The Wall Street Verdict
Recalling Spitzer’s tough measures on Wall Street crimes, the financial sector has mixed feeling about the governor’s prostitution scandal.
The news about New York Gov. Eliot Spitzer’s prostitution scandal stirred emotions and memories on Wall Street, which was once a prime target of many investigations by the former attorney general. Despite the governor’s fervent persecution of white-collar business in the past, many in the financial industry dismissed feeling any joy over his downfall.
“This is a private matter,” said Rafi, 43, a financial industry employee who declined to give her last name. “But also, there is a guy who is trying to bring down the corruption in corporate America and, by doing so, somebody else got him for it. Why did they go specifically after Spitzer? You can’t mess with big money, they’ll come after you.”
The investigation into Spitzer’s affairs started when, under a suspicion of bribery, banks alerted the Internal Revenue Service that lump sums had been shifted from the governor’s funds to a questionable account, which was traced to Emperors Club V.I.P., an expensive online prostitution service that charged clients up to $5,500 an hour.
While serving as New York attorney general from 1999 to 2006, Spitzer initiated similar prosecutions, he broke up a call-girl ring and jailed 18 people on corruption, money laundry, falsifying business records and prostitution charges.
“Some of my colleagues look at this as hypocrisy but I don’t,” said Rafi, who was on a cigarette break in front of Deutsche Bank building at 60 Wall St. “The Wall Street corruption was absolutely needed to be fettered out. It involved public trust and public money, and he went after firms that were doing wrong investments, that were corrupted. The scandal now is directly linked to humiliating and defacing him.”
Rafi is not alone in her suspicion of foul play bringing in the attention to the governor’s scandal.
“The irony is that he got caught up in an IRS thing after seeking out the IRS on Joe Bruno,” said her colleague Brandon, 51, who declined to give his last name. “I think they went hunting for him. The same people he was after. It is too much of a coincidence after he is involved in an IRS scandal for Joe Bruno [Republican majority leader in the State Senate].”
Spitzer was linked to a failed proposal for an IRS probe of Bruno’s potential income-tax evasion for alleged personal use of state aircraft last year.
As Republicans have called on the governor to resign or face impeachment, some financial traders are relieved.
“Well, they are cheering because they don’t have the watchdog anymore,” said Brandon. ”Corporate America can go back to its corrupt ways if there’s nobody to oversight.”
While evidence of Spitzer’s prostitution scandal accrues, political experts interpret its implications and the governor’s next step is under speculation.
“The central issue is that he put himself up as a model of integrity and this is a huge slip for him,” said Al Romay, who works at Charles Schwab on Wall St. “At the same time I don’t think it’s entirely appropriate to vilify an individual on one misstep in conduct.”
Going after big business corruption, Spitzer prosecuted top investment firms for corruption and financial fraud a few years ago. Ten major Wall Street companies agreed on a landmark research settlement spearheaded by Spitzer in December 2002, which raked up about $1.4 billion. The animosity between the former attorney general and Wall Street reverberated in the financial industry as initial reports of the scandal came in, Romay said.
“Frankly, he didn’t necessarily make too many friends with the research settlement back in 2001 and 2002,” Romay said. “But the mood internally is not necessarily one of elation, although you hear from certain circles that they are feeling some sort of happiness because of somebody else’s misery. In many ways, it doesn’t matter because it is a personal scandal not a professional one.”
