Wall Streeters are conditioned to know a bad trade when they see one. They tend to view most life decisions through the prism of risk and reward, just as they do buy and sell decisions each day at the office.
In today’s New York Post, we learn that at least one political action committee made up of finance types in New York is backing away from their support of the anti-Eliot Spitzer candidate in New York City’s comptroller race…
Terrified of “Steamroller” Eliot Spitzer, heavy hitters on Wall Street have abandoned their ambitious plan to inject millions of dollars into the race for city comptroller to help elect Scott Stringer, The Post has learned.
One group formed by the financial titans, Forward NY, has spent only a paltry $2,000 in “independent expenditures.” Forward NY was supposed to raise huge sums — up to $150,000 per individual — from corporate executives who abhor Spitzer for targeting them and their industry when he was state attorney general.
As it turns out, they fear Spitzer more than they hate him.
Spitzer garnered the reputation as the scourge of New York’s investment banks when he nailed them to a cross for peddling fake research in exchange for i-banking fees during the dot com bubble fourteen years ago. He also managed to push AIG’s then-powerful chairman Hank Greenberg out of the company during an unrelated investigation of the insurance companies. He’s played that reputation up during this campaign (see the haunting commercial here).
Interestingly, the role of comptroller does, in fact, come with some oversight with regard to how NYC’s enormous pension funds are allocated and managed. God help The Street if Spitzer believes in passive management and index funds – that’s a lot of fees out the window.
Kevin Roose at New York Magazine gives you some idea of what’s at stake for the investment pros who live off of this business:
Right now, there are five public city pensions — one for teachers, one for firefighters, one for police officers, one for Board of Education employees, and one for all other covered public workers. The comptroller is in official custody of all of these giant piles of money, whose assets currently total about $140 billion, but each of them is run independently. Each pays its own consultants, hires its own investment managers, and sits under its own board of trustees. There are about 60 trustees between the five pension funds and few professional investors among them.
Bottom line, Wall Street’s big money guys can smell this losing trade from a mile away and they want no part of it. Antagonizing Spitzer right now is simply an inefficient – and possibly disastrous – use of funds.
You might ask “But instead of backing down, why don’t they just throw everything they’ve got at Spitzer’s opponent to keep him out of power?”
The writing is pretty much on the wall that it won’t do much good. Anyone willing to spend more than $4 million dollars of their own money to obtain a job paying $200,000 is clearly not going to be deterred. For Spitzer, one of the most determined human beings in New York political history, there is a lot more at stake than just a job. This is about redemption, it’s about the restoration of his legacy. Remember, this is a man whose stated goal has always been to become President of the United States someday.
Nobody on Wall Street wants to take the other side of that trade, and with good reason.