This is a partial transcript from "Your World with Neil Cavuto," February 15, 2005, that was edited for clarity.

NEIL CAVUTO, HOST: Eliot Spitzer (search) promised he would come on this show eventually. And today he did, the very same day his widening probe of the insurance industry three more guilty pleas now for a total of nine at four different companies, just part of a wide-ranging exchange in part inspired by you in your hopes he would come on FOX eventually.

Here now, unedited and in its entirety, Eliot Spitzer.

(BEGIN VIDEOTAPE)

ELIOT SPITZER, NEW YORK ATTORNEY GENERAL: I love you guys, glad to be on-air with you and thrilled to do it any time in the future.

CAVUTO: All right. So prior issues where you didn't come on the show or couldn't arrange to be on the show, this is nothing personal, right?

SPITZER: Of course not. No, I am a huge fan of your guys' programming. It was scheduling issues, as you can imagine, there were a lot of demands for interviews, which I'm flattered by, but I have a job to do. And so I try to keep myself at the desk most of the day and I look forward to chatting with you any time in the future.

CAVUTO: All right. Mr. Attorney General, let's go right to the subject at hand. Now in going after the insurance companies. In going after, particularly, AIG (search), the company's chairman, Mr. Greenberg, had expressed at least indications to analysts just the day before your latest wave came down that the company was out of the woods. What made him think that?

SPITZER: Well, my understanding -- and again, of course, I can't speak for Mr. Greenberg -- but, my understanding is that it had done an internal audit, an internal examination of some sort. And I base this knowledge on press reports that they had reported that they had found only one individual in one unit who had been culpable in whatever they considered to be impropriety.

And of course, I haven't seen their internal examination, so I can't respond to it, except to say that, with the guilty pleas that are being entered today, there will be now four individuals from AIG who will have pled guilty. And as a consequence, whatever claim they've made that only one person was implicated clearly is wrong, and the problems there are more expansive than, certainly, their internal audit had demonstrated to them.

I'm not suggesting that there is corruption rife through the company. We have served subpoenas. That has been reported by them. I obviously cannot comment upon ongoing investigations, but the subpoenas are broad in nature, and we will see where they take us.

CAVUTO: Are they serious enough, Mr. Attorney General, for the company to have to restate its earnings?

SPITZER: I simply can't pass judgment on that. A subpoena is merely a mechanism by which we gather information. It would be wrong for either me or anybody else to draw conclusions at this point about what may or may not eventuate from this inquiry. The inquiries that the SEC (search) and I together have made to the company are pointed and are direct. And we will just have to wait and see what results from it.

And obviously, the company felt that this was what the lawyers would call a disclosure item they felt they needed to reveal to the investing world, that the subpoenas had been received and hence, they did so yesterday.

CAVUTO: And on a disclosure item on some of their nontraditional products. So this is a whole new area you're looking at?

SPITZER: Well, it is an area we have been looking at for a fair bit of time now, and there are a number of subpoenas out there investigating or inquiring about the use of nontraditional products that have occasionally, but not always, been used to smooth over earnings in a way that violates the law and accounting principles.

Whether or not that is the case here, of course, only time will tell. It is premature to draw any conclusions at this point.

CAVUTO: Let me ask you something that, Mr. Attorney General, when our viewers knew that you were going to be on here, many of them are investors, some directly in AIG. One of them wrote me and said: "I wonder if Mr. Spitzer can be sued for the losses suffered by AIG investors?"

What do you think of the losses that they've been incurring, just on your request for information from the company?

SPITZER: Well, the law enforcement process is one by which government gathers information. I would suggest to him, as an investor, that he is paying the unfortunate price for a leadership in a company that was not sufficiently attentive to its legal obligations.

There are stock drops in companies which are the recipients of subpoenas and ultimately plead guilty. Marsh is perhaps a more unfortunate example. And we feel terrible for the losses that are incurred by investors, by employees, but our responsibility is to ensure integrity in the marketplace. And that is what we have been doing.

Marsh has paid a fine of $850 million. Their market cap has dropped significantly, because there was a core illegality in their business model. They have now been acting to get rid of it. They are doing what is necessary and appropriate to clean up that business model.

The culpable parties are the executives at the companies who oversee and know and participate in the illegality. That is where liability falls. That's where it should fall. Our job, whether it's mine or the SEC or any other federal entity, is to examine and enforce the law to ensure integrity and transparency in the marketplace. That is what we are trying to do.

CAVUTO: But some of this issue of contingent fees and some of the other things for which you have tried to go after many in the insurance industry, sir, the industry itself isn't saying they're necessarily a bad idea and have not backed away from them. Are they just cruising for a bruising or what?

SPITZER: No. I think you need to understand, Neil, that we have not filed a complaint against any insurance company merely because it had a contingent fee in its fee structure.

