On the whole, Wallison says the changes were negative because of the reduced coverage – virtually eliminated for small firms – and stock analysis that he said is probably as conflicted as ever.
By short-circuiting the established legal process he said Spitzer effectively undermined the reforms he purported was interested in bringing about.
Spitzer took on alleged bid-rigging and price-fixing in the insurance industry but by peremptorily forcing executives to resign or risk possibly devastating indictments Spitzer undermined any real chance of real reforms, observers say.
“We never knew whether what he was showing us was in fact an example of corruption throughout the company or whether it was simply one or two people –. All we know is that the companies felt they had to settle with him quickly because their reputations were being destroyed,” says Wallison.
Spitzer also took on the mutual fund industry over the controversial practice of market timing -- at times outmaneuvering and overshadowing the efforts of the Securities and Exchange Commission.
But for all of the personal animus Spitzer’s performance as attorney general generated there are some who view the antagonism as part of a larger recurring pattern – almost part of the nature order -- between Wall Street and ambitious New York law officials.
Rudy Giuliani, when he was U.S. Attorney for the Southern District of New York, also advanced his career with made-for-TV arrests, barging onto trading floors and frog-marching executives out in view of cameras, recalls Wall Street veteran Robert Stovall, managing director of Wood Asset Management. Sarasota, Florida.
“This is an on-going thing, I think it happens every generation or so,’ says Stovall. “Is it a good thing? Everybody needs a cold shower every once in awhile and that’s what happened – in both these instances.”
As a result of those tactics, Giuliani’s reputation on the Street was only slightly better than Spitzer’s and may have been a factor in his failed presidential bid, say some analysts.
“The fundamental problem here is that when you are given the power of government you have to exercise it not like a private party would exercise it but in a way that is responsible,” explains Wallison, who also served as general counsel in the Treasury.
“Even if you don’t get what you want in every case, you have to accept that as part of the responsibility of the huge amount of power that you have been handed.”
Defenders of Spitzer say his tough actions against Wall Street partially made up for the lackadaisical regulation at the time by the SEC, which did subsequently change and become more aggressive.
But, “Spitzer’s effect on the SEC was terrible because they then became prosecutorial and they started abusing people’s rights, and they are still doing it, because they are trying to prove they are just as tough as Spitzer,” insists Wallison.
“This is like classical Greek tragedy,” says Marvin Pickholz, the former SEC official.
“He was the sheriff of Wall Street – he set very high standards and enforced them not with a lot of compassion – and he is being judged in that same way,” says Pickholz.
And perhaps too harshly. The irony is that major investment houses may have made out very well under Spitzer's stock research settlement.
"They have this huge new credibility in the objectivity of their research as a great vehicle that people should trade on ... but it didn't go anywhere near addressing all the pressures that are placed on research analysts," says Armand Musey, chair of the New York Society of Security Analysts' corporate governance committee and a former analyst for Merrill Lynch and Salomon Smith Barney, a unit of Citigroup.