Former Ny Gov. Spitzer Discusses Nation’s Economic Corruption

Former New York Gov. Eliot Spitzer spoke Thursday evening in Hendricks Chapel about the federal government’s response to the recession and increased corruption in country’s financial sector.

The lecture, organized by faculty members from the Maxwell School of Citizenship and Public Affairs, attracted approximately 400 people, and was forced to move from its original location in Maxwell Auditorium to Hendricks Chapel.

Spitzer said the setting was a little less personal than he had hoped, but was happy to see so many people interested in current economic, political and social issues.

After the FBI revealed in March 2008 that Spitzer had ties to a high-class escort service in Manhattan, he resigned from his post of governor. In his resignation speech, he cited his “private failings” as the reason he decided to step down.

But his political and personal scandal was not mentioned during the evening. Instead, Spitzer focused on his economic theories, outlining the boundaries for government intervention in the market place and financial sector.

There are only three reasons, Spitzer said, for government intervention: to ensure integrity, overcome unintended effects of one group’s financial policies on another group and enforce core values into the market place.

“How did we go from the Reagan years when any government intervention was bad to having Ken Feinberg, a pay czar, decide the pay for corporate CEOs?” Spitzer said.

Spitzer pointed to the deregulation of the financial service sector during the Reagan administration as an underlying cause of the recent collapse of the markets.

“They lied. They deceived. They cheated,” Spitzer said. “We deregulated the financial service sector just like the way they wanted… and destroyed the economy in the process while all they left us with was the debt. It isn’t only Wall Street. It isn’t only money. The crisis is deeper than the financial services sector.”

The Obama administration has been making important steps in the last year, Spitzer said, but it still lacks an agenda of reform. Spitzer said he thinks the main thing the administration has done is shift the debt from the private sector to the public sector.

But bringing Paul Volcker, former chairman of the Federal Reserve, on to President Obama’s economic team, is a positive sign and will help bring stability to the banking industry, Spitzer said.

“When banking is boring, it’s good,” he said, eliciting strong applause from the crowd.

Spitzer also touched on the trade relations between the United States and the emerging power of China, and China’s ownership of a large percentage of American debt.

“When Obama went to China in October, it almost felt like he was a kid asking for his allowance,” he said. “We have lost our independence.”

The high turnout of students was exactly the response Horace Campbell, a professor in Maxwell, said he was hoping for. With such success, the Spitzer speech could be the first in a series of high profile guests to visit SU, he said.

Nicole Perman, a freshman policy studies major, was very impressed with how articulate and well-spoken Spitzer was on the economic crisis.

“I definitely have more of an appreciation for him after hearing him speak,” she said. “He’s become a lot more than just an ex-governor with a scandal for me.”

bzeisens@syr.edu