The Blodget - Spitzer Interview: Who Killed Wall Street?

As many of you know, my career as a top-ranked Wall Street research analyst ended in 2002, when a then-little-known New York Attorney General named Eliot Spitzer accused me and my firm (Merrill Lynch) of producing bogus research to curry favor with banking clients.

Merrill denied and then settled the charges, but Spitzer's allegations resonated with furious investors who had lost their shirts in the market crash.  Spitzer soon expanded his research investigation to other firms, eventually forcing the industry into a "Global Settlement" that changed the longstanding relationship between bankers and research analysts.  I, meanwhile, got tossed out of the securities industry.

For Spitzer, the research investigation was the first of many.  Over the next few years, as the newly crowned 'Sheriff of Wall Street', he launched similarly aggressive investigations into mutual funds, insurance, and other industries, often exposing shady practices that had come to be regarded as business as usual.

By 2003, when I was taking the first steps toward rebuilding my shattered reputation--writing commentary for Slate, The Atlantic, and other publications--Eliot Spitzer's fame and success had soared.  In 2004, he was re-elected as Attorney General.  In 2006, he was elected Governor of New York in a landslide.  By 2007, he was frequently mentioned as a possible future presidential candidate.

Meanwhile, by the spring of last year, thanks to the generous second chance many people had given me, I was beginning to rebuild some credibility.  TechTicker was doing well, The Business Insider (my business site) was growing rapidly, and Valleywag had even taken to referring to me as "the disgraced analyst everyone listens to."

Then, one day, I got a note from a New York Times reporter saying I should check out the lead story about Eliot Spitzer that had just hit their front page.  I checked it out--and my jaw hit the floor.  A few days later, outrage about the prostitution scandal forced Spitzer to resign.

And now, here we are.

Nine months ago, as a private citizen, Eliot Spitzer re-emerged exactly the way I had: By writing for the online magazine Slate.  In recent months, he has become a prominent and frequent guest on CNBC, MSNBC, and other networks--where, not surprisingly, he usually has provocative and interesting things to say (e.g., "The Fed is a Ponzi scheme.")  He keeps an office at his father's commercial real-estate firm, but you don't have to know him well to see that his passion will never be the commercial real-estate industry.  He plays more tennis than he used to.  He spends more time with his family.

Last week, Eliot sat down with me for the first substantive conversation we've ever had. (I had met him once, long after the research investigation, when he was running for governor, but the encounter was brief.) The topics ranged from policy to politics to the highly personal, for both of us.

We've broken the interview into six parts.  In this clip, Eliot reflects on the near-collapse of our financial system and answers an all-important question: Who screwed up?

Also from the Blodget-Spitzer interview:

• Spitzer's Verdict: Pay Citi Trader $100 Million
• Is It Spitzer's Fault AIG Nearly Destroyed the World?
• Spitzer to Failed Regulators: "Do Your Job" - Don't Got to Lunch with Investment Bankers
  
• The Comebacks 
• Spitzer's Wise Investment Advice: You Can't Win So Don't Play