We have filed criminal and civil complaints, and again, as of the pleas that are going to be entered today, there will be nine guilty pleas across four different major companies. And these are all individuals who are cooperating with us, which I think indicates to most people who understand the way this works, they are cooperating so we can build bigger cases against others more senior in the industry.

Nine guilty pleas, hundreds of millions of dollars of fines, not because contingent fees were being paid, but because fraud was ongoing, deception, bid rigging, falsehoods throughout the bidding process that has cost American purchasers of insurance vast sums of money. The scheme here was to drive up the cost of insurance in a way that was illegal. That was the core of what was going on, and that is why people were being harmed.

CAVUTO: Is your sense, sir, that most insurance brokers are dishonest or are they...

SPITZER: No. Absolutely not. Absolutely not. The last thing anybody in my position should do is generalize in that way. There are clearly instances of illegality, hence nine guilty pleas so far. And there will be many more.

There was a business model that had severe problems because the way the contingent fees were structured, it then led to a violation of duty, contrary to law. It led to bid rigging, which is a rank illegality. So one problem in the business model then led to a larger circle of illegality, which is what we're attacking. And we are trying to root it out, trying to work with the industry to solve the problem.

CAVUTO: Well, what would you say?

SPITZER: That is what we all want to do.

CAVUTO: What would you say, sir, do you think that 5 percent are bad guys, 10 percent?

SPITZER: Neil, I simply can't put numbers on it. I don't want to even begin to throw a number out. My overwhelming presumption and confidence is that the vast majority of insurance brokers and agents are honest, hardworking, good individuals. I know, as every one of us does, many people who are in that profession, that they work hard. They work diligently. They look out for their clients. They do what is right.

Those whom we have been prosecuting clearly were not in that category. But the last thing anybody should do is generalize or jump to conclusions about an entire group of people who are in a sector that is vitally important.

The importance of the insurance sector to our economy can't be overstated. And that is why we have to work so diligently to make sure that it is functioning properly and ethically.

CAVUTO: Mr. Attorney General, I guess what troubles many in this industry is that you don't often say that most of them are pretty good. Ken Crerar of the Council of Insurance Agents and Brokers (search) said: "The attorney general has made broad claims of corruption. That's just not the industry we know. We disclosed the compensation. That's our position, period."

SPITZER: Well, I don't know him, and I don't want to get into a back and forth with him. I understand he obviously wants to speak well of his industry, and I think well of his industry.

Having said that, when we revealed that there were structural problems within the analyst community, within the mutual fund community, now within the insurance world in terms of how some of these products are being sold, there's a reflexive desire on the part of those who speak for the industry to say it's merely one or two bad apples.

I think unfortunately, we're finding that it's at least a crate. Maybe not a bushel. Maybe many bushels. Who knows? We're going to have to wait and find out.

So I understand the desire to say it's not everybody. Of course it's not everybody. There is an overwhelming dominance of good, honest, hard working people in that sector. But we are finding some evidence of criminality, hence the guilty pleas, the massive fines, the restructurings. My job is to find and root out those problems, and then hopefully we will have an industry that is on an even keel and is doing a better job.

(END VIDEOTAPE)

CAVUTO: All right. Straight ahead on this edition of "Your World," unedited and exactly what he told me as he told it to me. How does Attorney General Eliot Spitzer address his critics who claim he is simply over the top in his investigation and only seeking the limelight. He only spoke to FOX today and he addresses it next.

(COMMERCIAL BREAK)

CAVUTO: Continuing my conversation with New York State Attorney General Eliot Spitzer. He talks about the criticism he faces and his ongoing battle with former NYSE boss Dick Grasso. But first, Spitzer weighs in on one of his biggest critics, Tom Donohue who heads the U.S. Chamber of Commerce.

(BEGIN VIDEOTAPE)

SPITZER: I think he is a shill for guilty people, and Tom Donohue has never once found a crime that he couldn't justify, as long as it was committed by one of his dues-paying members. And it is too bad. The Chamber of Commerce should rise above that sort of rhetoric.

Tom Donohue cannot show you one fact we've alleged that is wrong. And yet, if Mr. Donohue wants to be an apologist for criminal conduct, so be it. Then he is, I think, tarnishing the reputations of many of his members who don't want that sort of voice out there saying that illegal conduct is good. It isn't.

My job has been to reveal facts, to bring the cases. And I think if you ask any investor, if you ask any executive, do you want to live in a world where analytical work is fraudulent, where mutual funds are diluting and skimming profits, where insurance companies are bid rigging, I think they will tell you no. The reason is that those behavior patterns cut against the market as we want it to operate.

I'm protecting the market. Mr. Donohue is protecting an ossified culture of illegality. And if he wants to be an apologist for crime, then I think his board members should consider whether or not that's the job.

CAVUTO: But he's clearly not the only one saying that, right, sir?

