With the Securities and Exchange Commission, federal prosecutors, and individual shareholders scrambling to come to terms with some high-profile cases of collapsing companies, State Comptroller H. Carl McCall and State Attorney General Eliot Spitzer yesterday announced that they were joining with the state treasurers of California and North Carolina to require that investment firms that do business with the states adhere to the standards set forth in Mr. Spitzer’s infamous settlement with Merrill Lynch. Some of these standards are so obvious as to be downright funny. One provides that “In deciding whether to invest State or Pension Fund moneys in a company, money management firms must consider the corporate governance policies and practices of the subject company.” In case that seems like too high a standard, the agreement helpfully notes that this principle is “not intended to preclude or require investment in any particular company.” Mr. McCall has earned pretty good returns for the state’s retirees for years without such vague or explicit guidelines, so it’s a little amusing to see him jumping on the bank-bashing bandwagon now that the boom has come to an end. We’re all for shareholders keeping management honest, and for investors keeping money-managers honest. But when the shareholder and investor is a state government, what’s really going on is regulation. And what the McCall crowd is doing is a back-door bypass of the hearings and votes that would ordinarily attend such an effort to impose new rules on Wall Street.