Investigative reporter Greg Palast claims ex-New York Governor Eliot Spitzer had to be stopped from going after banks that offered sub-prime loans, as it would have embarrassed the Bush Administration and its banking buddies.

Ok, our lad Jason Lee Miller has done a fine job of discussing web prostitution in connection with Spitzer’s philandering. There’s another side to the Spitzer story that involves money, and not just what he tipped Kristen.

Palast blogged at length about Spitzer’s role in pursuing predatory banks like Countrywide, whose sub-prime operations became de rigeur under Bush and company. Spitzer was the most prominent person taking on a Wall Street that hated his guts for doing so.

Recently, Fed chairman Ben Bernanke gave these lenders, the same ilk being chased by Spitzer, a fat $200 billion to keep their mortgage-backed junk bonds afloat, as Palast noted. That’s our tax dollars being handed over to wealthy bankers as a reward for their crappy business practices.

Care to guess who else benefited from Bernanke’s largesse? Said Palast:

Then, on Wednesday of this week, the unthinkable happened. Carlyle Capital went bankrupt. Who? That’s Carlyle as in Carlyle Group. James Baker, Senior Counsel. Notable partners, former and past: George Bush, the Bin Laden family and more dictators, potentates, pirates and presidents than you can count.

The Fed had to act. Bernanke opened the vault and dumped $200 billion on the poor little suffering bankers. They got the public treasure – and got to keep the Grinning’s house. There was no ‘quid’ of a foreclosure moratorium for the ‘pro quo’ of public bailout. Not one family was saved – but not one banker was left behind.

Getting Spitzer out of the picture became much easier when a bank tipped off investigators to his financial transactions, which happened to be under the threshold of customary reporting. Banks may report any suspicious activity and are encouraged to do so.

But reporting on the Governor of New York? That’s pretty damned suspicious, and seems to lend credence to Palast’s theories. Read on…