Photographer: Ben Baker/Bloomberg
Photographer: Ben Baker/Bloomberg

If my friend Eliot Spitzer succeeds in his ambitious nine-week quest to become New York City’s next comptroller, he is determined to use the power of the city’s $140 billion pension-purse to push for long-overdue changes to the way corporations are managed and governed.

“The big missing link in corporate governance has been the role of shareholders,” he said in a quick interview this morning before attending to some ballot issues. “You cannot either regulate or prosecute your way to good judgment. Ownership trumps regulation. Ownership trumps prosecution. Yet ownership, if it’s passive, cedes authority to those who might exercise it well and those who might not. That abdication of authority by ownership is one of the reasons we’ve had problems over the past years.”

The New York City comptroller certainly has the power to change things. As of April 30, the five pension funds that the city’s comptroller oversees have invested nearly $80 billion in the equities of domestic and international companies. John C. Liu, the current comptroller, has begun to use some of that clout. He helped push Goldman Sachs, Morgan Stanley and JPMorgan Chase & Co. to amend the language in their bonus-clawback provisions, and he has filed a shareholder lawsuit against BP, claiming that the company’s negligent behavior at its oil well in the Gulf of Mexico cost shareholders millions of dollars in losses.

But there is little doubt that Spitzer, if elected, will ramp up the influence that stock ownership gives the city to shake up the clubby world of corporate boards and institutional investors, who too often are willing to overlook corporate pigging out. He made clear that while he doesn't believe shareholders should manage corporations on a day-to-day basis, he does believe that “those with significant stakes in the market should play a much more active role in the decision-making, in the personnel judgments and the overall strategic judgments that are made. That void needs to be filled.”

He cited as one obvious example of a corporate governance change he would advocate immediately: splitting the role of the chairman and chief executive officer at U.S. corporations and making it as common as it is in the U.K. to have one person in charge of the board and another in charge of the day-to-day management of the company.

“When the issue of Jamie Dimon arose at JPMorgan Chase & Co, it was not just a commentary on him,” Spitzer said. “Even when George Washington was president, we kept the system of checks and balances in place. Even where you have a superb CEO you say that unbridled decision-making shouldn’t exist.”

He's right. And by electing him comptroller, New Yorkers would help not only their city but also the entire financial system.

(William D. Cohan is a Bloomberg View columnist. Follow him on Twitter.)