The spectacular and bizarre release of
secret FBI wiretap data to the New York Times
exposing the tryst of New York State governor
Eliot Spitzer, the now-infamous client "No 9",
with an upmarket call-girl had relatively little
to do with the George W Bush administration’s
pursuit of high moral standards for public
servants. Spitzer was likely the target of a White
House and Wall Street dirty tricks operation to
silence one of the most dangerous and vocal
critics of their handling of the current financial
market crisis.
A useful rule of thumb in
evaluating spectacular scandals around prominent
public figures is to ask who might want to
eliminate that person. In the case of former
governor Eliot Spitzer, a Democrat, it is clear
that the spectacular "leak" of the government's
FBI wiretap records showing that Spitzer paid a
high-cost prostitute US$4,300
for what amounted to about an hour’s personal
entertainment, was politically motivated.
The press has almost solely focused on the
salacious aspects of the affair, not least the
hefty fee Spitzer apparently paid. Why the scandal
breaks now is the more interesting question.
Spitzer became governor of New York
following a high-profile 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
dotcom bubble era. Spitzer made powerful enemies
by all accounts. The former head of the large AIG
insurance group, Hank Greenburg, was among his
detractors. He was bitterly hated on Wall Street.
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, home to its
financial industry, Spitzer had begun making
high-profile attacks on the complicity of the Bush
administration in covertly arranging bailouts of
its Wall Street friends at the expense of ordinary
homeowners and citizens, all paid for by taxpayer
funds.
Curiously, Spitzer, who had been
elected governor in 2006, defeating a Republican
by winning nearly 70% of the vote, has not been
charged with any crime. However, the day the
scandal broke, New York Assembly Republicans
immediately announced plans to impeach Spitzer or
put him on public trial were he to refuse to
resign. 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, nor are their names usually leaked
in a case in process. 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
officially charged $1,000 an hour, on February 13
in a Washington hotel. Whatever transpired,
Spitzer paid her $4,300, according to the official
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 or few Republican calls for
resignations were heard.
Why the
attack now? Spitzer had become
increasingly public in 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.
In a national CNBC TV interview the same day, he
laid blame for the crisis and its broader economic
fallout on the Bush administration.
Spitzer recalled that several years ago
the US Office of the Comptroller of the Currency
(OCC) went to court and blocked New York State
efforts to investigate the mortgage activities of
national banks. Spitzer argued that 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," he said.
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, laying
clear blame on the administration for the
development of the subprime crisis, appeared the
day after his ill-fated tryst with the prostitute
at the Mayflower Hotel. Just a 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 the 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, Spitzer may well have signed his own
political death warrant.
F
William Engdahl is author of the book
Seeds of Destruction: The Hidden Agenda of
Genetic Manipulation, about to be released by
Global Research Publishing, and of A Century
of War: Anglo-American Oil Politics and the New
World Order, Pluto Press. He may be reached via
his website, www.engdahl.oilgeopolitics.net.
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