I read liberal blogs defending Spitzer and spinning conspiracy theories about his downfall, and all I can think is "Really? You really want to hitch your wagon to this fallen star?" Why on earth? They were investigating him for a perfectly legitimate reason: he had a suspicious pattern of withdrawals from his bank account, and the Feds are supposed to keep an eye on that sort of thing in people who are elected to public office, because we all have a legitimate public interest in clamping down on official corruption. I think "structuring" and "money-laundering" charges are repugnant. The Mann act is garbage. Prostitution, drugs, and arranging homosexual liasons should be legal, though the airports have a perfect right--and good reason--to keep it out of the restrooms. But Eliot Spitzer was caught doing something that, regardless of its moral status, is in fact illegal, and which, moreover, he was more than happy to prosecute others for engaging in. (Though to be fair, since he only went after the purveyors, perhaps he somehow genuinely believe that the johns did nothing wrong in buying what they were selling.) Yes, he did so because it was his job to uphold the laws of the state of New York. Call me crazy, but as the governor, I think it may also have been his responsibility to follow them.
To be sure, many people--including, yes, me--are taking glee in Spitzer's downfall even though we think all his actions should be legal. There you are: having people you disagree with revealed as stunning hypocrites is emotionally satisfying. Plus there's a positive side (I mean, beyond New York State possibly getting a decent governor). If this makes everyone rethink our nation's ridiculous prostitution laws, Eliot Spitzer will finally have made a lasting positive contribution to his country.
But I also think that many of the reasons people are defending him--that he was a good governor and took on Wall Street--are fundamentally wrong. Eliot Spitzer was a terrible AG, and a terrible governor. He had even more difficulty than Rudy in understanding that the executive office does not simply confer more power than that of prosecutor, but different power; he treated those who disagreed with him as perps. His reform agenda died on the vine, and no, not just because of Republican obstructionism; he had vast troubles building coalitions, which is why no one is offering him any sort of public support, not even of the tepid "family tragedy, let's move on" variety: the man has no friends in Albany. And that's because he is, at heart, a petty tyrant. Sometimes you need a petty tyrant--Rudy did good things for New York before he went totally off the rails. But Eliot Spitzer's agenda was not fighting crime and taking on out-of-control unions; he was trying to build, not destroy. For that, you need help.
His attacks on Wall Street, meanwhile, were more about grabbing headlines than catching criminals. Some of the things he took on were real abuses, like the disgusting abuse of equity research and retail networks to pump up the stocks of investment banking clients. Others were much more dubious--a pointless-seeming war against insurance brokers for wrongs that were at best trivial. Some of his more bizarre prosecutions, and the weird settlements he demanded, made it clear that he didn't have the understanding of markets to effectively be the financial regulator he set himself up as.
Worse was how he did it. He couldn't make cases--the highest profile case he brought to trial basically ended with an acquittal on all counts. Yes, securities cases generally settle, but not like Spitzer's--precisely because the cases are generally a hell of a lot stronger than any of Spitzer's, cases where the prosecutors had some hope of proving that someone had actually done something illegal. Spitzer was able to do this through the power of the Martin Act, which gives the New York State attorney general practically despotic powers to go after fraud. Among the provisions: the prosecutor does not have to prove that there was intent to commit fraud, that any transaction took place, or that anyone was actually defrauded; he can interrogate potential defendants with no rights to an attorney or against self incrimination; he can keep the investigation secret or make it public, just as he pleases; and can subpoena just about anything. Practically the only limitation on the AG is his goodwill and sense of fair play. Eliot Spitzer was not overgenerously endowed with either.
Banks and others came to the table because Spitzer would launch these investigations and then use a carefully orchestrated series of press releases and leaks to torpedo their stock price. But many of the more spectacularly incriminating sounding excerpts from subpoenaed documents were so misleadingly taken out of context that they would have been grounds for a libel suit if he'd been a journalist. Don't get me wrong--many of them were guilty. But this kind of tactic doesn't distinguish between the guilty and the innocent; anyone in a credit-dependent industry whose stock value is plummeting would have to negotiate, because Spitzer's inquiry could shut them down. (Can and did, in some cases--indeed, he apparently nearly shut down Merrill's asset management business until a judge reversed the order.) Often, these shaded into personal vendetta--Dick Grasso's pay package seems like he was grossly overvalued, but what business is it of Eliot Spitzer's how much a private body pays it's CEO? This has nothing to do with the reasons we regulate financial markets.
