- The spectacular and highly bizarre release of secret
FBI wiretap data to the New York Times exposing the tryst of New York state
Governor, Eliot Spitzer, "No.9" with a luxury call-girl, had
less to do with the Bush Administration's high moral standards for public
servants. Spitzer was the target of a White House and Wall Street dirty
tricks operation to silence one of its most dangerous critics in handling
the current financial market Tsunami crisis.
- A useful rule of thumb in evaluating spectacular scandals
around prominent public figures is to ask what and who might want to eliminate
that person. In the case of Governor Spitzer, a Democrat, it is clear
that the spectacular "leak" of government FBI wiretap records
showing that Spitzer paid a high-cost prostitute $4,300 for what amounted
to an hour's personal entertainment, was politically motivated. Why?, is
the interesting question.
- Spitzer became Governor of the State following a record
as a relentless State Attorney General going after financial crimes such
as the Enron fraud and corruption by Wall Street investment banks during
the 2002 dot.com bubble era. He was bitterly hated on Wall Street for that.
He had made his political career on being ruthless against financial corruption.
Most recently, from his position as Governor of the nation's second largest
state, and home to its financial industry, Spitzer had begun making high
profile attacks on the complicity of the Bush Administration in covertly
arranging bailout if its Wall Street financial friends at the expense of
ordinary homeowners and citizens, paid all with taxpayer funds.
- Curiously, Spitzer, who had been elected governor in
2006 defeating a Republican winning nearly 70 percent of the vote, has
been not charged in any crime. However, New York Assembly Republicans immediately
announced plans to impeach Spitzer or put him on public trial were he to
refuse resignation. Spitzer could be asked to testify in any trial involving
the Emperors Club prostitution ring. But so far he hasn't been charged
with a crime. Prostitution is illegal in most US states, but clients of
prostitutes are almost never charged. The Spitzer case is in the hands
of Washington and not state authorities, underscoring the clear political
nature of the Spitzer "Watergate."
- The New York Times said Spitzer was an individual identified
as Client 9 in court papers filed last week. Client 9 arranged to meet
with "Kristen," a prostitute who charged $1,000 an hour, on February
13 in a Washington hotel and paid her $4,300, according to the court documents.
The case is clearly political when compared with more egregious recent
cases involving Republicans. Republican Mark Foley was exposed propositioning
male interns in Congress and Rudolph Giuliani was discovered cheating on
his wife but no Republican calls for resignations.
- Why The Attack Now?
- Spitzer had become increasingly public in his blaming
the Bush Administration for the nation's current financial and economic
disaster. He testified in Washington in mid-February before the US House
of Representatives Financial Services subcommittee on the problems in New
York-based specialized insurance companies, known as "monoline"
insurers (monoline Versicherung). In a national TV interview the same day,
he laid blame for the crisis and its broader economic fallout on the Bush
- Spitzer recalled that several years ago the US Office
of the Comptroller of the Currency went to court and blocked New York State
efforts to investigate the mortgage activities of national banks. Spitzer
argued the OCC did not put a stop to questionable loan marketing practices
or uphold higher underwriting standards.
- "This could have been avoided if the OCC had done
its job," Spitzer said in the interview. "The OCC did nothing.
The Bush Administration let the housing bubble inflate and now that it's
deflating we're dealing with the consequences. The real failure, the genesis,
the germ that has spread was the subprime scandal," Spitzer said.
Fraudulent marketing and very low "teaser" mortgage rates that
later ballooned higher, were practices that should have been stopped, he
argued. "When mortgages are being marketed, there is a marketplace
obligation to ensure the borrower can afford to pay back the debt,"
- That TV interview was only one instance of Spitzer laying
blame on the Bush Republicans. On February 14, Spitzer published a signed
article in the influential Washington Post titled, "Predatory Lenders'
Partner in Crime: How the Bush Administration Stopped the States From Stepping
In to Help Consumers."
- That article appeared the day after his ill-fated tryst
with the prostitute at the Mayflower Hotel. Coincidence? Spitzer wrote,
""In 2003, during the height of the predatory lending crisis,
the OCC invoked a clause from the 1863 National Bank Act pre-empting all
state predatory lending laws, thereby rendering them inoperative. The OCC
also promulgated new rules that prevented states from enforcing any of
their own consumer protection laws against national banks."
- In his article Spitzer charged, "Not only did the
Bush administration do nothing to protect consumers, it embarked on an
aggressive and unprecedented campaign to prevent states from protecting
their residents from the very problems to which he federal government was
turning a blind eye." Bush, said Spitzer right in the headline, was
the "Predator Lenders' Partner in Crime." The President, said
Spitzer, was a fugitive from justice. And Spitzer was in Washington to
launch a campaign to take on the Bush regime and the biggest financial
powers on the planet. Spitzer wrote, "When history tells the story
of the subprime lending crisis and recounts its devastating effects on
the lives of so many innocent homeowners the Bush administration will not
be judged favorably."
- With that article, some Washington insiders believe,
Spitzer signed his own political death warrant.