Turning the tables has never been so much fun

James Doran is a New York based business columnist who has travelled the world for seven years as a foreign correspondent for The Times of London for whom he has also served as a bureau chief in Wall Street and Washington DC.

I swear you could hear traders on Wall Street send up an almighty cheer when Elliott Spitzer, the crime fighting former Governor of New York, was last week exposed as a grubby John who had high-class hookers delivered to his hotel room the way you or I might order a pizza.

Sex, money and power rarely converge in such a public display of outright hypocrisy. Elliott Spitzer, for those who do not know his background, made a name for himself as the hard headed Attorney General of New York - otherwise known as the scourge of Wall Street.

He came to the fore after the Enron, WorldCom and Tyco scandals with promises to clean up the world of finance.

He swept into Wall Street brandishing the Martin Act, legislation brought in before the Great Depression that gives the Attorney General extraordinary powers. Anyone called in for questioning under the act is denied legal representation and is forbidden from pleading the Fifth.

Wall Street paid a whopping $1.4 billion in fines at Spitzer's command and ushered in rafts of expensive new procedures to protect investors. High-powered CEOs like the NYSE's Dick Grasso were publicly humiliated and forced to resign once Spitzer got his claws in.

He turned the fundamental tenet of American justice, that of being innocent until proven guilty, on its head. He was the perfect New York governor. A Democrat, married 21 years and a father of three daughters.

And then, last Friday afternoon, Spitzer's world imploded as he learned that federal investigators had recorded him ordering a $1,000 an hour prostitute to be delivered from New York to his hotel room in Washington DC.

As soon as the news flooded out onto the streets of lower Manhattan, the fun began. First to enjoy the sport was Ken Langone, the former NYSE director and Spitzer target in the Dick Grasso investigation.

"We all have our own private hells," Langone said. "I hope his private hell is hotter than anybody else's."

Next was the wife of Frank Ferella, the wife of a prostitution ring leader locked up for two years by Spitzer himself. "I've got to stop smiling - it is funny," the woman said.

Then there was Norman Barabash - who was accused by Spitzer in 2003 of running an international sex-tourism agency. "it's a little premature to break out the champagne...I'm rather happy over this. I can't deny it," he said.

But, the greatest irony of all is that it was the onerous financial reporting laws of New York State, reformed by Spitzer himself, that ultimately led to the former governor's downfall.

In an effort to stop money laundering all banks in New York are required to monitor patterns that show several small amounts of money being paid to a single source.

Spitzer's bank alerted the authorities after they noticed unusual financial transactions between the former governor and several shell companies.

He had tried to divide up a transaction of about $40,000 into smaller amounts to avoid federal reporting rules. To say he was hoist by his own petard is an understatement.

Spitzer's meltdown may have been the only thing to bring a smile to the faces of thousands of Wall Street traders this week but there is a serious side of this. America will not recover from its deep financial malaise until confidence is restored in its legislators, regulators and its executives.

So far in this short-lived century none who have claimed able to do so have measured up to the job.

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