Mike Bloomberg earned the $60 billion-plus fortune that is funding his presidential campaign by selling his proprietary computer terminals to Wall Street firms. And when the Great Recession hit, he defended Wall Street, blaming bad laws for inflating the housing bubble and slamming Washington’s crackdown on financiers.
That history is taking center stage now that the former New York mayor is battling to secure the Democratic nomination against liberals Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.), who have made confronting Wall Street central to their bids.
Comments Bloomberg made at a September 2008 event resurfaced this week. At a Georgetown University conference two days after Lehman Brothers declared bankruptcy, Bloomberg blamed Congress for destabilizing the housing market by forcing banks to offer home loans to lower-income, minority communities they had deliberately underserved in a practice called redlining.
That reasoning — absolving major financial institutions of their role in pushing mortgages to uncreditworthy borrowers, then packaging them off for profit — became a staple for industry-friendly policymakers attempting to fend off tough post-crisis reforms. For Bloomberg's critics, it also appears to blame the victims — an issue at the heart of the stop-and-frisk policing he embraced as mayor but is now disavowing.
“Mike’s saying that something bad — the financial crisis — followed something good, which is the fight against redlining he was part of as mayor,” Bloomberg campaign spokesman Stu Loeser said in a statement first released to the Associated Press.
Bloomberg’s comment from more than a decade ago drew a rebuke from Warren, who doesn't typically name him specifically:
The end of redlining didn't cause the 2008 crash. Out-of-control greed by Wall Street and big banks, and the corruption that lets them control our government, caused the crash. Predatory lenders steered families of color into the worst loans and those families lost billions.— Elizabeth Warren (@ewarren) February 13, 2020
And she called him out on stage, then tweeted video of the moment, from her Thursday night rally in northern Virginia:
The 2008 financial crash would not have been averted if we had allowed the banks to be more racist. And anyone who thinks otherwise should not be the leader of our party. pic.twitter.com/9DN2hlvIzp— Elizabeth Warren (@ewarren) February 14, 2020
Other industry critics added on.
“That kind of position, no matter who takes it, speaks to a willingness to blame the victim, frankly,” Marcus Stanley, policy director for Americans for Financial Reform, tells me. “And if you take the position it's the borrowers fault when they’re victimized by enormously well-funded and sophisticated Too Big To Fail banks — and not the fault of Wall Street and the regulators who let it happen — the concern going forward is you won’t protect the American people from allowing this to happen again.”
A Bloomberg campaign spokesman did not return a request for comment.
But Bloomberg’s redlining remark was hardly the only time he came to Wall Street’s defense in the midst of the financial crisis and its aftermath.
Three years after the comment, as Occupy Wall Street Protests raged in New York, he said the protesters were targeting the wrong villains. “It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp,” he said at a business breakfast in midtown Manhattan, as Slate’s Jordan Weissman recently noted.
At the time, he accused the protesters of "trying to destroy the jobs of working people in this city.” In an October 2011 radio address, he said, “You can't have it both ways: If you want jobs you have to assist companies and give them confidence to go and hire people.”
He has also been an outspoken critic of the Dodd-Frank legislation that created the post-crisis regulatory regime for the industry.
For one, he said, lawmakers should not have taken the lead drafting the measure. “The President should send to Congress a specific law that was created by people, experts in the field,” he said in an interview with Charlie Rose in February 2013. “And then sell it to them. They may have to tinker a little bit here and there to get some votes but fundamentally the leadership has to come from 1600 Pennsylvania Avenue and not the other way around.”
Later that year, he called the measure ”a terrible bill" that “didn't accomplish anything.”
He made a similar case at a Securities Industry and Financial Markets Association conference in November 2014, arguing the law should have been "created by the people who really understand how the world works, how financial services work.” The world, he said, “adjusts to stupid laws, they don't pay any attention to them and you get burned later on, like a 25 mile per hour speed limit.”
More, from BuzzFeed’s Matthew Zeitlin’s dispatch at the time:
He also criticized the large fines meted out to banks in recent years. "Some of these fines I think are outrageous and shouldn't be allowed to take place," he said.
Bloomberg adamantly defended the industry in the face of its pre-and-post crisis scandals. "Things have changed dramatically for the better for the public," he said, but "you wouldn't believe that if you read the newspapers." And he said more regulation could mean a financial system that does less to stimulate the broader economy. "If you reduce the risk, they can't make the money, they can't provide the financing that this country and world needs to create jobs and build infrastructure and all of those things.”
