Many of us know the story of Eliot’s Spitzer’s fall from the top of the political ladder. After being linked to a high-priced prostitution ring in 2008, he was forced to resign as the governor of New York. Regardless of the hypocrisy unveiled by the breaking of the news — as New York attorney general, Spitzer led a task force in a prostitution ring bust — the salacious scandal was a purely personal failing. He now works at his father’s real estate firm and making appearances on television from time to time.
But Spitzer’s flaws don’t challenge his credibility as an effective politician nor do they represent a misuse of public office. His immense knowledge of the financial system is essential to policy makers at this critical juncture for regulatory reform in the industry. Spitzer’s personal mistakes shouldn’t hinder the protection of the average American taxpayer from the excesses of Wall Street.
Spitzer’s reputation as “The Sheriff of Wall Street” is well deserved. During his tenure as the attorney general of New York, he utilized an obscure 1921 New York statute — The Martin Act — to expose conflicts of interest within the workings of ten of the top investment firms in the United States. The companies agreed to pay fines in excess of one billion dollars, representing a victory for the state against the abuses of the financial industry.
Since he stepped down as governor, Spitzer has been an outspoken critic of banks like Goldman Sachs “double-dipping” into bailout money. In 2008, he questioned the rescue of AIG not because of its profligate yet largely irrelevant bonuses that occupied the public’s attention, but because it had been the insurer for financial institutions that were already assisted by the government. Spitzer’s work made him a feared character on Wall Street and distinguishes him as the type of official currently needed to help rein in the industry.
In addition to his track record as a successful financial prosecutor, Spitzer’s persona also makes him well suited to have a role in the reform of the financial industry. He’s arrogant, ambitious and shows no mercy as a prosecutor. His arrogance has been apparent: in a private conversation with a New York assemblyman who opposed his choices for state comptroller, Spitzer said, “I am a fucking steamroller and I’ll roll over you or anybody else.” He also quite harshly called New York City Mayor Michael Bloomberg “wrong on every level” because of Bloomberg’s opposition to his plan to issue driver’s licenses for illegal immigrants. Though these statements may frame Spitzer as bigheaded and hot tempered, they also allude to his toughness and imposing stature, which are necessary to police the cutthroat business world.
Bearing in mind the recalcitrant tone the investment banks have taken when it comes to atoning for their mistakes, these qualities are exactly what are needed for a policymaker and regulator. Goldman Sachs CEO Lloyd Blankfein issued a vague apology for the crisis but refused to take the blame for questionable business practices. One such practice was the bank’s unloading and subsequent shorting of subprime mortgage securities — or betting on the securities’ devaluation — to limit their exposure to the crisis and create profits. Blankfein’s apology surely requires a “situational” sense of morality to understand, as banks were simultaneously selling these securities to their clients. Perhaps Spitzer could be a guns blazing sidekick for the meek U.S. Treasury Secretary Timothy Geithner to help him hold Wall Street in check.
Spitzer also has a good work ethic. According to a Feb. 18 article in The New York Times, he “installed appointees with substantial credentials and took a deep interest in their work, peppering them with e-mailed policy questions in the early-morning hours.” Several state officials are quoted in the article attesting to his responsiveness and engagement. So while Spitzer was caught — in a personally and morally reprehensible situation, no doubt — with a prostitute, he never allegedly abused his authority to coerce a woman to not press sexual assault charges on an aide like current New York Governor David Paterson or left his state without an executive for an Argentinean fling like South Carolina Governor Mark Sanford. Spitzer’s personal character flaws may not make him a good role model, but they don’t reflect on his capacity as an effective policy maker or adviser.
The new regulatory legislation being discussed should impose strict and logical regulations on the institutions that contributed to the worldwide financial crisis and enforce them. Politicians should utilize all possible resources to ensure the best outcome for the American economy. Now is not the time for Spitzer to sit on the sidelines when he is clearly qualified to be a top adviser to Congress or the U.S. Treasury Department on matters of financial regulation.
Harsha Panduranga is an LSA sophomore.