So the Lord High Executioner of Wall Street, Eliot Spitzer, now wants to make it “fraud” to help a poor person save for retirement. That’s the message of the complaint filed this week in New York State court in Manhattan in The People of the State of New York against H&R Block. Those who have been following Mr. Spitzer for years now thought they’d pretty much seen it all, but for an example of leftist ideology run amok, this lawsuit sets a new standard of cynicism, denying those of modest means a first step into the system of capitalism and savings that is enjoyed with impunity by wealthy leftists such as Mr. Spitzer himself.

Mr. Spitzer complains that fees for the Individual Retirement Accounts offered by H&R Block ate up much of the potential savings. But as the complaint notes, “The median initial deposit to an Express IRA account is approximately $300.” Most of the biggest low-fee IRA operators won’t even let you in the door at that amount. The Web site for Vanguard, one of the largest mutual fund firms and one that markets itself on the basis of its low fees, says its minimum investment for someone wanting to start a new IRA is $3,000, 10 times the median account that H&R Block was starting.

Even at that level, Vanguard – remember, this is the firm known industrywide for its low fees – is going to charge you a $10 a year IRA custodial fee, a $10 annual “index fund maintenance fee” if you invest in an index fund, and the expense ratio for its mutual fund, which could amount to another $6 or so a year. These fees don’t make the $15 account-opening fee that Mr. Spitzer is suing H&R Block over seem particularly abusive.

Another fee that Mr. Spitzer is in a lather about is H&R Block’s account closing fee, which initially was $75 and then was lowered to $25. This, too, is hardly unusual. Fidelity, another large mutual fund operator, charges a $50 closing fee for the Simple-Start IRA that it bills on its Web site as a “no-fee” IRA. Fidelity requires a $2,500 minimum initial investment for most of its IRAs, and if an account falls below $2,000, it charges a $12 a year “low-balance fee.” If you want to open an IRA at Fidelity with less than $2,500, you need to set up an automatic withdrawal from your bank account of at least $200 a month.

Robert Abrams, who is one of Mr. Spitzer’s predecessors as New York attorney general and who is representing H&R Block in the battle with Mr. Spitzer, says the firm has actually lost money on the program, while 78% of the accounts opened between 2001 and 2005 “have experienced positive net tax savings benefits and interest earnings.”

Meanwhile, Mr. Spitzer doesn’t make clear in his complaint why he, rather than the free market, should be setting H&R Block’s fees. Or why, even if government intervention were necessary, fee-setting for these accounts should be his responsibility rather than that of the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Treasury Department’s Office of Thrift Supervision, or the federal Comptroller of the Currency. Maybe Mr. Spitzer wants to set the fees so low that no one will offer IRAs to poor people. That’d be the consequence of his lawsuit making it “fraud” to help poor people save for retirement.

Mr. Spitzer also has a beef with H&R Block in respect of the investment options it gave its customers. “Unlike many IRAs, which offer various investment options such as stocks, bonds, and mutual funds, the Express IRA has only one investment option, an FDIC insured money market account that typically pays an interest rate less than the rate of inflation,” Mr. Spitzer’s complaint charges, going on to say, “It is common knowledge that money market accounts are a poor vehicle for retirement savings.” Mr. Spitzer goes on to quote a Wall Street Journal article to that effect.

Well, Amalgamated Bank, “America’s Labor Bank,” also offers only IRAs that do not allow account holders to invest in stocks or mutual funds. The annual rate Amalgamated was offering yesterday on an IRA deposit of $300 was 0.60%, below the rate of inflation.Yet you don’t see Mr. Spitzer going after his allies in organized labor. The truth is that if allowing a consumer to invest his IRA in a money market account – or in a way contrary to how an article in the Wall Street Journal advises – constitutes fraud and a breach of fiduciary duty, every banker in New York might as well start paying the fines to Mr. Spitzer now.

While money-market accounts expose an investor to inflation risk, they protect from market risk. And since one of Mr. Spitzer’s complaints is that some H&R Block customers “lost money” over the year or two that they had their accounts, it’s hard to see why he thinks they should have been directed toward riskier options. As it is, according to the Investment Company Institute, IRA assets as a whole nationwide declined by $100 million between 2000 and 2002 as the stock market went down. H&R Block clients avoided much of that volatility. Had H&R Block pushed its clients into stock funds and had the stock market declined, Mr. Spitzer would probably be suing the firm anyway for having failed to direct clients to a less risky option.

Mr. Spitzer, a Horace Mann graduate who is the son of a real estate tycoon, invested his own money in the 1990s in the Cramer Berkowitz hedge fund. Mr. Spitzer’s actions will have the effect of preventing Americans with less money from saving for retirement, despite the fact that the idea of channeling a tax refund directly into an IRA – the essence of H&R Block’s Express IRA – has been championed on Capitol Hill by Democratic congressmen like Rahm Emanuel and Jim Cooper, sponsors of the Direct Deposit Savings Act of 2005.

If Mr. Spitzer wanted to score political points by attacking the tax industry in the month before April 15, he’d have been better off focusing on New York’s high marginal rates and how he’d change them as governor. That’d help the poor more than attacking their retirement accounts. But Mr. Spitzer is running for governor precisely so that he can raise taxes on New Yorkers. You can bet you’re your entire IRA on it. So at the end of the day H&R Block and Mr. Abrams would be doing all New Yorkers a favor if they fought this suit to protect the points of principle that are being trampled.

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They’d be doing all New Yorkers a favor, that is, except for the trial lawyers who fund the Spitzer campaign and those of other politicians, mostly Democrats, in the Empire State. One of the most prominent among those trial lawyers, William Lerach, happened, the same day Mr. Spitzer moved, to file what the Wall Street Journal described as “a complaint seeking class action status in U.S. District Court in Missouri alleging H&R Block breached fiduciary duties and used deceptive and unfair trade practices by steering clients to the Express IRA accounts.” Funny how Mr. Lerach, who didn’t return our reporter’s calls yesterday about whether he had gotten an advanced heads-up from Mr. Spitzer, managed to move so fast on this one. Don’t count on Mr. Lerach filing a similar suit against Amalgamated Bank – they are his client. And don’t count on Mr. Spitzer’s zeal for low fees to extend to the multi-million dollar profits of the trial lawyers – they are his campaign donors. No, the lawyers and the politicians do okay for themselves all around – it’s H&R Block’s shareholders and the poor who wind up the losers in Mr. Spitzer’s latest sally.