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This past weekend, several of the newspapers wrote a recap of my friend New York Attorney General Eliot Spitzer's allegations against the insurance companies. Several of these writers even suggested that Spitzer at last has overreached himself.

After reading all this, and after having several people ask me about it Saturday at our financial fair with WOR, I believe I need to explain a few things: first, how Wall Street really works and second, what Eliot is really like.

First, I have to tell you that I feel like a total chump. To think that I was a key player in the financial services industry in New York for two decades and that I never once took a multi-million-dollar kickback from the insurers for steering business their way.

I never ripped off the mutual funds for big bucks or stole net asset values from the ignorant moms and pops out there. I never published or shopped corrupt stock research in return for seven-figure bonuses from corporate finance. And I never hid gigantic commissions from customers, jammed crummy investment managers down their throats for big back-end fees or rigged a billion-dollar insurance bid with a cartel of backroom buddies to make sure that the customer overpaid me for the job.

What kind of fool was I? I wasn't one. I was honest. And did I have a premonition that one day, my completely incorruptible best friend from Harvard Law School, Eliot Spitzer, would be elected state attorney general and would put an end to all of these business-as-usual practices? Every one of those methods of profiting by taking advantage of the customer had become established practice in the regulation-starved ultra-free markets until Spitzer came along. It wasn't wink and nod stuff, either; the big guns, the famous CEOs, the financial royalty, ordered much of it. You couldn't advance at some insurance or stock brokerages or mutual or hedge funds if you didn't throw the game against the customer. That's how corrupt things had gotten and how failed the regulatory environment became.

I would love to think that I saw it coming. It's true that at Harvard Law, I was obsessed with the reruns of

The Untouchables

, a television series where Robert Stack played an Eliot on the show, and often joked to my square-jawed classmate that he could be the logical heir to that other iconoclastic Eliot on the small screen. But that Eliot never succeeded to the extent that our Eliot had in busting up the mobs and cartels that truly gripped business. And with last week's amazing kimono-opening of the crooked insurance industry, Spitzer's proven himself to be far more lethal to the corrupt practices of Wall Street than Ness was to the gangsters of Chicago.

But the truth is that no one saw any of this coming, including Spitzer. Because, until email, the single-most important law enforcement tool since the wire tap, we knew there were dishonest people, we just didn't know they were in charge or had been blessed by the higher-ups. Without email, it was too preposterous to prove or extend the crime upstairs. I don't know anyone, for example, including major clients of

Marsh & McLennan

(MMC) - Get Report

, who ever suspected that they were being as ripped off as they were. Heck, I don't know anyone who thought you could rig the whole insurance system. It was too big, too difficult to fix, with too many players, too many mouths to keep quiet, too many consciences to corrupt.

Or so we thought.

We have dozens of enforcement agencies that could have put a stop to the incessant brokerage corruption, but until Spitzer, the regulators either were too eager to please the industry, in part because they always knew they would go back to work in it, or because they simply weren't sophisticated enough to understand how pervasive the chicanery was. I can give you instance after instance where financial service folk tried to buffalo Spitzer only to discover that he knew more than they did about the practices going on under their roofs. He was too smart to be fooled by the "we always act in our customers' interests" line and he understood how juries would read email, so it never got there; the industry had to cave well ahead of the courtroom.

Insurance, though, gets regulated state-by-state, which, frankly, until Spitzer's groundbreaking work, has meant almost no regulation at all. The insurance industry has long been too powerful to regulate, and owns way too many congressmen and state assemblymen to get that to change. Which is why, as a state regulator, Spitzer has the field to himself. Unlike brokerage, where Spitzer had to employ the little used Martin Act to regulate securities fraud, a throwback to the days before the SEC, insurance is right in Spitzer's breadbasket. If the feds -- Justice, not the

Securities and Exchange Commission

-- get involved, it will be because of the alleged bid-rigging. That's a classic antitrust violation, and the prosecutions will be criminal, not civil, with very lengthy jail time for all who signed on to the "thrown bidding," as the Spitzer complaint calls it.

