10 Questions For Eliot Spitzer

By Adi Ignatius

New York state attorney general Eliot Spitzer is stirring up Wall Street again, investigating the mutual-fund industry for illegal-trading practices. It's the latest high-profile probe by the legal crusader who took on the big investment-bank analysts in 2002 and who, everyone assumes, will run as a Democrat for New York Governor in 2006. Spitzer spoke with TIME's Adi Ignatius about Wall Street, the Yankees and who would play him in the movie.

NOW YOU'VE GONE AND RATTLED THE MUTUAL-FUND INDUSTRY. HOW DEEP DO YOU EXPECT THIS INVESTIGATION TO GO? It's hard to say. In six weeks we've had two felony pleas, another pending and a pipeline full of criminal cases waiting to be made. For an industry that has always told the public to "trust us," there sure are a lot of skeletons in the closet.

DO YOU WISH YOU HAD BEEN TOUGHER WITH THE BIG INVESTMENT BANKS IN LAST YEAR'S SETTLEMENT OVER MISLEADING STOCK RESEARCH? THEY PAID SOME FINES, BUT NO ONE WAS INDICTED. I feel that we made the right judgment calls at the time. Whether the investment banks have learned their lesson and are playing by the new rules remains to be seen. If not, I'll probably reach the conclusion that we should have indeed indicted some people.

SO HOW EXACTLY DID A RICH KID LIKE YOU END UP DEFENDING THE SMALL INVESTOR? I think it helped that I know people on Wall Street and I understand investment banking. I didn't buy their easy rationalizations and explanations about what was going on. And these are great cases. It's fun to go up against the Goliaths and bring them down.

AFTER ALL THIS, DO YOU STILL HAVE ANY FRIENDS ON WALL STREET? Surprisingly, the answer is yes. Particularly with the recent cases against mutual funds, some of my fiercest critics are saying, "O.K., you win."

IS CORPORATE AMERICA CLEANER NOW THAN IT WAS A YEAR OR TWO AGO WHEN ENRON AND ALL THE OTHER BIG SCANDALS BROKE? I think that there has been an emotional shift both on Wall Street and in boardrooms. What's changed is the level of arrogance that drove corporate governance to the precipice. I think it's safe to get back into the market now as long as you have an adequate degree of caution. And as an investor, you should never forget that it's your money at stake, not theirs. Oh, and if you see a shark's fin, get out of the water.

WHAT ARE SOME OF THE NEXT BIG CASES YOU PLAN TO BRING? Acid rain, to fight President Bush's efforts to gut the Clean Air Act. Low-wage labor cases. And Internet spam. We're working now with some Internet service providers to see what we can do.

AND THEN YOU'RE RUNNING FOR NEW YORK GOVERNOR IN 2006, RIGHT? I'm thinking about it. I'll make the call a year from now. The state of New York needs help; it needs creative thinking to lead the economy out of the doldrums to avoid following the path of California.

WHICH OF THE NEW YORK YANKEES WOULD YOU WANT ON YOUR PROSECUTORIAL TEAM? I'd take Don Zimmer--for the 15th round. With a steel plate in his head and two bad knees, he'll take on anybody.

IF DICK GRASSO MADE $140 MILLION FOR THE YEAR AS HEAD OF THE NEW YORK STOCK EXCHANGE, HOW MUCH IS NEW YORK'S ATTORNEY GENERAL WORTH? Well, let's just say somewhere between the $1 that John Reed is now getting for that job and what Grasso took.

IN THE MOVIE ABOUT YOUR LIFE, WHO PLAYS ELIOT SPITZER? I'd want Kevin Costner in The Untouchables. He has that swagger and arrogance you need to be a prosecutor.