"We all have our own private hells. I hope his is hotter than anybody else's." - Ken Langone, former NYSE board member
Pay no mind to the talk of Spitzer staying in power. The question is not
if his political career is over, but rather
when he will resign from his position. Speculators expect such an announcement within the next couple days.
Now, I'm not going to defend his actions. I believe what transpired is disgraceful at best, and I sympathize with his wife and children in what must be an incredibly difficult time right now. I won't get into the politics of prostitution, either.
What I will say is that we should pay attention to the news for the rest of the week. While the networks spend the day covering his impending decision and the election, expect discussion to shift from outrage to inquiry on how the investigation came to be.
A lot of the shock over this story is due to the platform he ran on. He was supposed to be a reformer who put ethics as his top priority. This made him a lot of enemies, and the hypocrisy of the situation is the reason why he will not be able to ride this out.
It's no secret that this man is strongly despised on Wall Street.
MSN Money Central reports that news of the scandal was met with cheers, while
his witch hunt of former NYSE CEO Dick Grasso did not win him any fans.
As of this writing, the DJIA is up over 250pts. This is mostly due to the Fed announcement of a $200 billion bailout for securities dealers embroiled in the current mortgage crisis, but there's no denying that traders have a little bounce in their step today.
This has fueled discussion that someone was out to get him. The Associated Press reports that "
his movement of cash to bank accounts operated by the call-girl ring" triggered the probe. It is believed that the bank itself had approached the authorities regarding these suspicious transactions. The IRS thought they were investigating a case of corruption before discovering his ties to the prostitution ring.
Now,
Spitzer is believed to have either amassed or inherited a significant amount of money. Why does this matter? Two reasons, with the first being that the transactions in question were in the low thousands of dollars. If reports of a personal fortune are true, then occasional wire transfers for a few thousand each shouldn't have raised eyebrows.
It's also curious since standard procedure for financial institutions is to notify the customer of suspicious activity. Current reports leave no reason to believe that the recipient accounts were suspect. This seems to indicate that either the trigger was automatic or someone was keeping a close eye on his finances.
The automatic trigger brings me to my second point. Such triggers are called CTRs (currency transaction reports) and go into play when any transaction involving over $10,000 in cash is processed. For a person of his wealth, these IRS reports are likely filed on a constant basis.
If the report in question is a CTR, then what caused this particular CTR to stand out? Does the agency seriously have enough employees to meticulously review every report that comes their way? The same question applies if a bank employee reported it -- why was this transaction deemed suspicious?
Again, this isn't a defense of his actions; I'm just curious of the circumstances regarding this investigation. I anticipate that others will be as well.
Expect questions like these to be raised in the near future.