Moreover, all his quick settlements screwed the investors he was supposed to be protecting. The unjust settlements extorted money from those firms' shareholders and dumped it into state coffers. And the just ones did nothing for investors: the money went to the states, not to the people who had allegedly been defrauded. Shutting the investigations down quickly forestalled discovery that would have helped clients sue. Eliot Spitzer got the headlines; investors got nothing.
Felix Salmon argues that it was a good thing that Eliot Spitzer put the fear of God into Wall Street, and I take his point--the cozy practices that had become common by the end of the nineties needed to change. But it's not clear to me that these prosecutions gave them anything but a fear of Eliot Spitzer. Whoops. In a liberal democracy, it matters how you punish people for their crimes--"they got Al Capone for tax evasion" is not a triumph, it's tyranny.
And yes, that applies to Eliot Spitzer too--now that he's resigned, I hope he gets off with community service and a fine. Though in a slightly more perfect world, the johns would serve time and pay fines at least as stiff as the prostitutes get.
"There you are: having people you disagree with revealed as stunning hypocrites is emotionally satisfying."
No need to apologize, Megan. You might as well have said, "having a jackhole revealed as a jackhole is emotionally satisfying." Which we can all unashamedly agree with.
I thought Spitzer should resign. He did. I was taken aback by the Republicans who announced that they would go for impeachment if he did not resign immediately. Where were these guys with Larry Craig?
Steve
This whole thing upsets me, if only because I had "Hank Greenberg will have him assassinated" in the "How will Spitzer flame out" pool. I write property insurance at AIG and you better believe the bars were popping on Monday
Steve at 12:56: "I was taken aback by the Republicans who announced that they would go for impeachment if he did not resign immediately. Where were these guys with Larry Craig?"
Ummm... In New York state politics, not federal senate politics?
Craig is from Idaho, the people who would impeach Spitzer would be in NY. Craig is in the U.S. Senate, Spitzer is a NY state politician.
Federalism: it can be tricky.
A lot of liberal blogs, including one maintained by a co-worker of yours, have been lambasting Spitzer, and rightly so, for his actions.
"But this kind of tactic doesn't distinguish between the guilty and the innocent"
That's what I thought about many of Spitzer's prosecutions. He surely managed to nail some people that deserved it, if only by chance, but I don't think he really cared who deserved it and who didn't. He wanted to make a name for himself as a tough prosecutor, so he did whatever he had to do.
The global settlement is now used in academics as proof that all of the investment banks were doing every single bad thing that Spitzer ever accused them of. But surely Spitzer would have paraded around a longer list of scapegoats if he really had that much evidence.
One question I have about this situation is the media's urgent need to classify the Guv's vendor as a "high-end" (or similar adjective) sex provider. Does that make a difference in any legal or ethical sense? Or is about selling papers and page views and stuff like that?
What bothered me the most about many of Spitzer's prosecutions was his penchant for using his office to criminalize behavior that had heretofore been legal. Don't like certain behaviors? Fine. Pass a law (or publish a regulation) criminalizing it.
That's not what Spitzer did. He'd use some novel legal theory to prosecute behaviors that were expressly permitted by NASD (now FINRA) or some other regulatory body. The AG's office is NOT supposed to be setting public policy. It's supposed to be enforcing it. Legislating from the prosecutor's office is no better than legislating from the bench; it's worse. When a judge imposes new law on society, at least the law tends to be prospective. With Spitzer, it was retroactive.
Does that make a difference in any legal or ethical sense?
Probably not, although it does make about a financial difference of about $5k/hour, and helps explain how The Spitz managed to dissipate enough income to wake up the feds.
Good post, Megan. Maybe if your colleague Matt Yglesias reads it he'll stop lamenting the downfall of his 'Great Jewish Hope' Spitzer.
How about his prosecution of the prostitution ring? Maybe they failed to offer him a discount?
Where were the Republicans impeaching Craig? Well almost all of them were demanding he resign.
