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Making Sense of Sen. Schumer's Defense of Wall Street

Tuesday, 16 Dec 2008 11:19 AM

I have known Sen. Charles Schumer, D-N.Y. since before I was elected mayor of New York in 1977. I have both supported and opposed him, endorsing his opponent for the Senate, the then sitting senator, Alfonse M. D’Amato, the first time Schumer ran for that office, and supporting Schumer when he ran for re-election.

Schumer has both supported and opposed me as well in the course of his career. He is now reputed to be ranked No. 4 in the Senate hierarchy and has the confidence of his colleagues, who were very pleased with his efforts at recruiting and supporting successful Senate candidates across the country during the last election and raising huge amounts of campaign funds from Wall Street.

What distinguished his choices and contributed to those successes was his selection and support of moderate Democrats representing the views of Democrats in their own state on controversial issues such as abortion and gun control. Schumer has established through his years of service in the Senate that he is not a left-wing ideologue, but instead, a mainstream liberal. His personal integrity is unimpeachable. All to his credit.

This past week, The New York Times did an extensive and somewhat disquieting profile of Sen. Schumer, portraying him as the handmaiden of Wall Street and the powerbrokers who dominate that industry, an industry that many people, including me, believe is responsible in large part for the economic maelstrom the U.S. economy is now experiencing.

Reporters Eric Lipton and Raymond Hernandez, wrote, “But Mr. Schumer, a member of the Banking and Finance Committees, repeatedly took other steps to protect industry players from government oversight and tougher rules, a review of his record shows.

“Over the years, he has also helped save financial institutions billions of dollars in higher taxes or fees. He succeeded in limiting efforts to regulate credit-rating agencies, for example, sponsored legislation that cut fees paid by Wall Street firms to finance government oversight, pushed to allow banks to have lower capital reserves and called for the revision of regulations to make corporations’ balance sheets more transparent.”

The reporters then pose a question asked by Barbara Roper, director of investor protection for the Consumer Federation of America, “Since the financial meltdown, people have been asking, ‘Where was Congress? Why didn’t they see this coming? Why didn’t they provide better oversight?’ And the answer for some, including Senator Schumer, is that they were actually too busy pursuing a deregulatory agenda. Their focus was on how we have to lighten up regulation on Wall Street.”

Schumer’s reason for defending and assisting Wall Street is that he is a protector of New York jobs. We know that Wall Street employers and employees are responsible for 30 percent of New York City tax revenues. The Times quotes Schumer in his own defense saying, “that until the recent market turmoil, he did not fully appreciate how much risk Wall Street had assumed and how much damage its practices could inflict on ordinary Americans. ‘It is a learning process, no question about it, an evolution,’ he said, adding that he now believed that investors and homeowners must be better protected.”

I can appreciate the impetus for Schumer’s pro-Wall Street orientation. Having become mayor of New York when the city was teetering on the edge of bankruptcy, I decided early on that real estate development was New York City’s version of Pittsburgh’s steel mills and Detroit’s car industry. It was my job to bring back real estate development to New York City, which had ceased prior to my arrival on the scene.

I wanted the real estate development sector to flourish and did what I could to make the city attractive in rules and regulations to create a welcoming “climate.”

As a result of the city’s success in encouraging development, when I ran for re-election many of these developers who had not supported me with campaign contributions when I first ran, now did.

When my opponents attacked me for that, I said, “Of course they are supporting me for re-election. I’ve been a good mayor, and they agree with many of my decisions which affect their industry. Who should they be supporting, my opponents?” Of course, I pointed out how, I rebuilt the economy as well, and particularly in the Bronx, built housing at affordable rents and brought jobs back to the entire city. The whole city prospered.

So this age-old quandary in politics comes to the fore, which is if you are successful in your job and your success and vision happens in great part to correspond with a special commercial sector, is it wrong to accept campaign funding from that sector? I chose to accept funding from the real estate sector, since under the applicable campaign financing laws, contribution amounts were regulated and reported to a public agency.

I’m sure that Sen. Schumer will make similar arguments in defending himself against the charge of being the financial industry’s handmaiden.

Almost everyone agrees that the deregulation by Congress of Wall Street is responsible for our current calamitous financial situation. Sen.r Schumer played a role in such deregulation, but he certainly did not act alone. He was supported by a Congress and a president too willing to ignore excesses by Wall Street until they could not be ignored any longer.

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I have known Sen. Charles Schumer, D-N.Y. since before I was elected mayor of New York in 1977.I have both supported and opposed him, endorsing his opponent for the Senate, the then sitting senator, Alfonse M. D’Amato, the first time Schumer ran for that office, and...

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