SACRAMENTO -- Burned from losing billions of dollars in scandals and bankruptcies, a growing band of state treasurers have scrapped their low profiles to wage a campaign to clean up Wall Street and America's corporate suites.
The treasurers and comptrollers are sounding out from often-obscure capital backwaters, places like Albany, N.Y., and Sacramento, to more actively wield the clout of more than $1.5 trillion in public investment funds.
In California, New York, Connecticut, North Carolina, and elsewhere, they are pushing reforms -- demanding less extravagant executive salaries, for instance. They are pulling their investments from companies that move their headquarters abroad for tax purposes or from mutual funds accused of mishandling money.
They're trying to run more independent candidates for corporate boards to curb what many call the worst wave of corporate fraud, deception, and scandal since the stock market crash of 1929.
The most recent example came earlier this month, when California's top finance officials filed an unprecedented lawsuit against the New York Stock Exchange, seeking millions of dollars for investment losses due to alleged "illegal trading practices."
North Carolina Treasurer Richard Moore, who helped start the crusade last year with New York Attorney General Eliot Spitzer and California Treasurer Phil Angelides, said the stream of improprieties on Wall Street pushed him into action.
"Somewhere between Enron and WorldCom I just got mad as hell," Moore said.
Spitzer said the states are getting involved because "federal authorities that theoretically should have been on the front lines were not as attentive as they should have been."
Last year, Spitzer's investigations forced a $1.4 billion settlement with investment banks for improperly recommending stocks to investors -- and have now targeted the mutual fund industry. Attorneys general often have used their positions as platforms for their political ambitions. Treasurers are typically quieter, but say they could not stand by as the business scandals kept growing.
"We understood for the first time that corporate officials could be looting their companies," said Nevada Treasurer Brian Krolicki, president of the National Association of State Treasurers. "Investors are used to market risk, but they're not used to integrity risk."
States have tightened standards for investment banks, and written scathing "report cards" alleging lax market oversight by the US Securities and Exchange Commission.
They've demanded reforms to longtime Wall Street trading practices and played major roles in the recent resignation of former New York Stock Exchange Chairman Richard Grasso over his $187 million pay package.
Treasurers and comptrollers say they are simply protecting retirement assets of nearly 14 million public employees from corporate lapses that already cost them billions of dollars.
"We were genuinely damaged by what happened in the marketplace," said Angelides, who presides over a trio of investment funds worth more than $300 billion.
Last year's crash of WorldCom cost California's two biggest funds $850 million, he noted. "For the country's economic progress and our portfolio, we've decided to put our voices together," he said.
Their efforts have met with resistance from business executives, some of whom believe public officials are pushing too far too fast with populist reform agendas.