SPITZER: Well, who else?

CAVUTO: The feeling seems to be -- not across the board, but amongst some, that you get a little too zealous, that maybe you get too vindictive. Ken Langone, the former New York Stock Exchange director said you wanted to put a stake through his heart.

SPITZER: No, I didn't. Look, Ken Langone has been charged because he and Mr. Grasso turned the New York Stock Exchange into the piggy bank for Mr. Grasso. And Ken Langone was the chairman of the compensation committee that oversaw the distribution of about $200 million to Mr. Grasso, a case that is ongoing. The Web report that was revealed last week I think laid out the facts for many to see.

And oddly, Mr. Langone's motion to dismiss the case against him was denied from the bench very quickly. Because they want to go through a lengthy process of discovery, there will be a lengthy discovery process pretrial.

We will go to trial. We will prove our facts against Mr. Langone, against Mr. Grasso. And as I've said from the beginning, after many months trying to settle that case before trial so we didn't need to go through this, when that failed because they simply refused to be reasonable, we will now go to trial and prove our case, and we will win.

And that is the nature of these proceedings and if all I have to stand up against is Mr. Langone and Mr. Donohue, then I think I'm doing quite fine.

CAVUTO: But I found it interesting, sir, that you went after Mr. Langone, but you didn't do the same with Carl McCall, who essentially approved the Grasso pay package.

SPITZER: No. What we did, and, Neil, you need to understand here, the New York Stock Exchange is a not-for-profit. And we charged Mr. Grasso because he improperly received close to $200 million. Mr. Langone because he is alleged to have deceived the board and misled the board.

There were many other board members, comp committee members, CEOs of the major investment banks, whom I don't think you would view as being my closest allies and buddies these days, whom we did not charge because the distinction is between making a fundamental misrepresentation to the board, versus simply making a bad decision.

Board members should not be charged for making a bad decision. That falls within the business judgment rule. We may say, bad judgment, guys, you should learn from it. But deceiving the board is the distinction, and that is why Mr. Langone and Mr. Grasso were charged, a distinction that is appropriate, given not only the law but the public policy of encouraging people.

CAVUTO: So I can draw no inferences here that Carl McCall is a prominent New York Democrat?

SPITZER: No. Frankly, last time I checked, Hank Paulson, who is not charged, is not. Nor is David Komansky, nor are the other executives of the major investment banks who were not charged.

And so, I think that I understand why Mr. Langone is grasping at straws to make the argument. Unfortunately for him, it has about as much merit as all the other arguments he's made.

CAVUTO: You know, I know now you're running for governor, sir. The present governor, George Pataki, still isn't clear if he's going to run for a fourth term, has said that your zeal going after the financial industry is one thing, but it could chase business away from the state. He said: "It does concern me that I've had corporate and other business leaders come to me and say, 'Why should we be in New York?'"

How do you answer that?

SPITZER: Well, because business leaders whom I deal with want an honest marketplace. And you would be amazed, Neil, how many CEOs come up to me every day and say, Eliot, thank you for what you're doing. Yes, you're going after the bad guys. We want you to do that. We depend on an honest, level playing field.

The honest players out there don't want a system that is rigged. They want to be able to compete, create jobs. Most of them say, you know what, a hundred years ago, a lot of CEOs didn't like it when Teddy Roosevelt went after the cartels. But we applauded that. We know what it did for the economy. It created jobs.

They say to me, we need somebody who cleans up the illegality to permit the rest of us to play fair. That's what we approve of. It encourages investment, encourages job creation. Look at the markets these days. They're doing fine.

CAVUTO: So, you don't think, sir, that it would chase business out of the state?

SPITZER: Absolutely not.

CAVUTO: Or maybe some of them might have a vendetta against you and say, Eliot Spitzer, just to screw you if you become governor, we're going to get out.

SPITZER: Hey, look, I can't control somebody who sort of thinks that way. What I can tell you is that those who value the marketplace, who value integrity are going to stay here, applaud what we've been doing. And it's been a pursuit that the SEC has now joined. States other than New York, of course, are involved.

And so, no, I don't buy the argument at all. In fact, I think it encourages jobs. It encourages people to be here, to invest here because of the integrity of the marketplace.

(END VIDEOTAPE)

CAVUTO: All right. Eliot Spitzer. Just a quick reminder here. If we were not clear, Tom Donohue, the president of the Chamber of Commerce was critical of Mr. Spitzer, claiming that he had acted as the judge, jury and executioner in these investigations. Obviously, as you can see, Mr. Spitzer took exception to that and said that Mr. Donohue was not hearing his members' real concerns or what was in their best interest.

Well, Eliot Spitzer's political ambitions notwithstanding, just wait until you hear what he has to say about President Bush and newly crowned DNC chief Howard Dean. We'll show you all of that in Wednesday's edition of "Your World."

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