The Limits of the City Comptroller's Toolbox

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Former Governor Eliot Spitzer launched his run for city comptroller with a promise to renew his efforts to reign in Wall Street excess.
But he would have a much more limited set of tools in that position.

The New York City Comptroller is the managing investor for the city's five pension funds, about $140 billion in all. Those behemoth funds have long been used as leverage to force corporations to change their behavior, but there's disagreement about the return for investors.

James Copland of the conservative Manhattan Institute tracked all the shareholder resolutions the city comptroller has endorsed since 2006. He said the city comptroller's shareholder resolutions haven't historically been a big worry for companies.  "These are largely viewed as a cost of doing business and a nuisance for senior management," Copland said, adding that most of them have failed. "The possible damage the New York City comptroller could do is far less than what the New York Attorney General could do, Spitzer's former job."

But Nell Minow, the co-founder of GMI Ratings, a research firm for institutional investors, said she loves the idea of Spitzer having access to the comptroller's bully pulpit.  "The last thing in the world that we need from Wall Street is for them to stop being afraid of investor feedback."

The New York City comptroller has long been a leader to push shareholder accountability on social and political issues, Minow said, and Spitzer's ability to generate national headlines would make him a significant force to push for changes in corporate governance. "Companies will understand that, and will be quick to answer the phone when he calls," she said.

The city's five pension funds are overseen by separate boards, so the comptroller's power is somewhat constrained by the other pension fund trustees. Their primary obligation has to be to protect the pension fund investments, said former lieutenant governor Richard Ravitch, who has been repeatedly tapped to reorganize broken public finances. Otherwise, taxpayers will be on the hook if pension investments don't cover the promised benefits for city workers and retirees.  "Which means responsible investing, and that's their highest obligation," he said. 

But, Ravitch added, fiscal management philosophies are probably too boring to come up much in this hotly contested campaign.