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Which Street Are You On?

Why are Chuck Schumer and Mike Bloomberg so heated over financial regulation? It’s hard to get from Wall Street to Main Street.

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Illustration by Andy Friedman  

Howard Wolfson is talking to me on the phone when he sees the headline on The Wall Street Journal’s Metropolis blog: sen. gillibrand to wolfson: blocking entire financial regulation bill is ‘stupid.’ “Huh,” Wolfson says, sounding genuinely surprised. “That’s not what she said. And we’re not opposed to the entire bill.”

Now his other phone is buzzing. “It’s a voice-mail from Kirsten’s chief of staff,” Wolfson narrates, “saying, ‘None of us had anything to do with that story.’ Which I believe.”

It’s a small, serendipitous multimedia moment. But that bit of electronic crossfire is emblematic of the tangled, contentious, multiplayer political drama swirling around New York’s high-stakes interest in the Washington debate over financial-industry regulation—and especially around Mayor Michael Bloomberg’s role as Wall Street’s staunchest defender.

Some background: Wolfson was in D.C. to do a bit of previously scheduled schmoozing with the state’s congressional delegation. In many ways, he’s an ideal emissary for City Hall, particularly to Democratic Washington: Wolfson has worked for Westchester congresswoman Nita Lowey, steered Gillibrand’s upset 2006 congressional win, and was a key part of Hillary Clinton’s senatorial and presidential teams before joining Bloomberg’s campaign staff last year; his wife is one of House Speaker Nancy Pelosi’s senior aides. In March, Wolfson went on the city’s payroll as a deputy mayor, part of the administration’s third-term overhaul that also dispatched Michelle Goldstein to Washington as New York’s chief lobbyist. To get things off on the right foot with the city’s congressional delegation, Wolfson and Goldstein set up an April 26 chat.

The weeks leading up to the meeting made it more fraught, however. The SEC suit against Goldman Sachs, quickly followed by President Obama’s financial-industry-reforms speech at Cooper Union, suddenly turned up the heat on an issue that had been sidetracked by the health-care battle. Bloomberg emerged as Wall Street’s strident champion this winter, and the White House was happy to have him as a foil. In April, the mayor returned to center stage, positioning himself as being above grubby politics, loudly warning of the possible damage to the city’s economy, and accusing New York’s Capitol Hill contingent of not fighting back. “The bashing of Wall Street is something that should worry everybody,” Bloomberg said. “We need the New York delegation to be out there protecting our businesses.”

The lecturing was not appreciated, and the resentment boiled over in a mid-April meeting between Goldstein and the delegation; last week’s sessions were more cordial, but some tension lingers. “The mayor has been out there for months publicly saying, ‘You have to defend Wall Street at all costs, and do it the way I want you to,’ ” says a top congressional aide. “Nobody who represents New York City thinks Wall Street isn’t critical to our economy.” Yet those same representatives are spooked by polls showing a heavy majority of their constituents raging at the financial industry.

All that skirmishing, though, is mere undercard. When Bloomberg aimed at the “delegation,” his real target was its king, Chuck Schumer.

New York’s two smartest and most powerful elected officials have worked collegially for most of eight years; they shared custody of Iris Weinshall when Schumer’s wife was Bloomberg’s transportation commissioner, and Wolfson helped Schumer beat Al D’Amato in 1998. Still, it’s surprising this clash didn’t happen sooner. Neither man lacks for ambition, ego, or confidence in his own judgment. Equally inevitable is that the flash point was Wall Street money. Bloomberg’s adult life is based on the earning and spending of piles of it, and there is no subject on which he is more authoritative or more prickly; Schumer’s political ascendancy has been fueled by his gift for raising millions in campaign cash for himself and other Democrats, much of it from the city’s financial industry. And until last year’s economic collapse, Wall Street had no better friend than the senator from Brooklyn—which is why the titans of industry are incensed by Schumer’s current, wildly uncharacteristic low profile. “Wall Street is beyond furious at Chuck. They think he sold them out, and Mike hears that from his friends,” a New York political consultant says.

Certainly the mayor has been prodded by his rich pals, but he hardly needed encouragement to jump into the fray when he believed Schumer was abdicating the role of New York’s chief Washington advocate. Bloomberg is invested in Wall Street in every sense: as a mayor protecting jobs, as the founder and owner of a company whose core product is terminals that crunch derivatives calculations, and as, well, an extremely wealthy investor in the hedge funds that could come under tighter scrutiny. “Reforms are fine; transparency is fine; the tenor that ‘Wall Street needs to make less money’ is not fine,” a Bloomberg ally says. “And that’s been the mind-set of the delegation. The mayor feels that the downside risk of regulations needs to be a part of the conversation, so he’s used the bully pulpit.”


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