Saturday, March 21, 2009


Once all the hoopla (and snickers) died down, it wasn't a big surprise that the so-called charges against Eliot Spitzer ended up being much ado about nothing.

After last year's revelation that he had been involved with an escort service, Spitzer resigned as Governor of New York (he's a Democrat after all). In November, the announcement that no laws were violated after all, as the Huffington Post reported, Spitzer Won't Face Charges:

Federal prosecutors said Thursday that they will not bring criminal charges against Eliot Spitzer for his role in a prostitution scandal, removing a legal cloud that has surrounded the former New York governor since his epic downfall eight months ago.

U.S. Attorney Michael Garcia said investigators found no evidence that Spitzer or his office misused public or campaign funds for prostitution. Investigators found that Spitzer solicited high-priced call girls, but federal prosecutors typically do not prosecute clients of prostitution rings.

Coincidentally, Spitzer was in the process of investigating the sub-prime mortgage mess when he was busted for cavorting with hookers, Elliot Spitzer - The First Patsy in the Meltdown:

Former New York Governor Elliot Spitzer was cleared in the first week of November this year of a fairly serious offense against the Mann Act, a Federal Offense as opposed to a State Offense, which prohibits 'the transportation of people 'across state lines for the purposes of prostitution'.

Well, they didn't really clear him; they just 'declined to prosecute'.

Why? The Bush administration's job was done: It has been universally accepted that the political assassination of Elliot Spitzer was engineered by the Bush administration because of his public accusations against the United States Federal Reserve Bank and the top Wall Street bankers and lending institutions of a predatory lending practice called 'sub-prime' mortgaging.

See also, The $200 billion bail-out for predator banks and Spitzer charges are intimately linked.

But now with Fall of the House of Wall Street Usher, Spitzer has re-emerged to remind us of his attempt to warn us of the danger, Spitzer on AIG: I told you so:

Eliot Spitzer has a few words to say about the AIG bonus brouhaha: I told you so.

The former New York governor battered American International Group with charges of corruption long before his own dizzying downfall in a prostitution scandal. He has used this latest financial scandal to strike his old populist, Sheriff of Wall Street themes and, just maybe, mend his reputation -- though critics contend that he bears a share of the blame for the insurance giant's historic near-collapse.

Spitzer says the AIG bonus issue is "penny ante" compared to the billions of the insurer's bailout money funneled to bad banks, and that Treasury Secretary Timothy Geithner owes America an explanation, quickly.
As Spitzer wrote in Slate, The real scandal at AIG is the not the bonuses. It's the payments to counterparties.:

Everybody is rushing to condemn AIG's bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG's counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman's collapse, they feared a systemic failure could be triggered by AIG's inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure. The payments to AIG's counterparties are justified with an appeal to the sanctity of contract. If AIG's contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.

In an excellent piece, Melina at Brilliant at Breakfast explores the role of Spitzer, the Bush Administration and Wall Street shenanigans, in He's Back...The Return of Elliot Spitzer....:

Spitzer may be as "disgraced" as any anonymous sex loving Republican loser, but America is known for its great second acts, and we may be witnessing the curtain rising on Spitzer's. Today in Slate Elliot Spitzer has a short op-ed that speaks volumes about what is going on, and indirectly, if you follow the money, what happened to him. Plainly stated, Spitzer brings the AIG Ponzi Scheme one step closer to the revered establishment when he explains how the bailout money was funneled straight into the top players, with Goldman Sachs being the name that comes up again and again. These top players already got bailout money, and Goldman is looking at zero losses at this point, while regular Americans are being asked to make concessions or just plain losing everything. here are the biggest financial entities in the world, making billions on what appears to have been nothing but air traded back and forth, and having gutted the American people they are walking away with 100% return to their stockholders. In return AIG seems to think that its appropriate to pay themselves bonuses with the leftover funds. This leaves AIG still a wobbly shell with no plan of how to go forward, and the threat of the collapse of all of the world's financial markets still up in the air. So, what was all that bailout money for? Apparently to make sure that no one at Goldman or the other few top firms in the hand-out-line lost anything!

* * * *
This is country that Spitzer is familiar with; he has been a terrible liability to entities that, under the Bush administration, were allowed to literally gut the country and its citizens. All of this seems to have been part of the Bush Administration's own Ponzi Scheme, which figured that the illusion of an ownership society, terrified of the "terraism" and steeped in the me, me, me, culture would look the other way while they finished clearing out the vault. Beyond that, it's clear that the media hyped housing bubble encouraged the house flip mentality and the idea that anyone could be rich. The idea of the lottery dropping on our own heads made us more protective of the rich, because we might one day be one....or look, we could be one with no money down, if we could just balance that on this, and flip that house!!

* * * *
Spitzer has been fighting these guys and asking questions all along. Coincidentally, right after the WSJ editorial appeared on Valentine's Day 2008, Spitzer was caught up in what was an extremely unusual sting. So unusual is an investigation like this that it seems almost like it was a set-up; and considering where it all came from and how it all came down, it might well have been.

It seems that Spitzer's bank was investigating expenses under the auspices of the newer Homeland Security laws of the Bush administration. Greg Palast wrote about this compellingly, and in light of how the whole thing is shaking out now, and what Spitzer said back then about this financial mess and what he tried to DO about it, Palast had a pretty good early grasp on what had gone down. So now, with Spitzer poking his head up from the underground of "healing his family," at this most compelling of moments, its probably worthwhile for Americans to screw their heads on straight and forget the details of the hooker, and look at what Spitzer was working on when he was taken down. We might all find ourselves wanting to thank the egotistical crime fighter who cant keep it in his pants.
But, of course, you would have to believe that the Bush Administration would be capable of using partisan politics for illegal ends, to cover up the fraudulent and unethical activities of Wall Street, to think that the of persecution of Spitzer was done intentionally to get him out of the way.

And, if you believe that, you might even think thatthe financial disaster that has befallen us might have been prevented or at a minimum, lessened, if he hadn't been stopped.

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