Shock and Smirks on Wall Street as Longtime Foe Spitzer Squirms
Tuesday, March 11, 2008
NEW YORK, March 10 -- Shock, devastation, disappointment, and, yes, retributive glee -- those were some of the emotions on the streets of New York Monday as Gov. Eliot L. Spitzer all but acknowledged his involvement in a prostitution ring.
With his political fate still in the balance, even those in this state's cynical, we've-seen-everything electorate expressed surprise that a man who promised to bring ethical reform to Albany may have been brought low by the same kind of wrongdoing he prosecuted as attorney general.
"For someone who put himself as being above the moral fray, it's just unbelievable," said Laura Klipp, 44, shaking her head as she took a late afternoon break at a cafe in midtown Manhattan. On the table in front of her was a bright orange cellphone she was using to follow the news.
"I was sort of enamored of him," said Klipp, who works for an asset manager in Manhattan. "Betraying his state, betraying his family . . . it's horrible for New York. It's a shame."
Her views were echoed by Sonia Somerville, 63, a registered nurse living in Manhattan.
"Eliot Spitzer of all people -- he's the person that seemed like Mr. Clean," she said, adding that she had approved of Spitzer as an attorney general going after Wall Street but grew disenchanted with him as governor. "For the good of the party and the state, he should step aside."
Yoshi Sawyer, a 31-year-old student at City University of New York, however, was hoping last night that Spitzer would stay in office rather than set off a tumultuous political transition. "I'd rather him ride it out," Sawyer said.
Some of the harshest reaction to Spitzer's plight was on Wall Street, where he prosecuted securities fraud and other white-collar crimes. Spitzer, a Democrat, aggressively used the power of his office against major U.S corporations after the Enron and WorldCom scandals and the bursting of the tech bubble, and accused analysts at brokerages of inflating shares of companies. He went after Dick Grasso, saying the former chairman of the New York Stock Exchange received excessive executive compensation, and also pursued Maurice "Hank" Greenberg, former chairman of AIG, though criminal charges were not filed.
Critics saw Spitzer as overzealous and stepping into a realm traditionally belonging to the Securities and Exchange Commission and other federal regulators. At the time, U.S. Chamber of Commerce President Thomas J. Donohue referred to Spitzer's tactics of threatening lawsuits and forcing settlements as the "most egregious and unacceptable form of intimidation that we have seen in this country in a long time."
A securities lawyer who has represented numerous corporations targeted by Spitzer predicted Monday that there would be a party on Wall Street that night.
"I am sure they are kicking up their heels with joy. . . . I could call any number of people and they would be delighted with this news," said the lawyer, who spoke on condition of anonymity.
On Monday, cheers rose from the floor of the New York Stock Exchange when reports of the scandal flashed across television screens, CNBC reported.
"There is a fundamental sense of disbelief that someone who should arguably know better finds himself in a position that he finds himself in," said one longtime worker at a major investment bank who spoke on condition of anonymity. "He's a veteran public figure who knows you are held to a very high standard if you are public figure and an even higher standard if your public figuredom is based on standing on a moral high ground."
Klipp, who was a currencies trader during Spitzer's term as attorney general, said she had approved of Spitzer's efforts on Wall Street. "White-collar crimes are as bad as any other," she said. "Being a female on Wall Street, being a trader in a locker room environment . . . a lot goes on that really shouldn't. I think he did a good job."
Though she is a Republican, she said she had voted for Spitzer when he ran for governor in 2006.
Charles Ross, a white-collar criminal defense attorney, said Wall Street should wait until all the details have come out.
"I think he's a hard-working public servant," Ross said. "From the time he was a Manhattan DA, I've always admired him. He can sometimes go overboard, but he's tried to do the right thing."