Eliot Spitzer’s announced candidacy for New York City comptroller may not affect the bond market or city pricing, muni observers say, but the former governor’s re-entry into politics will spice up what normally is a dormant race for an office that oversees the city’s bond program and pension funds.
Spitzer, the former self-proclaimed “sheriff of Wall Street” who resigned as New York governor in 2008 after a prostitution scandal, confirmed his candidacy over the weekend.
“It is a position that has tremendous opportunity,” Spitzer, 54, said on a radio show. He envisions invigorating his office as he did as state attorney general from 1999 to 2006, when he aggressively prosecuted white-collar crime on Wall Street.
Spitzer, who needs to file nomination signatures by the end of Thursday, would run as a Democrat against Manhattan borough president Scott Stringer in an open-seat race. Incumbent John Liu is running for mayor. Stringer has already lined up endorsements from party insiders.
“[Spitzer’s] candidacy will energize not just a sleepy race but the whole city election picture. The mayor’s race has been tepid so far,” said Anthony Figliola, a vice president at Empire Government Strategies in Uniondale, N.Y.
The comptroller manages city’s bond issuance under general obligation, Transitional Finance Authority and Municipal Water Finance Authority credits. The city has about $42 billion of GO debt outstanding. In addition, the comptroller is the custodian and investment advisor to the boards of the five primary employee pension funds.
“I don’t think there will be any immediate impact on the bond market, or New York City pricing, whether Spitzer runs and wins, or whether Stringer runs and wins. The actual department is run by experienced professionals in the comptroller’s office,” said Richard Larkin, senior vice president and director of credit analysis at HJ Sims & Co.
“Stringer has more direct experience with New York City because he was Manhattan borough president. He has some familiarity with the city’s budget whereas Spitzer has no direct experience. But hell, he ran the whole state of New York,” Larkin added. “Long-term, my concern is that Mr. Spitzer might use the comptroller’s office for political activism. Analysts like me just want to see financial efficiency.”
Spitzer’s announcement triggered the following response from Stringer’s campaign manager, Sascha Owen:
“Scott Stringer has a proven record of results and integrity and entered this race to help New York’s middle class regain its footing. By contrast, Eliot Spitzer is going to spurn the campaign finance program to try and buy personal redemption with his family fortune. The voters will decide.”
Elected governor in November 2006, Spitzer resigned just 16 months later after a high-end prostitution ring exposed him as “Client Number 9.”
In November 2008, the U.S. attorney’s office for the Southern District of New York said it would not charge Spitzer in connection with the scandal because it found no evidence of misuse of public or campaign funds.
“Another point of intrigue,” according to white-collar defense attorney Anthony Sabino, is how Wall Street will react.
“The New York City comptroller has to deal with Wall Street types, many of whom still hate Spitzer with a passion,” said Sabino, a name partner at Sabino & Sabino PC in Mineola, N.Y., and a St. John’s University law professor. “Spitzer has powerful enemies with lots of money to throw against him. It will be interesting to see how that acrimony influences the campaign.
“In analyzing Spitzer, there is a near schizophrenia here,” Sabino added. “There is Spitzer before 'Client 9,’ to the manor-born, wealthy crusader against Wall Street excess, and the like. Then there is post-scandal Spitzer, disgraced, embarrassed, relegated to being a talking head.”
In a strange twist, Kristin Davis, who said she was the madam who supplied Spitzer with escorts, is running for comptroller as a Libertarian.
After he resigned, Spitzer hosted a roundtable show with Kathleen Parker on CNN and lectured at City College of New York, among other involvements.
Figliola expected Spitzer to re-enter politics sooner. “I’m surprised it took him as long as it did to make an entree back into politics.”
Spitzer’s run, right after Anthony Weiner’s entry into the mayor’s race and surge in the polls, has fostered a comeback theme to this year’s city ticket. Weiner resigned from Congress two years ago amid relevations that he sent photos of his private parts on Twitter.
“Indeed, this election cycle is a tale of second chances in the extreme,” said Sabino.
According to Figliola, Spitzer can overcome any Wall Street backlash. “He’s made a certain number of enemies, but there’s more than just Wall Street money out there.”
Larkin said Spitzer, if elected, could overcome lack of direct experience with the comptroller’s office the way former congresswoman Elizabeth Holtzman did after she took office in 1990.
“Liz Holtzman was a political animal who stepped into the comptroller’s office and did a credible job,” he said.
Larkin rated New York City for Standard & Poor’s in the early 1990s, when David Dinkins was mayor. “We had serious concerns about the city’s credit at the time and we had a meeting. Mr. Dinkins came in with Liz Holtzman, and she presented the city’s case better than he did.”
Moody’s Investors Service rates the city’s general obligation bonds Aa2, while Fitch Ratings and Standard & Poor’s rate them AA.