"In terms of our issues, the key question is whether or not he is another Wall Street Democrat who's good on social issues but terrible on economics and finance? In my view, he has to give a speech and lay out his concrete, specific and comprehensive plans,” says Dennis Kelleher, president of Better Markets, which advocates tougher regulation of the industry.
“He needs to show some bona fides here that he’s actually reflected and gets what happened to this country in the financial crash, who actually caused it, and the importance of implementing Dodd-Frank to ensure it doesn’t happen again," Kelleher told me. "It's by no means clear to me that any of that is happening or will happen.”
Bloomberg joins a fight dividing the Democratic field over how Washington should approach Wall Street. While Warren and Sanders call out the industry and its influence, former vice president Joe Biden and former South Bend, Ind. mayor Pete Buttigieg are hitting up its executives for campaign cash.
Sanders supporters, for example, jeered “Wall Street Pete” at the Vermont senator’s primary night rally in New Hampshire this week. Biden, meanwhile, gathered more than 250 Wall Street and other donors in New York for a pair of fundraisers Thursday, CNBC’s Brian Schwartz reports.
From my colleague Matt Viser:
At a fundraiser today at Sarabeth’s restaurant in Midtown Manhattan, as a crowd of Wall Street executives and wealthy donors sipped champagne and munched on tuna tartare canapes and sliders, Joe Biden said he's confident he’ll win SC and place first or second in NV.— Matt Viser (@mviser) February 14, 2020
Per Schwartz, those slated to attend included “names such as former Morgan Stanley CEO John Mack, Centerview Partners’ Alan Hartman, Citigroup executive Ray McGuire, Blackstone operating chief Jonathan Gray, Snap Chairman Michael Lynton and former Obama economic advisor Jeffrey Zients, who is also the president of private equity firm Cranemere Group."
“Attendees also include Goldman Sachs chief spokesman Jake Siewert, along with his wife, Christine Anderson, who is the head of public affairs at Blackstone. Jonathan Henes, Sen. Kamala Harris’ former national finance chair who is now backing Biden, and Mark Gallogly, a co-founder of Centerbridge Partners, are listed to attend,” Schwartz writes.
MONEY ON THE HILL
— Shelton on the rocks. “One of [Trump’s nominees to the Federal Reserve Board, Judy Shelton, could be in trouble after her heated confirmation hearing,” my colleague Heather Long reports.
“Sen. Patrick J. Toomey (Pa.) and Sen. Richard C. Shelby (Ala.), top Republicans on the Senate Banking, Housing and Urban Affairs Committee, told reporters after they left the hearing room that they had ‘concerns’ about Shelton. Toomey said he was ‘not sure' if Shelton would uphold Fed independence, a key tenet for the central bank and one that Shelton was asked about several times."
"Shelby said Shelton sounded like she ‘could be an outlier’ for such a key position at the helm of the U.S. economy. If either senator votes against her, it would sink her confirmation hearing, making her Trump’s fifth Fed pick not to make it through the GOP-controlled Senate.”
From the WSJ's Nick Timiraos:
Kennedy: "It doesn’t bother me that someone changes their mind. I change my mind all the time… At the same time nobody wants anybody on the Federal Reserve that has a fatal attraction to nutty ideas. Now I’m not saying that’s the case but that was sort of the dialectic going on”— Nick Timiraos (@NickTimiraos) February 13, 2020
- How she addressed her critics: “Throughout the hearing, Shelton told the panel that ‘I don’t claim to be in the mainstream of economists’ and stressed that she would uphold Fed independence. At least three Republican senators on the panel sharply questioned Shelton in addition to Democrats. Shelton said at the hearing she does not believe in returning to the gold standard and told senators they misunderstood her position.”
- Shelton defended her past criticisms of the Fed: “'I believe everyone has the right to criticize the Federal Reserve, including the president, every member of Congress and every citizen,' she said, adding that it’s ‘refreshing’ that Trump’s Fed bashing is ‘out in the open,’ compared with past presidents who did so in private.”
- Recall: Her nomination hangs by the slimmest margin: Republicans only claim a 13-12 majority on the banking panel, and she is not expected to win any Democrat votes.
- 50-50 odds? Compass Point's Isaac Boltansky says Shelton's confirmation chances now are "no better than a coin flip.”
- White House stands behind her. The administration felt compelled to publicly defend Shelton after the hearing. From the AP's Chris Rugaber:
White House spokesman denies they will pull Shelton's nomination: "That’s absolutely false. The nominations of Judy Shelton and Christopher Waller are not being pulled. Both were in front of the Banking Committee today and the White House expects both to be confirmed"— Chris Rugaber (@ChrisRugaber) February 13, 2020
Fed watcher and University of Oregon economist Tim Duy called that White House statement a bad omen for Shelton:
— Coronavirus costs mount: “The economic casualties from China’s coronavirus epidemic are mounting as Asian and European auto plants run short of parts, free-spending Chinese tourists stay home and American companies brace for unpredictable turbulence,” my colleague David J. Lynch reports.
