Legal Intern, Manhattan Institute's Center for Legal Policy
It appears as if the 'Sheriff of Wall Street' is back with both six-shooters fully loaded. In true Wyatt Earp fashion, former governor and current NYC comptroller candidate Eliot Spitzer is planning to utilize his entire cadre of resources to strike against the renegade corporate marauders, euphemistically known as the "U.S. Chamber of Commerce." The Washington Examiner has published an op-ed by the Manhattan Institute's and Point of Law's own Isaac Gorodetski detailing Mr. Spitzer's plan to transform this typically administrative position through use of "aggressive" pension investing:
The comptroller serves as the principal auditor of city agencies and acts as the managing trustee and investment adviser of the five pension funds investing city workers' retirement assets -- currently valued at over $130 billion. As comptroller, Spitzer would sit on each of the boards overseeing these funds.
When asked how he envisions his potential role, Spitzer responded candidly. He said the position "is ripe for greater and more exciting use of the office's jurisdiction."
We've seen this play before. As New York attorney general from 1999-2006, Spitzer turned the traditionally behind-the-scenes role into a national media platform by pressuring, investigating, and prosecuting corporations under the little-known Martin Act. Any "underutilized potential" that Spitzer sees in the comptroller's office should alarm both America's corporate boards and New York City's public employees and taxpayers.
We don't have to speculate about how Comptroller Spitzer would use the office's powers. In 2009, he penned an op-ed for the online magazine Slate titled, "Chamber of Horrors: The U.S. Chamber of Commerce must be stopped. Here's how to do it."
After lambasting the U.S. Chamber as an "unabashed voice for the libertarian worldview that caused the most catastrophic meltdown since the Great Depression" and for being on the wrong side of "virtually every major public-policy issue of the past decade," Spitzer explicitly called on city and state comptrollers to "flex their political muscle" in order to combat the Chamber. Presumably, Comptroller Spitzer would target any and all groups or individuals voicing positions he finds distasteful.
Spitzer justified his call for aggressive activism by comptrollers by claiming that the U.S. Chamber spends "our money" on lobbying. By "our money," he meant the financial contributions of the Chamber's corporate members.
The shocking irony here is that Mr. Spitzer seems to be endorsing two fundamental principles opposed to the democratic chord he is trying to strike; namely, 1) that all people invested in a pension fund share the same political viewpoints (Chamber bad, pension activism good) and 2) that those people would wish to see their political ends carried out through the strong-arm tactics of an administrator charged with the singular task of maximizing the value of the funds he oversees.
Using this line of logic, Mr. Spitzer would have to acknowledge that he believes increased shareholder activism would lead to a concomitant increase in pension value. But wait, Isaac writes:
According to research conducted by the Manhattan Institute's Proxy Monitor project, which tracks shareholder activity for the largest 250 U.S. public companies, the New York City pension funds and comptroller's office have historically played an activist role, sponsoring an absolute majority of all shareholder proposals introduced by state and municipal pension funds.
Yet that activism has not added to share value for city workers: New York City's largest pension funds posted dismal 1.9 percent and 1.3 percent returns in the most recent fiscal year and have trailed their benchmarks over three- and five-year windows.
If shareholder activism has not led to increases in pension value in the past, New Yorkers have the right to ask ol' Sheriff Spitzer why he has his guns pointed firmly at the U.S. Chamber of Commerce.