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Mike Bloomberg Owns This Town

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The Third Term: Signing a bill extending term limits, November 3, 2008.  

Bloomberg’s aura of managerial effectiveness—he earned that fortune, after all—has smoothed the way in many of his endeavors. After the tumultuous Dinkins and Giuliani decade, the comparative peace of the Bloomberg years—albeit accompanied by the incessant sounds of construction—has been more than welcome. His social-issue sensibilities—pro-immigration, anti-gun—line up tidily with the city’s liberal mainstream. And his signature accomplishments, like taking control of the school system, have been easy to sell as sensible reforms, no-brainers opposed by troglodytic vested interests. In many ways he’s been a very good mayor. And yet there’s an inescapable queasiness in the city as the mayor proceeds through the democratic formalities and prepares—barring a huge upset win by Democrat Bill Thompson—for a third term. Bloomberg’s successful campaign to rewrite the term-limits law—using his connections and his money, he artfully circumvented bringing the matter to a public referendum—is precisely what, in a democracy, should not be possible, no matter what one thinks of the ends.

Back in 1999, when Michael Bloomberg began to think about a career change, his mogul friends were amazed. Bloomberg had at that point been a CEO for more than seventeen years. Why would he want to submit himself to the grubby rituals of campaigning, especially the media hazing? Still, the business class quickly came aboard, based in part on a sense of its own managerial excellence—who better to lead the city than a tycoon?—and in part on the fact that his agenda is theirs: growth and more growth.

Bloomberg made it clear from early on that even among his business peers, the lines of authority would be clear. Not long after Bloomberg won control of the public-school system, he was tested by Randi Weingarten, then the head of the teachers union. Weingarten was fighting with Joel Klein, Bloomberg’s school chancellor. But instead of complaining to Bloomberg, who had consistently backed Klein in other battles, Weingarten tried to enlist business-world intermediaries she thought Bloomberg would be more inclined to listen to sympathetically. Bloomberg was angry at the maneuver and sent a clear message of his own. “For business leaders, stepping forward and trying to become a civic leader would be at some risk to your relationship with the mayor,” a corporate insider says. “Only a crazy person would step out without Bloomberg’s say-so.” (Weingarten says she doesn’t remember the episode.)

As Bloomberg has moved to consolidate his clout, the hubs of power in the city have shifted, in some cases with extreme swiftness, and these changes have tended to work in the mayor’s favor. When Bloomberg took office in January 2002, Dick Grasso, the head of the New York Stock Exchange, was not just a colorful, well-known personality but a force in the city’s financial life. Quick: Name the head of the NYSE today. The stock exchange, as an institution, was going through a radical reshaping even before the recession. (The answer, by the way: Duncan L. Niederauer runs what’s now called NYSE Euronext, after a desperate 2007 merger with the European stock market.)

The recession has also wreaked havoc with the city’s power elite, virtually leveling what seemed only a few years ago to be unshakable edifices. The board of directors of the Partnership for New York City has been a reliable roster of the city’s business Establishment since it was created in 1979 by David Rockefeller. The Partnership’s board has taken a large blow in the past year, losing stalwarts from AIG and Merrill Lynch, but it retains big names like Lloyd Blankfein of Goldman Sachs and Larry Fink of Black Rock. The Partnership’s director, Kathy Wylde, has noticed another far-reaching structural evolution. “One huge change in the power structure is that increasingly the locus of power is external, not local,” she says. “Purely local business leaders are not as relevant as they used to be, because it has become a global economy. David Rockefeller was a local leader, because he ran a bank that was American and local. Today, more than half the revenue of any New York bank is from overseas.”

So instead of Walter Wriston, who as head of Citibank in the sixties and seventies was also deeply involved in steering the city’s finances, today’s city banker is typified by Jamie Dimon. He’s a native New Yorker and a committed member of all the right boards of local charities. But Dimon’s focus is necessarily outside the city, and that was even before he and JPMorgan Chase became one of the last megabanking survivors. Dimon and the others still employ thousands of New Yorkers, and their companies contribute millions in tax revenues to the city budget. But New York’s CEOs need to devote most of their attention to the world beyond the Hudson, and their political focus is Washington. “It’s not just that we’ve lost Lehman and Bear Stearns; it’s that Morgan Stanley and Citi are very different from what they were, and a lot of hedge funds have changed as well,” Zuckerman says. “The financial industry hasn’t lost its leverage in the city—and maybe that’s the wrong word to use at the moment—but it certainly has changed, just as the city’s legal world has. Guys like Howard Squadron or Bill Shea were political operatives as much as they were attorneys, and there aren’t any rough parallels right now. Publicist Howard Rubenstein is still a factor, but it’s hard to name many other players. In real estate, Jerry Speyer was a power player, and still is, but he’s distracted. Everyone is right now.” In these turbulent financial times, the business elite has been more than happy to delegate the job of running the city to one of their own.


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