Yet it's not the law that's defining these prosecutions. Nor is it the so-called, all-powerful nature and unlimited resources of the government. It's Spitzer himself. He has virtually none of the bodies or the money of the federal arms of prosecution. He has very little manpower for a state the size of New York. He's got a virtual basketball team's worth of lawyers doing this stuff, no more than that, matching up against hundreds if not thousands of private sector lawyers trying to stop him, frustrate him and defeat him. They can't because he's too smart. He never strikes until he has both email and insiders willing to tattle. Unlike virtually every other member of every prosecution out there, he doesn't reach out to try to solve things ahead of time.

He's not trying to make friends, he's trying to make enemies, and then have those enemies be embarrassed or jailed into submission. It's a beautiful, pure, rigorous and downright frightening thing to watch a prosecutor who is driven only by where the chips may fall and simply can't be bought or sold or owned or cajoled or derailed by anyone, friend or foe. He's a human highlight film, a television movie of the week, an endless, more fearsome version of

The Untouchables

with no


necessary because it's not brought to you by anyone but him.

Oh, and don't I know it. Right on the eve of the breaking of the mutual fund scandal, where hedge fund managers flitted in and out of mutual funds, stealing little bits of daily profit here and there until they accumulated hundreds of millions of dollars from unsuspecting little peoples' accounts, Eliot called me and told me he needed to see me. "Cone of Silence," he said. "120 Broadway." Yeah, he even talks like a modern day Ness.

I thought it might be something personal, and I asked if it's something our wives, who are friends, knew about. He told me just to come over. Gone were the usual

Krispy Kremes

and the smiling staff and the warm clasped hands and hugs. He ushered me in to his huge office dominated by that grade-school NewYork state map on the wall, gave me the Ness stare, and said, "Jim, when you ran your fund, did you ever market time mutual funds?" I asked him what that was. He repeated: had I ever, when I was running my hedge fund, of which Eliot had been a substantial partner, moved money rapidly in and out of mutual funds for a profit? I told him of course not, that I thought it was illegal and impossible to do.

"He said, "Good," and said I could go back to work.

I asked what would have happened if I had?

He said others had timed things, fixed the game, but he would, of course, have to take me down first if I had been involved.

"Of course," I chimed in. "You bet. Yeah, had to take me down... naturally." I left his office shaking. Reddened, perspiring and shaking. I know he meant it. He would have destroyed me, hopefully without the trademarked grin, but I wouldn't bet on that either. He's just the kind of guy that no one -- not even Silda, his wife -- has influence with.

As with every one of his investigations, you are already reading about people who think that Spitzer has overstretched, overreached again. That's how it always starts with these investigations. This time the conventional wisdom holds that by taking on the Greenberg family, the first family of insurance, with Daddy Hank Greenberg, CEO of


(AIG) - Get Report

, and sons Jeff Greenberg, CEO of Marsh & McLennan, and Evan Greenberg, CEO of



, he's bumping up against way too much firepower.

The Street tosses around terms like "extremely respected," "all-powerful" and "the real Big Boys" about the Greenbergs. To which I say, "Give me a break." Their fate is in the hands of Spitzer, just like those of the mutual funds and brokerage firms that Spitzer went up against. If Spitzer wants them to go to jail, I think they'll go. The fact that Spitzer won't even negotiate with current management of Marsh Mac because it is too corrupt, tells you not that Spitzer's bluffing, as some "experts" are telling the press, but that he's so confident of convictions that the only question is whether he will let the enterprises survive or not.

The executives? He wrote their financial obituaries last week at his surprise press conference. A whole family's worth of obits. In fact, the most amazing thing about the entire affair is that the executives continued to rig the market long after Spitzer made it clear that he wasn't done cleaning up the financial services cesspool. What were they thinking? That he was going to go after the credit card companies or something? Insurance was a natural, big, juicy and ripe for the pickin's. They should have stopped the rigging after Merrill and Smith Barney and Putnam and Alliance and so many others caved to the attorney general.

What should the remaining financial services executives do who haven't yet been investigated by Spitzer? I would suggest that they raise money to elect Spitzer governor. The criminals out there believe Eliot will stop once he's elected. And I'll tell you this: Nah, he won't stop. Instead of being an effective attorney general, he'll just be an effective governor. The heat's just starting, it isn't stopping. That's just how things should be.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made.

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