Problem is that it is very, very hard to remove a legislator from office - both constitutionally and thanks to the way the bodies are run. The Senate acts as a club and there are far too many members who want to be nice to the other guy. They want their earmarks, they want votes on horrid corrupt legislation, they don't want to be called out for their boyfriend running a prostitution ring from their apartment.
Dollar Bill Jefferson won re-election! Barney Frank is still in office. Heck there's a well known murderer running loose disguised as the Sr. Senator from Massachussetts.
Vitter should have gone, irrespective of the governor, and Craig should have left as well. I'd much prefer the death penalty for politicians rather than resignation, but that's just because I really truly hate the corrupt bastards that clog both parties. Ideally all politicians would be on trial for their lives at the end of their terms, with a reverse onus to prove that they and all of their staff were 100% pure. Cabinet secretaries would need to do this as well, and if a 19 year old gate attendant took $2 from the till at a National Park all in the chain of command - staff and political appointees, including the cabinet secretary - would be crucified. Notwithstanding the death penalty, their estates would be responsible for 50x any financial errors. Hopefully this would have a clarifying effect on politicians. It also has the benefit, for a libertarian, of scaring nearly everyone away from working for the government or getting involved in politics, which can only benefit the country.
Megan, you could have hit even harder. You left out how, as Governor, Spitzer used state law enforcement to harass his political enemies.
Megan, I agree that it is fitting that Spitzer should fall, but I disagree about what his fall reveals. Spitzer, although a legitimate douchebag, probably WAS politically targeted. These laws are objectionable precisely because they are always unrealistic, hypocritcal and more harmful than helpful to the rule of law.
Although temptation may be no excuse, it cannot be wished away. There will always be men like Spitzer, who set themselves unrealistic public or moral expectations and consequently feel prostitution is their only escape. There will always be men who fall into traveling or working too much to have a chance at a normal sex life. And many men will be shunned by an increasingly shallow and materialistic society in which they feel their attempts to establish normal relationships are in vain.
For the vast majority of men and women, the argument that men are as able as women to control their sexual desires is flatly wrong (so, too, is the moral argument for punishing the weak-kneed john as you would the calculating madam or pimp). If desires were comparably controllable, in fact, the entire call-girl industry in which all kinds of men pay more than they can really afford to have sex with modestly attractive woman could not exist. Bargaining power would be closer to parity, prices would be lower, and flatly put, more women would just sleep with men rather than requiring payment for it.
Demand for prostitutes will always persist, not despite, but largely because of, our Victorian and Puritan public morals. Even more surely than prohibition of alcohol is doomed to fail in any society where drinking is part of the culture, outlawing prostitution is bound to backfire in any society where sex is central to the culture - in other words, everywhere and always. Criminal prohibitions against man's natural desires immediately generate hypocrisy and corruption, and their vigorous enforcement just raises the stakes (and profits) of the criminal enterprises that will always rise to supply the demand. It also creates the certainty that enforcement will be unequal and sometimes, as in Spitzer's case, likely politically motivated.
I read liberal blogs defending Spitzer
Which ones, Megan? Please be specific and provide links.
"Spitzer was able to do this through the power of the Martin Act, which gives the New York State attorney general practically despotic powers to go after fraud. Among the provisions: the prosecutor does not have to prove that there was intent to commit fraud, that any transaction took place, or that anyone was actually defrauded; he can interrogate potential defendants with no rights to an attorney or against self incrimination; he can keep the investigation secret or make it public, just as he pleases; and can subpoena just about anything. Practically the only limitation on the AG is his goodwill and sense of fair play."
Amazing. The same people who fetishize the "rights" of detained terrorists at Guantanamo, and laud Spitzers prosecutions, are silent about the way that businessmen were blackmailed and denied even seemingly basic legal rights under the Martin Act. Hypocrites!
Amazing. The same people who fetishize the "rights" of detained terrorists at Guantanamo, and laud Spitzers prosecutions, are silent about the way that businessmen were blackmailed and denied even seemingly basic legal rights under the Martin Act. Hypocrites!
Of course, since Megan provided no links to support any of the assertions you quoted, you have to take her at her word. Which I see you are quite happy to do.