Thursday, February 21, 2013

Why Did Spitzer Resign?

If you could draw up a resume for how to be future Democrat president, it would be hard to top Eliot Spitzer. He's a brainiac, he's got the Ivy pedigree, he's from an extremely wealthy family, he's got a tough as nails persona but is also a family man, and after earning some bucks on the private side, he became a Manhattan DA. The blueprint for Democrats is to be a young, hard charging prosecutor so no Republican can say later that you were soft on crime. After he had reached the NY state Attorney General's office, he was so aggressive going after big names that he could count the scalps of giant, corrupt crony groups he had sliced in victory. He looked like a populist fighter for the little people despite being from the 1%. Here's a rarely discussed secret to his political success, Spitzer was great on the phone with donors. Spitzer was elected governor of NY, and if not for a high class hooker scandal that forced him to resign, he would be in the non-Hildawg Clinton driver seat for the Democrat nomination for president in 2016. Because of the 14 year freshness rule, he could run if '16 looked bad in 2020. Looking at the weak Democrat bench (really Hildawg is their only viable hope) and considering that he had the stones to go after big financial interests in NYC, Spitzer would be a shoe in. It just didn't work out for him despite the wonderful career he built because of sex with a pretty hooker. Why did Spitzer have to resign over paying hookers when he was not charged with any crime and other politicians before and after have done far worse? The FIRE economy interests wanted him out of the way, and they knew his kink was more than you could handle.

Spitzer made a name for himself by going after mutual fund companies, a stock exchange, and his crown jewel achievement, destroying the Greenberg family legacy due to bid rigging and contingent commissions. Hank Greenberg was the patriarch of an insurance family that controlled a significant bit of the insurance market with him leading AIG as the heavyweight insurer and his sons running March + McLennan (huge broker) and ACE Limited (gigantic foreign firm). Hank Greenberg reformed AIG's operations and grew them into the force they were prior to the bankruptcy. He also started the belief in underwriting for no underwriting profit, with the only profit a firm would earn would be on investment income (risky but it paid off). He was nicknamed Hank like the famous Jewish baseball player Hank Greenberg who was the "Hammering Hebrew". Hmmm, wonder what is implied? Hank Greenberg was a well connected man, that if his wikipedia entry is to be believed, was offered positions in the CIA and had Henry Kissinger as a friend and partner. A unique thing about NY insurance regulations is that in order to do business there, you must have a headquarters or sizable operation there (add in crazy state licensing regulations). Anyone who wants to play must be there, and this applies to any case you work on that has exposure of over 10-20%. Contingent commissions didn't exactly go away as every insurance carrier created a new commission program that still paid NY brokers extra commissions, but it was now disclosed properly. Insurance has been a huge moneymaker in NY from the days of their merchant port high times to the insurance like CDS of today. To go after Wall St. (smaller targets not TBTF) is a challenge. Adding in the insurance conglomerates, it is astounding that Spitzer forced Greenberg and his son out (he says otherwise). At Greenberg's age, it was the final taste in his mouth from his career. If he took out Greenberg, who in the FIRE economy could stop Spitzer?

Looking at what Spitzer did to insurance, why in hell would any of the FIRE economy pieces want a guy like him in charge of any government system that would have executive power and a bully pulpit? Greenberg says Spitzer thought he was above the law. Above the law for the hookers or his actions going after Greenberg? It's unclear, and even if it's for his hooker stuff, does it matter? Spitzer had more than enough money. He didn't need the FIRE economy payoffs. This isn't Clinton or Obama who want to secure a future with steady millions after they leave office. Spitzer didn't need it. Wall St. couldn't buy him off if they had to. With all of Wall St.'s corruption and problems, far worse than commission bonus plans for insurance, why would they trust him as governor of NY, US attorney general or worse, president of the US? He had executive authority in Wall St.'s situs state starting in Jan of 2007 to January 2011; exactly in the middle of the financial crisis when the masses were begging for anyone to go after Wall St. Where is their leverage on him? He can't be bought off, so they figured out what his kink was and used it against him.

The press coverage of the whole situation was funny since you have articles that discuss his use of hookers as well as disinformation articles trying to pin the attack on Spitzer as a GOP move. If the GOP did pay some guys to research him, why didn't they find the transfers for hookers or use of a well known high end escort service? They couldn't dig that up, yet the author of the linked article tries to loop them in. Where do you think Wall St. and Insurance bastards get their girls for conventions, conferences, client visits, etc.? Ten years ago as a newbie employee, I wrote a nice chunk of business with the New Jersey and NYC offices of my Fortune 500 company and their top brokers who were Mercer, Willis, AON, etc. After year end, I was invited (along with some executives) down for a night at the Meadowlands, daytime golf sessions, a Bruce Springsteen concert and then a nightcap at the "VIP Club". My guys said, "Everything is taken care of, nothing is off limits". While the executives present were high up at my company (one performed a scheduled insider stock sale at $10 mil), I was a noob and an even smaller noob in my industry. What's on the table for the real big boyz? Bill Gross, Russ Winter and others joke about the high end hookers that Wall St. had to use to get rating agencies to slap AAA on subprime securities. Corruption is everywhere because man is a weak willed animal prone to give in to impulse. Greenberg and these high finance guys have the Emperor's Club in their cell phones, and hey, what's a madam going to do with all of her secrets? Money changes hands, and a rising star collapses on itself.

Yes, hookers can be favors, but they also are liabilities. They get you dirty. You become a dirty figure that is compromised. Godfather Two laid out an extreme method of going after a compromised politician. Spitzer paid for Ashley Dupre to sign a confidentiality statement. It might just have been sex, but the press revealed enough for us to know he was considered 'difficult' or harder to handle. Why would we need to know that? Spitzer paid for a confidentiality statement. The implications are that Spitzer was into some weird or wild stuff. Maybe not, but that is what is implied. Did the media mention the confidentiality statement enough? Our FIRE economy barons needed to remove a figure they considered dangerous enough to take them down. This isn't a political plot. Spitzer was on the right side (Dems), and had done the right things. Fellow Democrat Sen. Menendez was just busted for underage hookers in the Dominican Republic, but you don't see him resigning. Greenberg and the Wall St. boyz needed to knock off a potential threat. Spitzer had more money than he needs and had already proven he'd go after whomever to win. Imagine what Americans will be screaming for in 2016 if the economy is still meh or slipped further into depression and Wall St. is still riding high? Spitzer could have run and said "I took it to AIG and mutual funds. I'll take the broom to Wall St.", and it would be credible. He could have even chopped off the crooks at Citigroup, which was on life support in 2009 to send a message to the others, and he'd look even more credible for a later run in office.

Wall St. needs to get to the statute of limitations for their actions in 2008 (and before) as well as keep their politicians in charge and calling the shots on investigations for as long as they get overt and backchannel bailout money and subsidies. Wall St. thinks they can ride this out with enough time. Why would they ever give up the power they have? If they can't buy you off, they will search by any means necessary to find a person's weak spot. People will vote for the hard charging anti-corruption candidate, people will vote for the guy who cheats on his wife, but Americans aren't voting for the guy who cheats on the mother of his children by choking hookers with a butt plug in place. Who cares about competence, little voters need to think they are normal.


asdf said...


We are at the stage of corruption where these people aren't going down until the whole system goes down.

odinslounge said...

It's funny cause they actually think they have this stable just full of prize winning candidates for 2016. I've heard Elizabeth Warren already mentioned a few times. Everything is just WTF