Blodget-Spitzer Interview: Who Destroyed Wall Street?

Henry Blodget, the former top Merrill Lynch securities analyst who hosts TechTicker, interviewed his nemesis, former Gov. Ellot Spitzer, the man who destroyed his Wall Street career.When Spitzer was New York Attorney General, he accused Blodget and his brokerage firm, Merrill Lynch, of concocting favorable research to curry favor with investment banking clients, while emailing colleagues that stocks were dogs. Then Spitzer went on to negotiate the Global Research Settlement, which forced Wall Street firm to admit the conflicts of interest and subsidize independent research. (The agreement just expired and its effectiveness has been questioned since many investors still rely on their brokers for research and are not downloading the independent reports). Blodget was forced out of the securities industry and began writing for the online Slate Magazine in 2003, then began appearing on CNBC and other networks as a commentator. Ironically, Spitzer, who resigned as governor of New York after being caught in a prostitution scandal, has been rehabilitating his career by writing for Slate, the Atlantic and other publications.

In series of interview clips released on Monday, running on Yahoo Finance, Spitzer discusses a range of topics including who destroyed Wall Street, A.I.G., the ratings agencies, Wall Street compensation and the Dick Grasso case.

Spitzer tells Blodget he would have gone after the ratings agencies since everyone knew there were fundamental flaws. "So much of the debt that made it's way into securitization, the ratings on the debt was so fundamentally wrong, we wanted to do an investigation of the rating agencies, we just didn't get to it. We had 10 lawyers," said Spitzer."

Regarding compensation practices, Eliot Spitzer told Henry Blodget that Citigroup's star commodities trader Andrew Hall should get his $100 million bonus because he had a contract. "You can't waive a wand over contracts and say we're going to ignore them," said Spitzer in the interview. "While trading for Phibro he made a blood fortune for the company. He did what he was being paid to do. So I think clawback is hard where you have a rock solid contract," Spitzer told Blodget. "It would have been easier if the bank had been put into bankruptcy and you could void all the contracts," added Spitzer.

Spitzer, who is a Democrat, also criticized the Obama Administration for following the policies of the Bush Administration with respect to financial services. "We've put tens of billions of dollars in banks, we did not restructure them, we did not put in risk controls, the taxpayer is still on the hook. Too big to fail is still the policy we're pursuing and it's still insane."

In series of interview clips running on Yahoo Finance, Spitzer discusses the credit crisis, A.I.G., the ratings agencies, Wall Street compensation and the Dick Grasso case. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio