At Least Admire Spitzer for His Foes
by Froma Harrop
A few good words for Eliot Spitzer. The resigned New York governor could be brutish, vindictive and, when it comes to sexual rectitude, a grand hypocrite. But in going after the depredations of Wall Street, subprime lenders and corporate looters, he was a rare crusader.
In its duty to regulate financial activity, the Bush administration has committed gross negligence. The result -- a plunging dollar, terrified credit markets, mass home foreclosures -- is a national humiliation on par with Mrs. Spitzer's personal one.
Spitzer railed against the excesses as well as outright fraud. It's true that many liberal politicians have stepped forward to condemn abusive loans peddled to the unsophisticated and the ludicrous pay bundles of CEOs. But Spitzer, rich himself, was a Democrat representing the Empire State, whose economy benefits from a lively Wall Street casino. He was thus going after members of his better-heeled constituency.
It was Spitzer who blasted the Bush administration for actually stopping states from passing their own laws against predatory lending. Mortgage companies, he recently wrote in The Wall Street Journal, were "making loans without regard to consumers' ability to repay, making loans with deceptive 'teaser' rates that later ballooned astronomically, packing loans with undisclosed charges and fees or even paying illegal kickbacks."
In addition to their disastrous consequences for homeowners, Spitzer went on, "these practices, if left unchecked, threatened our financial markets." He was right.
As New York attorney general, Spitzer sued over the $140 million deferred compensation showered on New York Stock Exchange Chairman Richard Grasso. The stock exchange happens to be a nonprofit, and Grasso's pay approached the exchange's net income for the year.
He also duked it out with Kenneth Langone, a stock-exchange board member who pushed for diverting the mega-millions to his friend Grasso. Langone had to resign.
(Of Spitzer's current troubles, Langone told CNBC, "I had no doubt about his lack of character and integrity.")
Spitzer shed light on corrupt policies at some investment companies that let rich investors get in and out of their mutual funds faster than the average guy. When makers of computer chips were caught fixing prices, he confronted them.
Spitzer went after Wall Street analysts busily suckering the investing public. One was Salomon Smith Barney's Jack Grubman, who plugged a stock that he admitted to friends "is going to zero." Another was Henry Blodget, a Merrill Lynch analyst who called at least one of his recommendations "a piece of crap."
In the little people's department, Spitzer subpoenaed restaurants, construction companies and other small businesses that cheated their workers, most often immigrants. Some were paying them less than the minimum wage. Others didn't pay overtime.
Spitzer wasn't always on the side of right. He joined Sen. Chuck Schumer, a New York Democrat and servant of Wall Street, in defending the infamous tax loophole for hedge- and equity-fund tycoons -- the deal that taxes their billions at about half the rate that middle-class people pay on their thousands. Superrich observers, such as Warren Buffett and Citicorp exec Robert Rubin, have slammed such tax scams as unfair and irrelevant to economic growth.
It is said that "friends come and go, but enemies accumulate." When Spitzer tripped up, his many foes filled the stands and stood up to cheer and gloat. Some of them had good reasons.
But in his role as the Sheriff of Wall Street, Spitzer offended a lot of people who needed offending. And he fought for the unconnected at a time when our so-called leaders in Washington could not care less. For that, Spitzer deserves a parting salute: He was on patrol when almost no one else was.
COPYRIGHT 2008 THE PROVIDENCE JOURNAL CO.
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Views expressed in this column are those of the author, not those of Rasmussen Reports.
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