Spitzer Resigns as New York Governor

Updated from 12:58 p.m. EDT

New York Gov. Eliot Spitzer on Wednesday said he would step down in the wake of revelations he had an affair with a prostitute, completing a stunning fall from grace.

The Democratic governor, who earned antipathy and the nickname "Sheriff of Wall Street" for his aggressive pursuit of alleged corporate wrongdoing, said his resignation would be effective Monday. Lt. Gov. David Paterson will take the reins of the state's top office, making him the first black governor of New York.

"I have been given much. The love of my family, the faith and trust of the people of New York and I have failed to live up to that," Spitzer said in a brief news conference, in which he took no questions.

Spitzer has been in seclusion since Monday, when he made a brief public apology to his family and the public after media reports identified him as a client of a high-priced prostitution ring being probed by federal authorities. Spitzer is accused of arranging to meet a prostitute from the New York-based Emperors Club VIP during a trip to Washington, D.C., in mid-February.

The Wall Street Journal reported Spitzer was holding off an official resignation while he negotiated with federal authorities to avoid prosecution in the case. Spitzer may have been in violation of the Mann Act, a federal law prohibiting the transportation of people across state lines for the purposes of prostitution.

The U.S. Attorney's office said after Spitzer's resignation that no such deal had been reached.

Spitzer's shocking fall comes a little more than a year after the Democrat swept into office in a landslide after eight years as a hard-charging attorney general. Wall Street cheered his demise.

Among his more well-known targets were Richard Grasso, former chairman and CEO of the predecessor to Big Board operator NYSE Euronext(NYX Quote - Cramer on NYX - Stock Picks) and ex-American International Group(AIG Quote - Cramer on AIG - Stock Picks) CEO Maurice Greenberg.

Spitzer's dalliances came to light Monday, when The New York Times first identified him as "Client 9" in an affidavit in connection with a federal probe into the Emperors Club. Wiretaps caught the governor arranging a tryst with a prostitute named "Kristen" the night before he delivered Congressional testimony on the plight of the bond insurance industry. Four people have been charged in the probe, but not Spitzer.

Spitzer did not specifically address the situation brief apology Monday, prior to Wednesday's resignation. The embarrassing revelations, however, only grew worse in his intervening silence.

The New York Post reported on Wednesday that Spitzer had spent up to $80,000 on prostitutes and had brought attention to his actions by trying to mask the amounts and other information to avoid detection.

Spitzer's 14 months in office were marked by partisan rancor and scandal, despite campaigning on a pledge to clean up Albany.

Just weeks after his inauguration, The Post reported he warned Repubican state Assembly Minority Leader James Tedisco he was a "f***ing steamroller" after the legislator complained about being cut out of negotiations to put together a state ethics law.

He also frequently and bitterly clashed with state Senate Majority Leader Joseph Bruno, the top Republican in the state. Spitzer's administration was investigated for ordering the state police to compile potentially damaging information about Bruno, in what eventually became known as "Troopergate."

Tedisco earlier this week had pledged to initiate impeachment proceedings if Spitzer had failed to resign.

Note: To see a mini-list of Spitzer's well-known targets, check out the The Eliot Spitzer Revenge Portfolio at Stocikpickr.com. In addition to NYSE Euronext and AIG, the list includes Citigroup (C Quote - Cramer on C - Stock Picks), Merrill Lynch (MER Quote - Cramer on MER - Stock Picks) and Martha Stewart Living Omnimedia (MSO Quote - Cramer on MSO - Stock Picks), among others.