Politics Wall Street: Who Will Be Sheriff?

Two new sheriffs are competing to carry on the tradition of battling the banks as New York's attorney general.
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ALBANY, New York (

TheStreet

) -- Two new sheriffs are competing to carry on the tradition of battling the banks as New York's attorney general.

This week's primary election in New York saw Eric Schneiderman emerge as the Democratic candidate to face Republican Dan Donovan.

Schneiderman, who outlasted five other Democratic candidates, has repeatedly hammered on the need for New York's attorney general to police Wall Street and chides Donovan for following a "leave Wall Street alone" plan. In a letter sent Wednesday inviting Donovan to a debate, Schneiderman put their differences this way:

"While you've suggested in recent interviews that you would seek to relax the focus of the Attorney General's office when it comes to cracking down on these crimes, vowing not to "disturb the garden," I intend to make protecting homeowners and consumers from bad actors on Wall Street a key concern, as it has been for Andrew Cuomo."

Them's fightin' words.

Donavan fired off his own letter to Schneiderman the same day, declining to join in a debate by saying the differences will be settled by the citizens of New York and "certainly not by an independent moderator." Donovan didn't stop there, however, he included a few hard jabs of his own:

" I have spent my career as a prosecutor, putting criminals in jail and protecting New York families from crime and violence. Possibly because you have never prosecuted a case, you have taken a different approach, starting with fighting for laws to reduce oversight of sex offenders, letting drug dealers out of jail, and advocating for the rights of criminals ahead of the needs of law enforcement."

Ouch.

OK, so they agree on one thing -- they have pretty clear differences. So let's look at the ones impacting Wall Street.

Here's what you'll find on

Donovan's official campaign site:

-- The Attorney General of New York has a long history of protecting investors and consumers from financial crimes, but we must promote fair markets and not bring cases simply to get headlines. Wall Street is the financial backbone of our state, and we must ensure that it continues to create jobs and remain the economic generator our state depends on.

-- I recently stood with Senator Schumer and all five NYC District Attorneys - all democrats -- to promote legislation that protects homeowners from the recent wave of mortgage refinance and debt-reorganization scams. Along with "Habitat for Humanity" we worked to educate the public about these scams. As Attorney General, we will continue to prosecute these crimes.

So Donovan is factoring in the benefits to New York from banks based there, including

Goldman Sachs

(GS) - Get Report

,

JPMorgan Chase

(JPM) - Get Report

and

Citigroup

(C) - Get Report

.

New York State is facing a revenue shortfall this year in part due to a decrease in taxable bank bonuses. In February, the state reported that it collected about $1 billion less than expected in taxes on Wall Street pay in the last two weeks of January, according to the

New York Times.

"We know that big guys typically pay us at the end of January," State Budget Director Robert Megna told the

Times

in February, which the

Times

called a reference to large banks like Goldman Sachs and JPMorgan Chase. "Last week, after the budget came out, they didn't pay us."

Donovan's comments on mortgages focus more on scam artists as exposed in

TheStreet's

Mortgage Mayhem

investigative series. This doesn't suggest a regulatory threat to major New York mortgage players like Citigroup.

So now on to the Democratic candidate.

Here's what you'll find on

Schneiderman's official campaign site:

-- Wall Street corruption, abusive lending, debt collection scams, mortgage fraud and insurance industry abuses are ripping off New Yorkers and devastating communities in every corner of our state. As a legislator, Eric has worked to pass a host of consumer protection and anti-fraud laws; as Attorney General, he will enforce them.

-- Attorney General, Eric will fight for industry-wide, statewide and nationwide reforms to ensure investors get a fair shake and Wall Street bankers are held accountable for wrongdoing. Eric will establish a first-in-the-nation general securities fraud whistleblower program to ensure there are no more Madoffs; he will focus on high-tech scams that have swindled local government pension funds; and he will investigate abuses by Wall Street firms using the "credit crunch" to take advantage of small businesses and consumers.

On the bank whistleblower front, we've recently seen a

whistleblower suing Moody's

for allegedly seeking to discredit him after he publicly criticized the credit rating firm's ratings practices.

Moody's

(MCO) - Get Report

has said the suit is unfounded.

JPMorgan also is fighting a recent

whistleblower lawsuit

from a banker who claims she was fired after questioning the actions of one of the bank's clients.

Schneiderman clearly intends to follow in the footsteps of his predecessors, including gubernatorial candidate Andrew Cuomo and the infamous Elliot Spitzer.

There are few elections more directly involved in the Politics of Wall Street than the race for New York's attorney general's seat, so this is definitely one to watch. Check back each Friday for more

"Politics of Wall Street"

columns that explore election issues from an investor's perspective.

--Written by Glenn Hall in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.