Debate Sought on Policing Wall Street

Hours after winning the Democratic nomination for New York attorney general Tuesday night, state Sen. Eric Schneiderman challenged his Republican opponent, Staten Island District Attorney Dan Donovan, to a debate how to crack down on crimes in financial markets.

In this May 25, 2010 photo, Staten Island District Attorney Daniel Donovan announces his bid for Attorney General of New York City on the steps of Supreme Court in New York. State Sen. Eric Schneiderman, who won the Democratic nomination for New York attorney general, will face Donovan in a general election, pitting a self-described progressive lawmaker against a tough-talking prosecutor in the race to become the state's top lawyer. (AP Photo/The Advance, Anthony DePrimo)

Suggesting that Donovan has proposed relaxing the attorney general’s oversight there, Schneiderman said a key issue for him as the state’s top lawyer would be “protecting homeowners and consumers from bad actors on Wall Street.”

He sent a letter to Donovan on Wednesday asking for the debate.

In campaign statements, Donovan says that Wall Street is an important economic generator for New York, and that it’s important to promote fair markets but not bring cases “simply to get headlines.”

In a reply letter Wednesday, Donovan said that he looks forward to the debate and that he has spent his career putting criminals in jail and protecting families. He questioned Scheiderman’s legislative vote against civil confinement for sex offenders and whether he is “sufficiently focused on protecting the citizens of New York.”

Then-Attorney General Eliot Spitzer became known as “the sheriff of Wall Street” for using the state’s anti-fraud Martin Act to bring cases against big financial companies, a tactic that resulted in settlements for conflicts of interest among investment banks, their securities analysts in the Internet stock boom and companies that later floundered.

In the wake of the latest Wall Street meltdown two years ago, several of the Democratic candidates for attorney general noted high credit ratings given to weak mortgage-backed securities, again questioning whether there was fraud that hurt investors, and citing a state role even as federal regulations are revised.

In 2008, current Attorney General Andrew Cuomo, now front-runner in the race for governor, reached agreements with the three largest credit rating agencies — Standard & Poor’s, Moody’s Investors Service and Fitch — to change how they were paid by investment banks for providing ratings on loan pools. The new arrangements are to include a fee-for-service structure, instead of free previews in which banks could shop for the best ratings.

Schneiderman defeated four other Democratic candidates to win the nomination: Nassau County District Attorney Kathleen Rice, former trial attorney Sean Coffey, Assemblyman Richard Brodsky and former state Insurance Superintendent Eric Dinallo.

Donovan said in a radio interview Wednesday that the real issues are corrupt and dysfunctional government, and that Schneiderman as a legislator has been part of the state government for the past 12 years.

“I’m the only person that’s independent of all those special interests,” he said, adding that he plans to take his experience as the top law enforcement officer in Staten Island to try to clean up Albany.

Donovan appeared later at City Hall in Manhattan with former Democratic Mayor Ed Koch, who endorsed him. Koch this year founded New York Uprising, whose reform pledges Donovan has signed. “Time and time again, Dan has proven himself to be independent and above special interests,” Koch said.

Schneiderman said that he will also target corruption, that he led the Senate expulsion this year of Sen. Hiram Monserrate after he was convicted of assaulting his girlfriend, and that he pushed legislation for ethics reform.

By MICHAEL VIRTANEN,Associated Press Writer

Copyright 2010 The Associated Press.