Wall Street Frets as Michael Bloomberg Prepares To Leave Gracie Mansion
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When Michael Bloomberg steps down as New York City mayor at the end of the year, few constituencies will miss him as much as Wall Street.
For 12 years, Bloomberg has gone from tireless cheerleader for the financial services industry after the Sept. 11 attacks, to its strident defender against Occupy Wall Street protests over economic inequality and calls for higher taxes on the wealthy.
But now the business elite has reason to pause. An unabashed liberal, city official Bill de Blasio, is leading opinion polls to replace Bloomberg in the Nov. 5 election while pounding a theme of “a tale of two cities” – one rich and one poor.
“There is a great deal of wistfulness and preemptive nostalgia for Bloomberg within the industry,” said one Wall Street executive who asked to remain anonymous because he did not want to be seen as publicly taking sides in the election.
The sense that victory is inevitable for Democratic Party candidate de Blasio over Republican Joe Lhota, a former investment banker and onetime mayoral budget director, was reflected in a Sept. 19 Quinnipiac University poll showing de Blasio ahead among likely voters by 66 to 25 percent.
While Bloomberg’s critics have attacked him for his tough policing strategy that they see as discriminatory, and bemoaned growing inequality, many on Wall Street say they see a city that is safer, cleaner, more prosperous and more livable than ever.
Robert Willumstad, former chairman and chief executive officer of insurer American International Group Inc said the industry is concerned about change “because there is such a concentration of financial firms” in New York “and any bad legislation or bad governance could be dramatic because the bulk of big players are here.”
Interviews with a dozen Wall Street executives and others in business revealed concerns that the city’s transformation will be threatened under a new mayor, and, at worst, that de Blasio will create a city that is unfriendly to Wall Street.
Lhota is a Harvard Business School graduate who served under Bloomberg’s predecessor, Rudolph Giuliani, the man many New Yorkers credit with changing the city’s image in the 1990s from dangerously crime-ridden to welcoming tourists and businesses.
De Blasio, who for the past four years has worked with a budget of just $2 million as public advocate, an intermediate official for residents and city agencies, is campaigning as the anti-Bloomberg.
He has criticized Bloomberg for allowing hospitals in under-served areas to shutter and proposed a tax on the city’s highest earners to pay for an expansion of pre-kindergarten programs.
Another executive, who also requested anonymity because he did not want to share his political views publicly, said that while Wall Street would be happy to support Lhota, many “need some sign that this is a winnable race.”
FRIEND TO THE INDUSTRY
Bloomberg arrived in City Hall in 2002 already a Wall Street insider – he began his career there, and was a self-made billionaire who financed his own campaign. His financial data and news business, Bloomberg LP, could count every major Wall Street bank as a significant customer. But it was the attacks of Sept. 11, 2001, two months before his election, and Bloomberg’s efforts to keep business from fleeing lower Manhattan that cemented the bond.
Weeks before Bloomberg’s January 2002 inauguration as mayor, Bloomberg invited Kenneth Chenault, chairman and chief executive of American Express, to his office to convince him that extra police and an array of security measures would ensure lower Manhattan was again safe for the company’s employees.
American Express’ headquarters had been in the World Financial Center, just across from the smoldering remains of the World Trade Center’s twin 110-story towers. Nearly 5,000 employees had been moved to offices in Connecticut and New Jersey, and American Express was wrestling with what to do.
“Overwhelmingly our decision to go back to lower Manhattan was Bloomberg’s reassurances that this would be a livable and safe place,” said American Express spokeswoman Marina Norville.
That marked the start of a uniquely close relationship between the Bloomberg administration and Wall Street that would stretch over three terms and weather the worst economic crisis since the Great Depression of the 1930s.
Indeed, on his first day in office, Bloomberg made the rare gesture of appearing at the New York Stock Exchange to ring the opening bell, cheers resounding from traders on the floor.
Years later, when being a cheerleader for Wall Street was an unpopular stance during the financial crisis, Bloomberg was not afraid to publicly defend employees of AIG and others.
“When much of the federal government … was set to vilify everybody on Wall Street without depicting the good guys from the bad guys, Mayor Bloomberg on more than one occasion said that did not make sense,” said Willumstad, the former CEO of AIG.
Goldman Sachs Group Inc executives recall a similar tale. In March 2012, the day after a Goldman vice president, Greg Smith, publicly resigned from the firm with a scathing op-ed attacking the bank’s culture in The New York Times, Bloomberg visited the investment bank’s trading floor, shaking hands along with Goldman Chairman and CEO Lloyd Blankfein.
A DIFFERENT KIND OF MAYOR
Bloomberg is occasionally spotted in the halls of JPMorgan Chase & Co, Citigroup Inc and Goldman Sachs. An avid golfer, Bloomberg plays with the likes of former U.S. Securities and Exchange Commission Chairman Arthur Levitt, who is on the board of directors of Bloomberg LP, and former JPMorgan CEO William Harrison.
The mayor, who declined to be interviewed for this article, remains the majority owner of Bloomberg LP and the company has continued selling terminals to Wall Street. Bloomberg LP is a direct competitor of Thomson Reuters.
Bloomberg’s vast personal wealth has also given him tremendous independence, freeing him from having to curry favor with donors. That freed him up to pursue an aggressive public health agenda, including a ban on smoking in public places, and to make significant changes to public education.
His largesse often benefited the city. During his first term, he reached into his own pocket to help make up a city budget shortfall, and has since helped fund various city projects. Mayors Against Illegal Guns, a group he co-founded in 2006, is largely funded with Bloomberg money.
But Bloomberg’s wealth has also helped open a rift with advocates for those on lower incomes.
Earlier this month, Bloomberg said the city’s income gap could be explained by the number of billionaires in the city and said it would be a “godsend” if more billionaires came to town.
“They are the ones that pay a lot of the taxes. They’re the ones that spend a lot of money in the stores and restaurants, and create a big chunk of our economy,” he said on a radio show.
Even Bloomberg’s fiercest critics acknowledge his sound fiscal management of New York. Bloomberg’s decision to set aside a rainy day fund even when the city was still running a strong surplus was widely seen as buffering city agencies from more severe cuts once the recession hit in 2009.
LOOKING AHEAD
While Wall Street executives and industry leaders lament the end of the Bloomberg era, voters in the city of eight million people appear eager for change. A Marist poll from July found that fewer than one in five New Yorkers see the city as affordable for the average family.
The average price of a Manhattan apartment is $1.425 million, according to The New York Times, while the cost of renting a New York apartment – excluding Staten Island – is more than $3,017 a month, up from $2,088 per unit in 2002, according to REIS, a real estate research firm. The average rent nationwide is $1,062 per month.
But the city has also made strides. In 1990, when the city had 1 million fewer residents, crime reached a high of 2,245 murders. The murder rate has fallen from 649 deaths in 2001, when Bloomberg was elected, to 414 in 2012.
The city is also greener with new parks ringing Manhattan and the Brooklyn waterfront.
Less than two months before the election, some Wall Street executives are already looking back fondly on the years when one of their own was mayor of the city and relate more easily to Lhota than they do to de Blasio.
“Joe understands that the job is more about management than politics,” said Ken Langone, co-founder of Home Depot Inc , who has helped organize a few fundraisers for Lhota. “But that doesn’t help him win an election.”
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