Before he became Client No. 9, Eliott Spitzer was the man that cleaned up Wall Street, taking investment bankers to task and helping to bring down the man that arguably did more for the New York Stock Exchange than any other chief executive in modern history, Richard Grasso, for making too much money when it was not politically correct to do so. But that's all history now.
Enter Attorney General Andrew Cuomo. After pulling Fannie Mae and Freddie Mac to the table and getting them to agree to overhaul the entire home finance real estate valuation business (to the angry howls of many in the industry)--and even getting the GSEs to cough up the funds to create the agency to oversee the changes--Cuomo has now turned his attention to the ratings agencies.
The bond rating industry is a $5 billion a year business, according to the Wall Street Journal's story today, that makes its money, in part, by charging the firms that provide the bonds it rates. The problems many are attributing to the ratings agencies are so similar to those that Spitzer attacked--investment bankers that sold stock that their own analysts recommended--that one wonders how he missed it. The Journal reported today that a settlement with Moody's Investors Service, Standard & Poor's and Fitch Ratings could come within a week.
Cuomo has only been in office since Nov. 2006. If he gets this done, he will arguably be the politician that has accomplished the most aimed at fixing the housing mess. We'll have to wait and see if any of his efforts actually make things better, but no one can say he isn't swinging the bat.
Most agree that Spitzer's efforts were geared at getting him and his family into the New York Governor's Mansion, two things he gave up when the scandal broke about his leisure activities. Cuomo may be hoping to translate his efforts into a similar position. After all, his father, Mario Cuomo, was New York's governor from 1983-1994.
But before we decide his efforts are only politically motivated, it would be wise to remember that he's built much of his career around US housing. He was Secretary of the Department of Housing and Urban Development under Clinton and Chairman of the New York City Homeless Commission under New York City Mayor David Dinkins.