Why Bush Watergated Eliot Spitzer
By F. William Engdahl, 17 March 2008
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.
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 Administration.
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," 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
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.