Wednesday, March 12, 2008

Spitzerwatch concludes

The second time's a charm,
Eliot Spitzer resigns: And there wasn't much rejoicing, except among the corporatists. Sayeth Megan,

I read liberal blogs defending Spitzer and spinning conspiracy theories about his downfall, and all I can think is "Really? You really want to hitch your wagon to this fallen star?" Why on earth?
Can anyone show me someone defending Spitzer? I was going as easy on him as anyone, n I kinda made a point not to say he shouldn't resign. I don't know that he should have, but I don't have a problem with it having happened. Politics is a contact sport.
In any case, in continuing her descent into being an honest right wing corporate whore Megan has decided to go with the classic move of misconstruing disagreement with her as support for the unsupportable. Questioning the motives of the Justice Dep't doesn't change Spitzer's misdeeds or the need for him to pay the price for them, but it does raise the question of whether there were more serious misdeeds underlying the discovery of Spitzer's. Targeting your political opponents is among the worst possible abuses of the Justice Dep't. That matters, but not to Megan, not when she's rid of a pest.
They were investigating him for a perfectly legitimate reason: he had a suspicious pattern of withdrawals from his bank account, and the Feds are supposed to keep an eye on that sort of thing in people who are elected to public office, because we all have a legitimate public interest in clamping down on official corruption. I think "structuring" and "money-laundering" charges are repugnant. The Mann act is garbage. Prostitution, drugs, and arranging homosexual liasons should be legal, though the airports have a perfect right--and good reason--to keep it out of the restrooms.
Which is why they should be used as tools to take your political opponents out of office, naturally. If, say, Alan Greenspan had been targeted by a mythical Admin that wasn't adoring of him you think Megan would have dropped empty platitudes about it being illegal if he'd been caught smoking a jay?
Hell, at least yesterday Megan was willing to tacitly admit Spitzer was targeted by trying to brush it off as something he should have expected considering his clashes with the banking industry, which remains willfully ignorant of the concept of prosecutorial misconduct by anyone besides Spitzer, but is slightly more honest than the "gee, garsh" pose of today.
To be sure, many people--including, yes, me--are taking glee in Spitzer's downfall even though we think all his actions should be legal. There you are: having people you disagree with revealed as stunning hypocrites is emotionally satisfying. Plus there's a positive side (I mean, beyond New York State possibly getting a decent governor). If this makes everyone rethink our nation's ridiculous prostitution laws, Eliot Spitzer will finally have made a lasting positive contribution to his country.
In other words, maybe so many people will think this is a farce something will change? And stunning hypocrites? I was a genuine Spitzer fan, and I'm apparently far less disillusioned than Megan is by this. Rich, powerful men frequent expensive prostitutes. That's kind of a truism. That's why there are expensive prostitutes in the first place.
But I also think that many of the reasons people are defending him--that he was a good governor and took on Wall Street--are fundamentally wrong. Eliot Spitzer was a terrible AG, and a terrible governor. He had even more difficulty than Rudy in understanding that the executive office does not simply confer more power than that of prosecutor, but different power; he treated those who disagreed with him as perps.
He was very effective at going after entrenched interests who don't like having their misdeeds aired out in public. He put public good ahead of corporate good, and that violates everything Megan believes in. BURN HIM!
His attacks on Wall Street, meanwhile, were more about grabbing headlines than catching criminals. Some of the things he took on were real abuses, like the disgusting abuse of equity research and retail networks to pump up the stocks of investment banking clients. Others were much more dubious--a pointless-seeming war against insurance brokers for wrongs that were at best trivial. Some of his more bizarre prosecutions, and the weird settlements he demanded, made it clear that he didn't have the understanding of markets to effectively be the financial regulator he set himself up as.
Sure, he did real good and addressed fundamental problems at times, but sometimes he hurt profits, too, in industries Megan views as sacred. Burn him!
Worse was how he did it. He couldn't make cases--the highest profile case he brought to trial basically ended with an acquittal on all counts. Yes, securities cases generally settle, but not like Spitzer's--precisely because the cases are generally a hell of a lot stronger than any of Spitzer's, cases where the prosecutors had some hope of proving that someone had actually done something illegal. Spitzer was able to do this through the power of the Martin Act, which gives the New York State attorney general practically despotic powers to go after fraud. Among the provisions: the prosecutor does not have to prove that there was intent to commit fraud, that any transaction took place, or that anyone was actually defrauded; he can interrogate potential defendants with no rights to an attorney or against self incrimination; he can keep the investigation secret or make it public, just as he pleases; and can subpoena just about anything. Practically the only limitation on the AG is his goodwill and sense of fair play. Eliot Spitzer was not overgenerously endowed with either.
There are a total of three links in this entire post. One is Megan linking to herself on Spitzer's good deeds. Another is a Wall Street Journal Opinions piece, which means shite all in the rational world. The final is a piece by a self-described personal enemy of Spitzer. None of those links come in the section I just copied, which is to say we have to take Megan's word for every element of the facts in that section. Nope.
Banks and others came to the table because Spitzer would launch these investigations and then use a carefully orchestrated series of press releases and leaks to torpedo their stock price. But many of the more spectacularly incriminating sounding excerpts from subpoenaed documents were so misleadingly taken out of context that they would have been grounds for a libel suit if he'd been a journalist. Don't get me wrong--many of them were guilty. But this kind of tactic doesn't distinguish between the guilty and the innocent; anyone in a credit-dependent industry whose stock value is plummeting would have to negotiate, because Spitzer's inquiry could shut them down. (Can and did, in some cases--indeed, he apparently nearly shut down Merrill's asset management business until a judge reversed the order.) Often, these shaded into personal vendetta--Dick Grasso's pay package seems like he was grossly overvalued, but what business is it of Eliot Spitzer's how much a private body pays it's CEO? This has nothing to do with the reasons we regulate financial markets.
Diggin a hole, don't mind me, doo doo doo.
Megan is quite monstrously stupid, it only goes to show, yet again. Let's skip to the end, this is long and painful.
Felix Salmon argues that it was a good thing that Eliot Spitzer put the fear of God into Wall Street, and I take his point--the cozy practices that had become common by the end of the nineties needed to change. But it's not clear to me that these prosecutions gave them anything but a fear of Eliot Spitzer. Whoops. In a liberal democracy, it matters how you punish people for their crimes--"they got Al Capone for tax evasion" is not a triumph, it's tyranny.

And yes, that applies to Eliot Spitzer too--now that he's resigned, I hope he gets off with community service and a fine. Though in a slightly more perfect world, the johns would serve time and pay fines at least as stiff as the prostitutes get.
Megan McArdle, arguing taking Capone off the streets was a bad thing, but that taking Spitzer out of office is good.


spencer said...

Huh huh, uh huh, huh - she said "stiff" when writing about johns. Uhhhhhh huh huh, huh huh.

Anonymous said...

"If this makes everyone rethink our nation's ridiculous prostitution laws, Eliot Spitzer will finally have made a lasting positive contribution to his country."

Oh for fuck sake. That's the most retarded thing I've ever seen her write and she writes a lot of retarded shit. We didn't rethink the prostitution laws after Marion Berry or Charlie Sheen or Heidi Fleiss or any other time some famous person paid for tail. Most people in this country don't even give a shit about the governor of New York. Please, Megan, just once, try and step out of your little insular bubble of reality.

NutellaonToast said...

She tried, but she hit her head on the door jam and decided that the free market didn't want to pay her to leave her little world, so doing so had no actual benefit.