Spitzer Effect Boomerangs

Sophocles himself could not have presented us with a better ending for the career of Eliot Spitzer, an arrogant, vindictive man whose hubris inexorably brought his downfall.His critics have long thought him worse than many of the victims of his ruthless tactics but few can have imagined he would end as he did, exposed as a participant in a prostitution ring. Yesterday's press conference provided the morbidly fascinating spectacle of a great pretender unmasked, a man held up as a shining exemplar exposed as just another staggeringly un-self-aware careerist having risen to his level of incompetence.

It's not surprising that Spitzer should find himself schooled by seasoned New York politicians such as New York State senate majority leader Joseph Bruno, who turned the tables when Spitzer tried to sully his reputation; or assembly speaker Sheldon Silver, who outfoxed Spitzer on the appointment of comptroller. What is surprising is that Spitzer should fall victim to the kinds of investigative techniques that he has used with such relish against others.

Caught by review of bank transactions and the interception of communications, Spitzer could said to be a victim of "The Spitzer Effect" himself. However, while the guilt of many of his victims was debatable, Spitzer's was not, whatever one thinks of his root offense. Spitzer was never one to let the privacy of his marks get in his way, so there is poetic justice in the way he was nabbed.

His career in tatters, Spitzer's brassy persona remained intact at the March 10 press conference; his "short, arrogant statement," as the New York Times put it, was replete with self-reference: "I have disappointed and failed to live up to the standards I expected of myself," he said. But the mute eloquence of his wife Silda Wall Spitzer's sorrowful expression served as a reminder of the misfortune such narcissists can cause others.

The disappointment of the New York Times' editorial writers and other erstwhile Spitzer supporters was palpable; how much greater must the sense of betrayal felt by the woman who joined her life with this man and bore his three daughters. I feel truly sorry for Mrs. Spitzer, who bore yesterday's shame with such dignity. But I feel sorrier for other victims.

For example, the four Gen Re executives and former AIG VP Chris Milton, whose prosecution was an outgrowth of Spitzer's vendetta against Hank Greenberg. Four out of five of these executives face fines of up to $46 million and prison sentences of up to 210 years at their sentencing on May 15. I don't pretend to understand finite reinsurance transactions well (and doubt the jury did) and I'm willing to be persuaded that these executives transgressed the law. However, I find the severity of the penalties they face shocking.

By all means, let us insist that the powerful actors of the financial world be held to high standards; let investors be protected and people who ruin others financially be severely punished. But let these objectives be pursued by authorities who are scrupulous in their use of power, and who are dedicated to the presumption of innocence and to proportionate justice.

Spitzer failed miserably by that standard; and while he should be treated better than he has treated others because that is what the law demands, he is due very little leniency when it comes to the discretion that the law affords. When it comes to public opinion and the press, which he used so artfully to discredit others, let him have a dose of his own medicine.By all means, let us insist that the powerful actors of the financial world be held to high standards; let investors be protected and people who ruin others financially be severely punished. But let these objectives be pursued by authorities who are scrupulous in their use of power, and who are dedicated to the presumption of innocence and to proportionate justice.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio