Opinion: Op-Eds

MANHATTAN MOMENT: Eliot Spitzer looking to steamroll corporate boards at the expense of city workers?

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Just in the last week, since announcing his campaign, former New York Gov. Eliot Spitzer has already singlehandedly elevated the profile of the Office of the New York City Comptroller to new heights.

Once dubbed the "sheriff of Wall Street" for his targeting of financial companies as New York State's attorney general, Spitzer evidently wants his badge back. Why else would he be running for comptroller, a job that has traditionally been little more than the city's accountant?

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.

What Spitzer fails to realize, however, is that corporations undertake political activity in direct lobbying or trade associations like the Chamber to secure advantages for the corporation. These advantages accrue not just to management, but to shareholders as well.

In heavily regulated industries, companies must engage in political advocacy just to stay competitive. Additionally, well-developed historical evidence shows that such political activism by corporations yields generally positive returns for firms and their shareholders.

When it comes to the city's pension funds, positive returns are exactly what our retired teachers, cops, firemen, and other municipal workers expect their elected comptroller to deliver. Spitzer's belief that an elected comptroller should flex pension-fund muscle for political reasons flies in the face of the posture adopted by virtually every similarly elected trustee in the nation.

A comptroller's primary responsibility is to guard and guide the retirement funds of hardworking city workers, regardless of their political views. The exception to this rule, historically, has been New York.

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.

While New York City's workers may not agree on what sports teams to root for, let alone on politics, they should all agree that the comptroller should not play politics with their financial futures.

Isaac Gorodetski is the project manager for the Center for Legal Policy at the Manhattan Institute, which sponsors a publicly available database of corporate shareholder proposals, ProxyMonitor.org.

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