Back before the recession began (and when it could have been stopped) Eliot Spitzer was one of several states attorneys general who were investigating predatory lending, and he was probably the best known as well as being one of the most effective. Keep an eye on the timing of all this. Here's Spitzer in a Washington Post editorial in February, 2008, writing about the predatory practices he had uncovered and their ties to the Bush administration.
He was going after banks and, yes, the Bush administration was going after him. Greg Palast wrote almost exactly two years ago, in March, 2008:Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.
Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices.
What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.
The feds actually filed a lawsuit to block Spitzer’s investigation of ugly racial mortgage steering. Bush’s banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.
Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroup’s Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called “securitization.”
What that means is that they took a bunch of junk mortgages, like the Grinning's, loans about to go down the toilet and re-packaged them into “tranches” of bonds which were stamped “AAA” - top grade - by bond rating agencies. These gold-painted turds were sold as sparkling safe investments to US school district pension funds and town governments in Finland (really). When the housing bubble burst and the paint flaked off, investors were left with the poop and the bankers were left with bonuses. Countrywide’s top man, Angelo Mozilo, will ‘earn’ a $77 million buy-out bonus this year on top of the $656 million - over half a billion dollars – he pulled in from 1998 through 2007.
But there were rumblings that the party would soon be over. Angry regulators, burned investors and the weight of millions of homes about to be boarded up were causing the sharks to sink. Countrywide’s stock was down 50%, and Citigroup was off 38%, not pleasing to the Gulf sheiks who now control its biggest share blocks. Then, on Wednesday of this week, the unthinkable happened. Carlyle Capital went bankrupt.
Who? That’s Carlyle as in Carlyle Group. James Baker, Senior Counsel. Notable partners, former and past: George Bush, the Bin Laden family and more dictators, potentates, pirates and presidents than you can count. The Fed had to act. Bernanke opened the vault and dumped $200 billion on the poor little suffering bankers. They got the public treasure – and got to keep the Grinning’s house. There was no ‘quid’ of a foreclosure moratorium for the ‘pro quo’ of public bailout. Not one family was saved – but not one banker was left behind. Every mortgage sharking operation shot up in value. Mozilo’s Countrywide stock rose 17% in one day. The Citi sheiks saw their company’s stock rise $10 billion in an afternoon.
And that very same day the bail-out was decided – what a coinkydink! – the man called, ‘The Sheriff of Wall Street’ was cuffed. Spitzer was silenced.
There was almost no doubt, by the time Bush left office, that the FBI's decision to pick up Spitzer in flagrante with a call girl in a Washington hotel had nothing to do with a "prostitution ring." It was in fact about the embarrassment, inconvenience, and political damage inherent in Spitzer's going public about the Bush administration's ties to the financial crisis. Any doubt there had been about the seriousness of the government charges against Spitzer evaporated when the Bush administration, two months before leaving office -- in November 2008 -- quiet dropped the FBI's charges against him.
But by then Spitzer, who had gone from being New York's attorney general to being governor, had suffered serious politicial damage.
Eliot Spitzer is and has been one of the best and brightest of the sharp eyes focused bank and political malfeasance, malfeasance so egregious that it caused a global financial meltdown, a severe recession, and huge numbers of unemployed. Make no mistake: it's still with us and could get worse.
The question is, can Eliot Spitzer make a political comeback? Time has a kind of cutesy "insider" story on Eliot Spitzer, his personal life, his hopes and ambitions. All I can say is that if I had an opportunity to vote for the guy who did his best to warn us about the real prostitution ring -- the deeply corrupt Bush administration, a deeply corrupt Congress, and a deeply corrupt Wall Street -- I'd vote for him in a New York minute. I don't think Eliot Spitzer would allow "bipartisanship" to keep him from doing what needs to be done.
