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Video: Eliot Spitzer on scandal, economy

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updated 4/6/2009 9:54:32 AM ET 2009-04-06T13:54:32

While repeating his regrets and sorrow for the pain he caused his wife and three daughters, the disgraced former governor of New York, Eliot Spitzer, called himself “fortunate” Monday morning.

Spitzer has thrust himself into the national spotlight again by his emergence as an analyst and critic of the financial crisis. In an exclusive interview with TODAY’s Matt Lauer in New York, he talked about the prostitution scandal that forced him to resign as governor in March 2008.

“This is something that has caused excruciating pain to [my wife] and my daughters,” the 49-year-old Spitzer said. “It’s something that I carry with me every day because of the pain I’ve caused. And so I’ve tried to balance: The obligation to speak is vast but also the pain to my family has been enormous.”

He did not try to defend his actions.

“Like most of us I suppose, I’ve had flaws,” he told Lauer. “I’ve tried to think about it deeply, address it. There are no excuses. I have tried to address these gremlins; confront them. What I did was an egregious violation of trust to my family, to my colleagues, to the state, and I’ve paid a price and appropriately so.”

Spitzer’s patronizing of a $4,000-a-session call girl was discovered by federal investigators and revealed last year in The New York Times. Lauer asked Spitzer how long he’d been hiring prostitutes and if he ever considered the likelihood that a man with his high profile would eventually be caught.

“Not frequently — not long in the grand context of my life,” Spitzer said. “It was an egregious violation of behavior that I fell into for many reasons … but none of them are excuses.”

Getting caught, he said, “crossed my mind, but like many things in life, you ignore the obvious at a certain moment because you simply don’t want to confront it.”

Spitzer said his family has forgiven him.

“I’m a very fortunate guy,” he said, the words delivered without hesitation in a calm voice. “I have a spectacular wife, three daughters who are wonderful. I’ve been forgiven. There are moments when you realize those are the things that matter.”

Spitzer receded into the background after he left office in disgrace. But he re-emerged last year when he became a columnist on business and government for the online magazine Slate.com. He said he knew the new job would put him back in the spotlight and focus attention again on his indiscretions of a year ago, and he had to balance his obligations to his family with what he feels is an obligation to tell the truth as he sees it about the financial crisis.

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As New York state’s attorney general, beginning in 1998, Spitzer earned the nickname the “sheriff of Wall Street” for his investigations into such financial giants as AIG, Merrill Lynch and the chairman of the New York Stock Exchange. When he resigned as governor in 2008, traders on the floor of the exchange reportedly applauded in glee.

In his reincarnation as a columnist and critic, he has repeatedly called for the breakup of giant financial firms that the government has been forced to bail out because they are “too big to fail.”

“If it is too big to fail, break it up,” he wrote in a recent Slate column. “We should not let any private institution become so big and central to the financial system that taxpayers become its guarantor ... Socializing risk while privatizing gain — which is what having more and bigger ‘too big to fail’ institutions guarantees for the future — doesn’t work in the long run.”

Spitzer told Lauer that in the short term, pumping money into the system is necessary, but further action is needed.

“We should give them enough liquidity so they do not drag down the entire economy, and then we should break them up so there’s genuine competition,” Spitzer said. “And the next time around, they’re not too big to fail. If they’re too big to fail, break them up.”

He emphasized that the immediate efforts to shore up the system have to be followed by real reform.

“I think we have to separate out the short-term crisis of liquidity and solvency in the financial sector versus creating in the long term a financial services sector that will work for our economy,” Spitzer told Lauer. “We have thrown a trillion dollars at the sector, and yet I honestly don’t yet see a new model of competition and a smaller financial services sector; smaller in terms of there not being these unbelievably large companies that are too big to fail.”

He also criticized the greed that caused the crisis.

“This was an enormous extraction of wealth by people who manipulated money back and forth but did not create anything for the economy. The toughest issue is where will we see value creation in our economy? Where will we create the goods and services to sell?” Spitzer said.

Lauer asked him about the enormous salaries and bonuses being paid to executives.

“The compensation system on Wall Street spiraled totally out of control, just as the compensation system throughout corporate America spiraled out of control. CEOs were making 500 times the average worker — it used to be 40 times. It was wrong,” Spitzer said.

Lauer asked Spitzer if he thinks real reform is possible.

“I hope the will is there because the mistakes of the past were so egregious,” Spitzer said.

He has also been highly critical of government regulators, saying that even if more safeguards were in place, the regulators would have allowed bankers and brokers to do whatever they wanted.

His rise and fall
Born and raised in the upper-class Riverdale section of the Bronx, Spitzer went to Princeton as an undergraduate before earning his law degree at Harvard. He became an assistant district attorney in Manhattan, where he led an investigation that brought down the Gambino organized crime family.

In 1998, at the age of 39 and financed by a loan from his wealthy father, Spitzer won election as New York state’s attorney general. It was in that office that he earned the enmity of the financial world for his dogged prosecution of white-collar crime and securities fraud. Among the targets of his investigations were the insurance giant AIG and the investment firm Merrill Lynch.

TODAY
 “I have a spectacular wife and wonderful daughters. I’ve been forgiven. Those are the things that matter.”
Running as a reformer, he won New York’s gubernatorial election in 2006 and immediately began clashing with the state’s established power structure. His first scandal involved using state police records to keep track of the activities of state Senate Majority Leader Joseph L. Bruno. An investigation by the state attorney general concluded Spitzer improperly used the information to damage Bruno in the media.

The Bruno scandal proved to be small potatoes when, on March 10, 2008, The New York Times revealed that Spitzer had been a customer — “Client 9” — of the Emperors Club VIP, a high-priced call-girl operation. Court documents would show that Spitzer had paid $4,300 for the services of a 22-year-old call girl.

Two days later, with his wife of 20 years, Silda, standing by him, Spitzer announced his resignation as governor effective a week later.

“I have acted in a way that violates my obligations to my family, that violates my or any sense of right and wrong,” he said. “I apologize first and most importantly to my family. I apologize to the public, whom I promised better. I must now dedicate some time to regain the trust of my family.”

Although it is a crime to pay for sex, federal prosecutors chose not to pursue criminal charges against either Spitzer or the young woman he paid for sex. Four principals of Emperors Club were prosecuted.

Spitzer began his comeback as a business and government columnist for the online magazine Slate last December. By last month, he had written an op-ed column for The New York Times and was being touted by some as a candidate for secretary of the Treasury.

Lauer asked Spitzer if he regrets having had to leave office in the midst of a crisis he might have been able to combat as governor.

“I grieve first at the cost to my family and colleagues,” he said, adding, “Sure, I say to myself what I hoped to do was contribute in some small way. Not to be able to participate is painful.”


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