It’s easy to forget, when watching Mayor Bloomberg parrot Wall Street’s pet causes — blasting Occupy, favoring bank-friendly regulation and tax treatment, sticking up for Goldman Sachs when a disgruntled employee slighted the bank in the Times — that it was once possible to be both mayor of New York City and a proud, vocal opponent of the financial industry’s excesses.
Ed Koch knew. And more than any mayor who has come after him, Koch carried with him a distinctly Main Street sensibility.
“Wall Street knows no shame,” Koch wrote in a 2010 op-ed. “When Judgment Day comes, will any of these ‘masters of the universe’ be able to pass through the eye of a needle?”
It’s easier to lambaste Wall Street when you’re no longer running New York City, of course. And the city Koch ran was less reliant on the industry — this was before the massive ballooning of the financial sector, back before the city’s budget projections lived and died with the vacillations of bank bonus numbers, before every bar, restaurant, and luxury apartment building between Battery Park and 96th Street was teeming with bankers in pinstripes. Back in 1977, according to Crain’s, Wall Street employed only 70,000 people, and its jobs made up only 5 percent of the city’s wage base.
As mayor from 1978 to 1989, Koch saw all of that change. The eighties were when Wall Street became Wall Street — when Solomon Brothers became a bond-trading behemoth (and where a young Michael Bloomberg was learning the ropes), when Tom Wolfe coined “masters of the universe” and Michael Lewis wrote Liar’s Poker.
Koch’s administration benefited massively with Wall Street’s boom and the tax revenues that accompanied it. (As Jonathan Soffer put it in his 2010 Koch biography, “New York in the age of Koch — with bistros springing up along Columbus Avenue, Wall Street fattening itself on mergers and junk bonds, and rental housing converting to co-ops or condos — became during his three mayoral terms a place that grew rather than shrank.”) But Koch himself never governed with Wall Street foremost in his mind. There were no large tax breaks for banks to construct new headquarters and few outsize benefits given to the city’s capital class. It was possible to become rich in Koch’s New York — and many did, in all manner of industries — but Wall Street was never given special dispensation.
In real, up-and-down financial terms, Koch’s early economic gains — balancing the city budget, attacking homelessness by getting funds for a massive housing restoration project — were all but overshadowed by the stock market crash of 1987, which sent the financial sector into a panic and filled the city’s office towers with worry. But it isn’t so much Koch’s mayoral legacy that will define him as an economic populist. It’s what he said in his later years and the way he spoke out against a Wall Street power structure that he saw as taking advantage of ordinary citizens.
“The current effort to control Wall Street with appropriate regulations will reduce the likelihood of that industry again ripping off and beggaring American investors,” he wrote. “It will help prevent unscrupulous brokers from again bringing the United States to the precipice of financial chaos and ruin.”
Koch was not a poor man. He always qualified his criticism of Wall Street by saying that he himself had made money in the stock market. But he knew, too, that to be a proponent of a safer, more sensible financial sector is not to be a Bolshevik in disguise. And he spoke with candor and vigor about how the big banks had gotten away with murder during the financial crisis of 2008.
Today, it would seem unthinkable — perhaps, some might say, unwise — to have another populist mayor who was deeply suspicious of the financial sector. But for Koch, appealing to Main Street was less a political play than an expression of who he truly was.
The divide between Koch’s Main Street sensibility and the unwavering Wall Street fealty of Mayor Bloomberg — who started his namesake financial services company during the Koch years — can be best summed up by a 2011 exchange between the two men, during a talk moderated by Charlie Rose, in front of a room full of the city’s rich and powerful and also attended by former mayor David Dinkins. At one point, Bloomberg was defending Wall Street banks, saying that they hadn’t created the mortgage crisis — that they’d done nothing wrong, essentially, and had only played by the rules they’d been given.
Koch, outraged, replied that big banks were, after all, fined hundreds of millions of dollars for their behavior. And then he added, with characteristic common sense: “What do you think they got fined for? Schmutz on the sidewalk?”