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Wednesday, August 01, 2007

Spitzer’s Wall Street Playbook

If there’s one thing we can be assured of when it comes to Eliot Spitzer, it’s that he’s an intelligent man with a long memory. That would likely explain the announcement to put communications director Darren Dopp on “indefinite leave” in the wake of the Joe Bruno smear scandal.

Spitzer’s sacrificial lamb actually brings to mind the Wall Street executives who escaped Spitzer’s wrath for their mutual fund market timing practices by paying menial fines and scapegoating lower level employees. The dismissed employees, some of whom are my clients, were tagged as rogue traders and will likely never work in the securities industry again. After the dust settled, it was back to business as usual on Wall Street while Spitzer sought out the next headline.

Wall Street’s strategy for weathering the market timing storm wouldn’t have been lost on a shrewd guy like Spitzer, which is probably why Dopp was placed on “indefinite” leave and not fired outright. Spitzer, and maybe Dopp himself, likely thought that once the scandal ran its course that in time Dopp would come back under the tent. But there are a few key differences between Wall Street’s scapegoating and the Dopp dismissal. First off, Dopp was not a low level employee. Likewise Dopp can’t be tagged as a rogue since he’s been Spitzer’s right hand man since the “press not prosecution” days in the AG’s office. And finally, the smearing scandal has not turned the other cheek the way Spitzer’s market timing “investigation” did.

So this leaves Spitzer in a difficult position: does he risk a guy like Dopp, who knows where the bodies are buried, wandering off the reservation or does he re-ignite the scandal by re-hiring his long time foot soldier? Frankly, it doesn’t matter because either way Spitzer’s true colors will be exposed; he’s a politically motivated man who cares not what’s in the greater good so much as destroying the opposition. If the smear scandal cause irreparable damage to Spitzer’s political fortunes, he clearly has what it takes to make it as a senior Wall Street executive.


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