–Proxy aggregators already exist to an extent. Certain institutional shareholders will always vote the way Riskmetrics (formerly ISS) or Glass Lewis tells them to vote. Haven’t spent a lot of time looking at the materials that Riskmetrics and Glass-Lewis put out and having recently had to negotiate with them about certain positions they have taken with regards to a shareholder meeting, I think that they’ve been drinking too much of their own whiskey.

–I think that Salmon and several of the commentators are espousing the traditional observation that equity holders are in no position to govern corporations effectively. They don’t have the time to manage. Mutual fund managers and most other types of institutional shareholders also don’t have the time to manage. This is why guys like Ackman are, arguably, so valuable–but there can only be so many Ackman’s in the investing world.

–With regards to better or more regulation, the trick is to regulate in a way that doesn’t directly affect the market. For example, structural regulations (requiring segregation of client assets or segregation of business types) probably makes more sense than dictating things like capital and leverage ratios.

So, pursue strong regulation but push on the other side of the equation as well. It sure wouldn’t hurt our economy’s risk profile or productivity if shareholders managed to figure out that the principal activity of senior executives in American business is a daily game of kleptomaniacs’ circle jerk, and then shareholders decided to do something about it. It might actually clean things up a bit if derivative suits were revived and shareholders’ lawsuits were more common and more lucrative.

Finally, it’s great positioning to set the whole angle up as “let the market self-regulate.” After all, he almost sounds like Greenspan for a minute there, and what could be wrong with that, if you’re the WSJ editorial page?

So, push on this new angle, and of course, keep trying on the other. Maybe someday an honest person could be an EVP of a Fortune 500 company.

And while 99.9% of shareholders may not be qualified to perform the oversight function, the 0.1% who are, and who own maybe 10% of the publicly traded companies, have incentive to enforce accountability. What they don’t have is any teeth. Arming them with certain rights will force execs to stop ignoring dissenting shareholders.

Of course, if shareholders are profiting from companies that are breaking laws, this will not stop that kind of behavior.

Or we can just do nothing and cry the next time a company defrauds stockholders or breaks the law.

In fact, someone or other–Lucien Bebchuk, methinks?–has made the very good point that shareholders were complicit in the dangerous levering up of publicly owned financial institutions in pursuit of higher returns. Given diversified portfolios, public shareholders should be even more indifferent to firm failure than their employees.

Spitzer seems to be trapped in the late 1990s/early 2000s “as long as you give ever more disclosure to the poor shareholders everything will be alright” mindset. He completely misses the point.