It wasn’t a good week for the already tattered legacy of Eliot Spitzer, and no, we’re not talking about the tabloid headlines about the latest exploits of his sometime paramour Ashley Dupre.

For one thing, the lawsuit against former American International Group CEO Maurice “Hank” Greenberg, one of Spitzer’s highest profile prosecutions as New York Attorney general, looks a little closer to ending with a whimper. The Wall Street Journal reported that Greenberg was in talks with Andrew Cuomo, Spitzer’s replacement, though it wasn’t clear how advanced they were or whether they would lead to a resolution of the case.

For another, Spitzer’s regulatory legacy is under fire from two different financial sectors he successfully tangled with in his AG days.

Insurance brokerages, which gave up billions of dollars in commissions they used to take from insurers in return for steering business their way as a result of one key Spitzer reform, are crying foul. The ban on so-called contingent commissions was never applied universally and should either be imposed uniformly or lifted, according to leading players like Marsh & McLennan, Aon and Willis Group.

Turning to another industry where Spitzer’s political downfall was met with quiet rejoicing, Wall Street is increasingly questioning the sweeping reforms to sell-side research that investment banks were forced to accept to settle another Spitzer suit.  At least that’s what former E.F. Hutton president George Ball, who is now president of mid-market bank Sanders Morris Harris, did in an interview with Reuters.

“What happened five years ago was a little like a couple rushing to get married in Las Vegas,” Ball said in an interview. “If you do something in haste, after awhile you can see where some parts are unnecessary or just unwise.”

To be sure, Spitzer wasn’t alone in advocating those reforms, aimed at isolating analysts from pressure from the investment banking side of their firms. They were also endorsed by the SEC. 

But Ball is part of a rising chorus on Wall Street arguing that the reforms, which they say have fueled an erosion in research coverage, went too far.  Frank Quattrone, the star investment banker who fended off obstruction of justice charges for four year, told a Stanford University audience that the Spitzer reforms were making it tougher than necessary for start-ups to go public.

Is there a flavor of opportunism to all this? Maybe, but the grumblings from Wall Street added insult to injury for Spitzer after a state ethics panel filed charges against three of his former aides over accusations they leaked to newspapers information about arch-nemesis Joe Bruno’s travel on state aircraft.

Not to mention those photos of Dupre, who the New York Post helpfully identifed as Eliot’s “gal” heading to meet a new “pal” in a Manhattan hotel.

(Photo by Reuters)