SYNOPSIS: We may have won some battles against the corporate criminals, but, in the present political climate, they are winning the war

There is, alas, only one Eliot Spitzer. And while you want to stand up and cheer when Mr. Spitzer, New York's attorney general, wins another round against malefactors of great wealth, his side — our side, unless you happen to be a corporate insider — is losing the war.

On Monday, thanks mainly to Mr. Spitzer, a group of investment banks paid $1.4 billion to settle charges that their stock analysts had been shilling for corporate clients. This was, however, a mere slap on the wrist. And it's increasingly obvious that neither the investment bankers nor corporate evildoers in general are feeling chastened.

Indeed, last week Stanley O'Neal, the chief executive of Merrill Lynch, wrote an op-ed article caricaturing the likes of Mr. Spitzer — though without naming him — as enemies of capitalism who teach investors that "if they lose money in the market they're automatically entitled to be compensated." By the way, Henry Blodget — the analyst whose internal e-mail famously used a scatological term to describe a stock he was publicly touting, and who was permanently banned from the industry under Monday's settlement — worked for Merrill Lynch.

Mr. Spitzer's scathing reply, addressed to "Mr. C.E.O.," is a classic. ("Indeed, you did not want to tolerate risk. Because what you did was shift the risk to unknowing investors while you got the fees up front.") But it's revealing that Mr. O'Neal felt empowered to write that piece in the first place. Like the New York Stock Exchange, which tried to appoint Citigroup's Sanford Weill to its board — Mr. Weill is now forbidden to talk to his own company's analysts unless a lawyer is present — Mr. O'Neal overreached. But he clearly knows which way the wind is blowing.

And it's not just investment bankers: corporate insiders across America are feeling their oats. Consider the executives at American Airlines, who paid themselves big bonuses and secretly set up a special trust to secure their own pensions, even while demanding pay cuts from their workers to save the company. Well, why not? Trust funds protecting executive pensions even when ordinary workers' pension plans are underfunded, and hefty "retention" bonuses for executives of near-bankrupt companies, are all the rage these days.

Warren Buffett has called C.E.O. compensation the "acid test" for reform. Between 1970 and 2001, in an orgy of mutual back-scratching by C.E.O.'s and their boards, median pay among the top 100 executives soared from 35 times that of the average worker to more than 500 times as much. So what happened in 2002, as unemployment rose, wages failed to keep up with prices and stocks declined — and stories of corporate malfeasance filled the news? Nothing. O.K., not exactly nothing: some of the huge options grants at the top went away, reducing the average among the top 100. But according to Fortune, which put a pinstripe-clothed pig on its cover, median pay among top executives rose another 14 percent.

Last summer it seemed, briefly, as if the torrent of scandals — and the revelations about how closely some of our politicians were tied to scandal-ridden companies — would bring about a public backlash against corporate malfeasance. But then the topic largely vanished from the news, driven out by reports about Iraq's nuclear weapons program and all that. And after the midterm elections, which put apologists for corporate insiders back in control of all the relevant Congressional committees, we might as well have had the sirens sound the all-clear. Only Mr. Spitzer still has both the inclination and the power to make trouble.

I also wonder about the demonstration effect. I don't want to sound like those Clinton-haters who attributed every immoral act in America to the president's bad example: Bill Clinton didn't invent sex, and the Bush administration didn't invent greed. But when insiders at major corporations see top officials getting away with it — moving unscathed between stints as crony capitalists and high office or even, as in the case of Richard Perle, playing both roles at once — they have to feel that old rules no longer apply, and that they can get away with even more self-dealing than before.

In the end the corruption of our corporate system will bring retribution; even if political action never comes, investors will eventually lose faith and put their money elsewhere. But right now the bad guys, though they lose an occasional battle, are winning the war.

Originally published in The New York Times, 5.2.03