“It was crunch time, and New York Attorney General Eliot Spitzer was getting antsy — again,” writes Charles Gasparino in today’s Wall Street Journal.

“On Oct. 23, as regulators in New York and Washington labored over the details of a plan to overhaul Wall Street research practices, Mr. Spitzer pressed Securities and Exchange Commission officials to move quickly and present a proposal to major securities firms the next day.”

“That was impossible, protested the SEC enforcement chief, Stephen Cutler. ‘I’ve got to sell this and it’s going to take some time,’ Mr. Cutler told Mr. Spitzer over the phone, according to people who heard the conversation. Mr. Cutler said he was having a difficult time getting his boss, SEC Chairman Harvey Pitt, and other commissioners to provide their full endorsement. ‘We’re not going to get it done’ as fast as Mr. Spitzer wanted.

“But they did. Last Thursday, Mr. Spitzer and the SEC unveiled to Wall Street firms a radical plan, probably the biggest regulatory change to hit Wall Street since brokerage commissions were deregulated in 1975. The proposal called for Wall Street to set up a new panel to provide its customers with independently developed stock research in addition to their own analyst’s recommendations. The tab would be as much as $1 billion to fund the new research panel as well as potentially hefty regulatory fines and associated legal costs.”

“Proponents of the plan argue that it would go a long way toward fixing one of the biggest problems of the 1990s stock-market boom: that securities firms misled small investors by hyping research on companies that were also investment-banking clients.”

“But the plan — which came after the intervention of an unlikely middleman, New York Stock Exchange Chairman Dick Grasso — is also the culmination of a struggle between Mr. Spitzer and Mr. Pitt over who wields the power to regulate Wall Street. Over the past year, the commission’s role largely has been usurped by a state attorney general whose previous investigations have largely focused on low-level consumer rip-offs.”

“Mr. Spitzer so effectively launched his crusade to punish Wall Street that he forced Mr. Pitt to take action. And even though it appeared last week when the plan was announced that the two men were working hand-in-hand, Mr. Pitt was still dragging his feet because the SEC needed to sell the deal to the firms and other regulators.”