"That’s just the start of a financial hangover that is expected to linger for months even if the flulike illness is soon brought under control, economists and supply chain experts say. The Chinese epidemic’s aftereffects will probably cause the global economy to shrink this quarter for the first time since the depths of the 2009 financial crisis, according to Capital Economics in London … Caterpillar this week said most of its Chinese suppliers have returned to work. But Foxconn, a major electronics producer for Apple, said it will be the end of the month before even half of its facilities are operating.
- China remains isolated: “United Airlines and American Airlines said this week that they would not resume normal service to mainland China until April 24, almost a month later than planned.”
- The fallout is spreading: “With the auto industry especially hard-hit. Nissan temporarily closed one of its factories in Japan after running short of Chinese components, one week after Hyundai in South Korea did the same. Fiat Chrysler warned that it may shutter one of its European plants. Some U.S. manufacturers could face parts shortages in one to two weeks.”
— Stocks drop on renewed virus fears. WSJ's Joe Wallace and Akane Otani: "A rally in U.S. stocks paused Thursday after a spike in the number of new coronavirus cases in the Chinese province at the epicenter of a global outbreak… The rising number of cases has prompted ‘renewed concern around the dynamics of the coronavirus,’ said James McCormick, a strategist at NatWest Markets…
“The Dow Jones Industrial Average lost 128.11 points, or 0.4%, to 29423.31, retreating from a record set the prior day. The S&P 500 declined 5.51 points, or 0.2%, to 3373.94 and the Nasdaq Composite fell 13.99 points, or 0.1%, to 9711.97.”
— Huawei charged with conspiracy to steal trade secrets: “U.S. federal prosecutors have charged Chinese tech giant Huawei with racketeering and conspiracy to steal trade secrets, escalating a case that began last year," my colleague Jeanne Whalen reports.
“The new charges accuse Huawei and its subsidiaries of a decades-long effort to steal intellectual property from six U.S. tech companies, including by offering Huawei employees bonuses for obtaining confidential information, the U.S. attorney for the Eastern District of New York said. Huawei and two of its U.S. subsidiaries violated the Racketeer Influenced and Corrupt Organizations Act, or RICO, through their actions, prosecutors said. The alleged theft helped Huawei illegally obtain technology relating to Internet routers and antennas, giving the company an unfair competitive advantage, prosecutors said.”
- Huawei denies the charges: “'This new indictment is part of the Justice Department’s attempt to irrevocably damage Huawei’s reputation and its business for reasons related to competition rather than law enforcement,' the company said in an emailed statement. ‘These new charges are without merit and are based largely on recycled civil disputes from the last 20 years that have been previously settled, litigated and in some cases, rejected by federal judges and juries.’”
— Ag-giant Cargill is a major Klobuchar supporter: “The agribusiness titan, 90 percent of which is still owned by the descendants of founder William W. Cargill, is based in the Minneapolis-St. Paul suburb of Minnetonka, and has a hand in nearly every political office in Minnesota — all but one member of the state’s congressional delegation received donations from Cargill in the 2018 election cycle,” the Daily Beast reports.
“But even among Minnesota politicians, Klobuchar ranks among Cargill’s favorites. The senator is the top recipient of donations from Cargill’s PAC and employees this cycle, receiving almost five times as much as the conglomerate’s next favorite member of Congress, and has been one of the company’s top recipients for much of her political career. The relationship has been mutually advantageous."
"On issues ranging from greenhouse-gas-emissions regulation to labels for genetically modified food to sodium in school lunches, Klobuchar has voted in line with Cargill’s extensive lobbying agenda. Klobuchar has also gone out of her way to cite Cargill as a ‘private-sector leader’ in environmental issues, despite a long record of fines for environmental violations and accusations that it has profited from the use of child slave labor in West Africa.”
— AP finds Opportunity Zone plug during State of the Union was misleading: “Tony Rankins, a formerly homeless, drug-addicted Army veteran, got a standing ovation at the State of the Union after [Trump] described how he turned his life around thanks to a construction job at a company using the administration’s ‘Opportunity Zone’ tax breaks targeting poor neighborhoods,” the Associated Press's Bernard Condon reports. “But that’s not completely true.”
