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 administrationís 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 hourís 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 nationís 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 hasnít 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
Why the attack now? Spitzer had become increasingly public in blaming the Bush
administration for the nationís 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
"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,"
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
With that article, Spitzer may well have signed his own political death
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