Was Wall Street Behind Spitzer's Downfall?

The Sunday Times is speculating that Eliot Spitzer's downfall might have been orchestrated by Wall Street bankers angry with Spitzer's vigorous pursuit of white-collar criminals. Both of the banks that reported Spitzer's money transfers (which proved to be payments to the Emperors VIP Club) had been the subject of investigations by Spitzer's office.

When the case against the one man and three women accused of running the international network reached court earlier this month, it was the presence of a federal prosecutor from the political corruption squad that first alerted New York Times reporters to the possibility that a politician might be involved.

It has since been established that both North Fork and HSBC were on the receiving end of Spitzer investigations in his days as attorney-general. In 2003 North Fork was obliged to refund $20,000 to dozens of home-owners after Spitzer claimed that the bank had been charging illegal fees.

No evidence has been produced that the bank reporting of Spitzer’s transactions was maliciously intended, yet Dershowitz and other commentators have noted that the system was designed to ferret out drug dealers, the mafia, terrorists and major financial fraud.

“Once federal authorities concluded that the ‘suspicious financial transactions’ attributed to Mr Spitzer did not fit any of [these categories], they should have closed the investigation,” said Dershowitz.

I'll wager that we hear a lot more of this angle.