“Rankins, who indeed moved out of his car and into an apartment since landing a job refurbishing a Nashville hotel two years ago, doesn’t work at a site taking advantage of the breaks and never has done so. In fact, he started that job four months before the Treasury Department published its final list of neighborhoods eligible for the breaks. And the hotel where he worked couldn’t benefit even now because it’s an area that didn’t make the cut.”
- Thanks, Clinton: “As it turns out, there is a tax break that Steffens has tapped to employ homeless and others like Rankins. The Work Opportunity Tax Credit gives as much as $10,000 in tax credits to employers who hire homeless and others with difficulty finding jobs. That benefit was passed in 1996 when Bill Clinton was president.”
- This isn't the first misleading SOTU plug: “Trump dramatically announced that a Philadelphia fourth-grader, Janiyah Davis, would be getting a scholarship that would allow her to transfer from a ‘failing government’ school to a charter school of her choice. But The Philadelphia Inquirer reported that she had already been attending a charter school for months and that students there don’t have to pay tuition.”
— Pentagon must halt JEDI work, court rules: “A federal judge has ordered the Pentagon to halt work on the Joint Enterprise Defense Infrastructure cloud computing network, known as JEDI, as the court considers allegations that [Trump] improperly interfered in the bidding process. The order comes just one day before the Defense Department had planned to ‘go live’ with JEDI,” my colleague Aaron Gregg reports.
“The JEDI contract, worth up to $10 billion over 10 years, was awarded to Microsoft in late October after a last-minute intervention from the White House prompted Defense Secretary Mark T. Esper to reexamine the department’s approach … Amazon’s market-leading cloud computing division is suing the Defense Department in the U.S. Court of Federal Claims, arguing the president’s involvement skewed the playing field in its rival’s favor. The company alleges the Defense Department made numerous errors as it weighed bids from Amazon and Microsoft. And it accused Trump of launching ‘repeated public and behind-the-scenes attacks’ against Amazon to act on a grudge against the company’s founder, Jeff Bezos. (Bezos also owns The Washington Post.)”
— Tesla records subpoenaed: “Tesla again has come under the scrutiny of financial regulators, less than a year after its chief executive, Elon Musk, resolved a dispute with the Securities and Exchange Commission over his tweets,” my colleague Faiz Siddiqui reports.
“In an annual financial filing, Tesla disclosed that the SEC had subpoenaed information about its finances on Dec. 4, though it did not disclose specifics. The SEC ‘issued a subpoena seeking information concerning certain financial data and contracts including Tesla’s regular financing arrangements,’ the company said. That request came on the same day that the SEC closed an investigation into projections and public statements on the production of Tesla’s mass-market Model 3 electric vehicle.”
- Musk and Tesla have been surging: “The renewed scrutiny coincides with a recent stock rally that has sent Tesla’s stock surging to nearly double its year-end price. Investor confidence has surged on two straight quarters of profits and Musk’s emergence from high-profile legal and regulatory scrutiny, though the recent disclosure complicates that narrative.”
— McClatchy files for bankruptcy: “McClatchy, one of the nation’s largest newspaper publishers, filed for bankruptcy protection, another harbinger of America’s deepening local-news crisis,” my colleagues Taylor Telford and Thomas Heath report.
“The Chapter 11 filing will allow the Sacramento-based company to keep its 30 newspapers afloat while it reorganizes more than $700 million in debt, 60 percent of which would be eliminated. If the plan wins court approval, control of the 163-year-old family publisher would be turned over to hedge fund Chatham Asset Management, its largest creditor. The company has obtained $50 million in financing from Encina Business Credit to maintain operations while it undergoes bankruptcy proceedings.”
— Goldman's future CFO?: “Beth Hammack, a longtime trader who’s quietly charting her way up the ranks …. challenge: rework how the bank funds everything from consumer loans to billion-dollar derivatives deals. Senior leaders see the mandate as proof she’s bound for higher office at the 151-year-old firm,” Bloomberg News's Sridhar Natarajan reports.
“As Goldman struggles to make good on pledges to recruit more women into its most senior offices, Hammack is among a small number who make the cut in every behind-the-scenes conversation. Insiders see her as a likely candidate to someday serve as chief financial officer, lead the trading division or take a number of other top posts — jobs that would make her one of the bank’s most prominent faces on Wall Street.”
Here's the new state of the Democratic presidential field, according to the national polling average:
BONUS CHART. With Trump attempting to make a campaign issue of Bloomberg's physical stature, here's how he literally measures up against other New York mayors:
- The Commerce Department releases the latest data on retail sales
From The Post's Tom Toles: