The politics of enforcement: Eliot Spitzer, state-federal relations, and the redesign of financial regulation

The dynamics of financial regulation in the United States have been transformed by a series of investigations mounted by Eliot Spitzer, the state attorney general of New York. Through the strategic use of his office, Spitzer has become one of the country's most successful policy entrepreneurs. His success is linked to the serendipitous confluence of three hey factors: the diffused nature of regulatory authority in a federal system, the location of the state as the preeminent global financial centre; and the particularity of the New York State constitution, which offers little resistance to the vagaries of political ambition. The paper concludes that although Spitzer has highlighted serious structural problems and caused severe embarrassment, fundamental changes to market governance itself have been less evident.