New York State Attorney General Eliot Spitzer to talk

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Eliot Spitzer
New York State Attorney General Eliot Spitzer fields questions during his April 23 talk at Duke

The wave of corporate scandals that recently swept the country — and continues to have serious repercussions throughout the financial world — has its roots in a 20-year-old movement to reduce the federal role in various forms of governmental regulation, New York State Attorney General Eliot Spitzer told a crowd of more than 100 at the Terry Sanford Institute for Public Policy Studies on April 23.

The visit by Spitzer, who was voted “Crusader of 2002” by Time magazine for his successful fight against corporate corruption, was sponsored by Duke Law School, the Global Capital Markets Center, and the Samuel and Ronnie Heyman Center for Ethics, Public Policy and the Professions.

“They called this a devolution of power,” Spitzer said of the movement away from federal regulatory efforts and toward state regulation in areas such as securities, other forms of commerce and environmental issues. “Back then I opposed this ‘new federalism.’ ”

The result was a regulatory vacuum that states were unequipped to fill, he said. Further, Spitzer said, some in Congress, along with business interests, have worked to prevent states from playing a regulatory role in areas including oversight of Wall Street practices and predatory lending.

At the same time, he said, relatively weak boards of directors at some corporations ceded more and more power to CEOs. Spitzer cited salary figures to underscore that power shift. In 1980, he said, CEO salaries at major corporations averaged 42 times the salaries of average workers within those companies. By 2001, the CEOs were earning 411 times the salaries of average workers.

All of these forces created an atmosphere in which corporate malfeasance was able to fester and weaken once-healthy companies. “What happens is you have all of these barnacles on the ship and they drag the whole ship down,” he said.

Since becoming New York’s attorney general in 1999, Spitzer has used his state office to attack corruption and as a platform for promoting notions of sound corporate governance. He has helped make New York a national leader in investor protection, environmental stewardship, labor rights, personal privacy, public safety and criminal law enforcement. His investigations of conflicts of interest on Wall Street have driven major reforms in the nation’s financial services industry.

A graduate of Princeton University and Harvard Law School, Spitzer previously served as a clerk to United States District Court Judge Robert W. Sweet and as an associate at Paul Weiss, Rifkind, Wharton and Garrison. He then worked as an assistant district attorney in Manhattan from 1986-1992, rising to become chief of the Labor Racketeering Unit, where he successfully prosecuted organized crime and political corruption cases. He also worked at the New York law firm of Skadden, Arps, Slate, Meagher and Flom, and was a partner at Constantine & Partners.