Goldman 'Witch Hunt' Or 'Legitimate Case'? Both: Spitzer

The securities fraud case brought against Goldman Sachs could be both a "witch hunt" and a "legitimate case of regulatory authority," former New York governor and attorney general Eliot Spitzer told CNBC Monday.

"There's no question the SEC (Securities and Exchange Commission) is desperate to enforce the law. It's desperate to bring in the big white whale. This is their opportunity to do so," said Spitzer.

Spitzer does not think Goldman's business is in any immediate danger. However, he thinks there will be long-term effects. “The existential threat they face right now is that the public doesn't understand what they, or any other investment bank, does that serves any social utility," he said.

"After they've taken trillions in subsidies, tax payer subsidies, now they are paying their bonuses again, and now they have an overlay of fraud, people are saying what do they do that serves any purpose?" he added.

"This case metastasizes all the public anger, the notion that they have gamed every system, they're squeezing money out of a stone at every turn, and everything that they are doing is antisocial in purpose."

Spitzer also said he thinks some form of the Volcker rule will emerge. The rule, named after White House economic advisor Paul Volcker, would ban the buying and selling of investments on financiers' own banks unrelated to the customers' needs. The rule is being considered as an element of the proposed financial regulatory reform.

President Barack Obama will take his push for tighter financial regulation to New York on Thursday. The Senate Democrats plan to bring a reform bill to the floor that day, which will likely be debated next week.