went to a shareholder vote, only
One of Liu's highest-profile pushes was to try to split
Jamie Dimon's role as chairman and chief executive of JPMorgan
Chase & Co into two. About a third of shareholders
backed Liu's latest effort, down from 40 percent the year
The city's pension funds track broad stock market indexes
and have small stakes in thousands of companies.
Its biggest single holding is Exxon Mobil in which
it holds $1.02 billion, or about 0.25 percent of the company. In
May, Exxon's shareholders defeated a proposal backed by the New
York comptroller's office to release information on the
extraction of shale gas, a process known as fracking.
The comptroller might also be able to exert influence over
the financial firms that manage its pension funds, but because
it deals with a large number of fund managers, it may not be
able to influence any one in particular.
The idea that New York's comptroller could pressure
financial institutions - beyond negotiating fees - is
"ridiculous," said a hedge fund manager who advises city pension
"If a pension is all combative and hostile, then you just
don't want their business," said the manager, who spoke on the
condition of anonymity because of a relationship with the city's
"REVITALIZE AND RE-ENERGIZE"
Another factor limiting the comptroller is that decisions
are taken by the boards of the five city pension funds, which
include trustees from labor unions and other public officials.
Harrison Goldin, who was New York City comptroller from 1974
through 1989, described the job as "a monitoring role, an
Goldin is supporting Scott Stringer for the position.
Stringer was leading in the race for the Democratic nomination
until Spitzer burst onto the scene last Sunday night.
Still, Spitzer says he has big plans.
"I hope to do with it what I did to the attorney general's
office, which is to revitalize and re-energize it," Spitzer said
in an interview with Reuters this week.
After becoming state attorney general in 1999, Spitzer
revived the 1921 Martin Act, which gave him extraordinary powers
to go after financial fraud and earned him the moniker "Sheriff
of Wall Street."
He pursued Maurice "Hank" Greenberg, the former head of
American International Group Inc, for misleading
shareholders about the insurer's financial health. A small part
of that case is still ongoing. And he sued Richard Grasso, a
former head of the New York Stock Exchange, over compensation
Spitzer said was excessive. That case was later dismissed.
But legal experts say there is no easy equivalent to the
Martin Act waiting for an aggressive city comptroller to revive.
More frequently, comptrollers use their power to clash with
other city politicians and build their resumes.
Liu, for example, criticized the New York Police
Department's stop-and-frisk practices and attacked Mayor Michael
Bloomberg over city contracts. Liu, who did not comment on
Spitzer's ambitions, is now running for mayor.