A rift as big as Wall Street is dividing the two most powerful politicians in New York — Sen. Chuck Schumer and Mayor Michael Bloomberg.
Bloomberg visited the Capitol last week seeking to defend the financial industry. But in the process, he wound up sitting in on a GOP gripe session about New York Democrats — and, sources say, chimed in to criticize Schumer for turning against a hometown industry that has fueled both men’s careers.
Relations between the billionaire mayor and the state’s senior senator — and its sole remaining Democratic powerbroker — have curdled in the heat of policy disagreements and Schumer’s backing of Kirsten Gillibrand for Hillary Clinton’s old Senate seat.
Bloomberg had previously criticized the city’s congressional delegation in generic terms for backing stringent regulation of banks and giant hedge funds, arguing that it would cripple the city’s most vital industry. But the third-term mayor has become increasingly disillusioned with Schumer in recent days, sources say, singling out the Brooklyn Democrat in recent meetings with business leaders and politicians.
In an April 12 meeting in Senate Minority Leader Mitch McConnell’s spacious office overlooking the National Mall, Bloomberg said that Schumer has been “AWOL,” that “this is a real problem for New York City” and that “our senators who are normally in the middle of it aren’t there,” according to a Republican senator briefed on the meeting.
Another person familiar with the meeting said Bloomberg was simply agreeing with criticism of Schumer leveled by McConnell and didn’t lash out pre-emptively: “They said that Chuck was not doing anything, that he was very unhelpful, that he wasn’t providing the ballast for New York,” the source said, adding, “Bloomberg didn’t disagree.”
McConnell’s office declined to comment other than to confirm that the meeting took place. Bloomberg's office also declined comment, but a person close to the mayor downplayed the conflict, sayng, "Their relationship is fundamentally strong."
Schumer, whose wife once served as Bloomberg’s transportation commissioner, is reportedly miffed that the socially liberal, economically moderate independent hasn’t aired his gripes personally during their regular one-on-one phone conversations.
“The mayor’s jihad against [President Barack] Obama and Schumer and the Dodd bill [is] a curious strategy,” said a person close to Schumer. “When you come down to Washington and argue for next to no regulation, it puts New York in the cross hairs more, not less.”
The issue of regulating Wall Street is arguably the stickiest of Schumer’s career — forcing him to choose between an industry that has pumped more than $10 million into his campaigns and the political survival instincts that have made him one of the party’s canniest strategists.
Given the choice, Schumer has chosen to regulate, not praise, Wall Street. “He took our money and is now showing us the back of his hand,” said one banking industry executive who has unsuccessfully tried to get Schumer to roll back provisions empowering state attorneys general to sue financial firms.
Added one Schumer ally: “This is not an easy issue for Chuck Schumer, obviously. This is an industry he’s close with — but they blew up the world’s economy, and Chuck has reconciled himself to that reality.”
Schumer watched warily as the career of Senate Banking Committee Chairman Chris Dodd (D-Conn.) was destroyed by perceptions he was too close to Wall Street and had no intention of being accused of backroom deal making on behalf of banks or hedge funds.
Schumer raised tens of millions from Wall Street as chairman of the Democratic Senatorial Campaign Committee — cash that helped propel Democrats to the majority in 2006. But he’s played a relatively minor role in the current fight over regulation.
When he has weighed in, it’s often been to punish the banking sector, backing Obama’s plan to impose a tax on the nation’s biggest financial institutions.
“I think it’s a tough issue for him,” said Brian Gardner, a financial analyst based in Washington. “I think any senator wants to protect his home-state interests.”
Even though Bloomberg and Schumer still get along — and the senator’s wife, Iris Weinshall, recently kibitzed with the mayor at City Hall — the two haven’t had one of their one-on-one dinners in months.
The race for Clinton’s old seat has been a sore spot.
Schumer supporters say Bloomberg political operatives Kevin Sheekey and Brad Tusk actively encouraged ex-Tennessee Rep. Harold Ford Jr. to run and backed the strategy of labeling Gillibrand a Schumer puppet.
But the tension between Schumer and Bloomberg stretches back to the mayor’s successful reelection bid last fall. At the time, Senate Majority Leader Harry Reid (D-Nev.) wanted to lend support to Bloomberg’s reelection campaign, but Schumer — who supported Democrat Bill Thompson — intervened and urged him not to, according to people familiar with the matter.
That Bloomberg griped with McConnell is telling; the GOP leader has been chilly toward Schumer since 2008, when Schumer’s DSCC steered attacks toward him for his support of the wildly unpopular Wall Street bailout bill.
But now faced with a bill that will arguably have more effect on New York City than any other piece of legislation this Congress, Schumer is taking a low-profile role — despite serving in Democratic leadership and on the Senate Banking Committee, which has jurisdiction over the issue.
Tennessee Sen. Bob Corker, who has been a central GOP negotiator on the Wall Street bill, said he’s had only one meeting with Schumer — and that was on the issue of proxy access, which would give shareholders more power to nominate directors to serve on a corporate board, a task delegated to him by Dodd.
Corker said his scores of other meetings have been with Dodd and Sens. Richard Shelby (R-Ala.), Judd Gregg (R-N.H.), Mark Warner (D-Va.) and Jack Reed (D-R.I.).
Corker said Schumer “hasn’t been that visible in these negotiations.”
But Democrats insist that Schumer has been working behind the scenes to shape the bill — although even some of them admit privately to being surprised that Schumer has not been trying to make the bill more palatable to the banks or Wall Street’s interests.
“Otherwise, it’d hurt him with the caucus,” said one senior Democratic aide. “He’s trying to thread the needle.”
Indeed, with polls showing Reid losing soundly in November, Schumer could very well be in a race for majority leader in the fall — and if he sided with Bloomberg and the banks, he could be tarred by many of the more liberal Democrats eager to crack down on Wall Street.
Schumer’s chief opponent for the majority leader job, Illinois Sen. Dick Durbin, also has ties to financial interests — with the Chicago Mercantile Exchange based in his home state. But the CME could stand to gain big if the bill results in an enormous increase in trading volume — giving Durbin even more latitude to rail against Wall Street.
Durbin said his party’s interests haven’t conflicted yet with his home state’s interests.
“To this point, I don’t believe that I have had any problems supporting provisions they can support,” Durbin said of the futures industry in Chicago.
The same can’t be said about Schumer.
Sen. Robert Menendez (D-N.J.) praised Schumer for taking a “balanced approach” in pushing for a financial system with “clear rules of the road.”
Sen. Ted Kaufman (D-Del.), who has been vocal about his concerns about the bill, said Schumer’s been navigating the competing interests with precision.
“I wouldn’t say he’s not defending the banks, but I think he’s trying to find the best legislation and he feels the politics will take care of itself,” Kaufman said. “But that’s a very naive kind of approach for this town.”
