Recently Republican billionaire Michael Bloomberg on Tuesday unveiled a financial reform platform obviously intended to put to bed concerns among Democrats that the former New York mayor’s long-standing advocacy for the financial elite would continue if he were to take the White House.
Bloomberg’s plan would reverse deregulatory maneuvers implemented by the Trump administration that have gutted the 2010 Dodd-Frank financial reform law. He’s also floating a tax on every Wall Street financial transaction ― a reform with the potential to raise tremendous revenue for the government while discouraging speculative excess in high finance. Sens. Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts, as well as former South Bend, Indiana, Mayor Pete Buttigieg, have also proposed a financial transaction tax as part of their platforms in the Democratic race.
Bloomberg’s plan is not a bad one, and the record-setting $338 million his campaign is spending to date on national TV ads alone will no doubt be used to sell it. But his abrupt conversion to financial regulator obscures a long-standing truth: He has always been a product of Wall Street. If he were to win the nomination, the Democratic Party would become, for all intents and purposes, the political wing of the U.S. financial sector.
This would be troubling enough on its own. But Bloomberg represents a particularly crass segment of the financial elite. He doesn’t make his money by making markets more efficient. He doesn’t help investors research transformational new ideas or target long-term value.
What Bloomberg really does is sell status. Bloomberg LP runs a news site, but its real revenue flows from Bloomberg terminal subscriptions. A Bloomberg terminal is a ridiculously complex computer interface with a weird, customized keyboard that tracks a ton of financial data in something very close to real time. This market data is indeed valuable ― but it isn’t worth anything close to what Bloomberg charges for it. Other companies offer similar material for far less.
Bloomberg LP doesn’t release pricing figures, but in 2013 Quartz reported that the terminals were going for $20,000 each, per year. Today, there are about 325,000 Terminals on the market. The price has almost surely gone up during the last seven years, but even at 2013 rates, it’s easy to see how Michael Bloomberg came to be worth more than $60 billion.
He can get away with overpricing his data because people who work on Wall Street will do almost anything to project their wealth. Paying too much is one way of telling the world that you don’t need to worry about money. And Bloomberg encourages this projection by providing a messaging service through the terminals that functions as a kind of social network for the 1%. Terminal users can communicate directly with other terminal users, establishing for all parties involved that they are all, indeed, very prestigious fellows. This makes everyone feel important.
The terminals, of course, have also been a breeding ground for fraud. During the Libor scandal ― in which traders at different banks worked together to manipulate the value of key interest rates ― malefactors used terminal chat rooms to coordinate their trades.
So Bloomberg makes his money flattering the egos of Wall Street professionals. If you have a Bloomberg terminal, you’re a real boy. If you don’t, you’re just another financial Pinocchio trying to make it in New York.
This basic fact helps explain why Bloomberg has publicly committed himself to flat-earth explanations for the 2008 financial crisis. In his worldview, Wall Street didn’t really have much to do with the Wall Street crash. The blame lies with fussy government meddlers and, of course, Black people.
“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.”
In 2008, Bloomberg told a panel at Georgetown University that the push to stop discriminatory “redlining” practices forced banks to make bad loans to poor Black people who couldn’t pay them back.
“It all started back when there was a lot of pressure on banks to make loans to everyone,” Bloomberg said, according to The Associated Press. “Redlining, if you remember, was the term where banks took whole neighborhoods and said, ‘People in these neighborhoods are poor, they’re not going to be able to pay off their mortgages, tell your salesmen don’t go into those areas.’”
Bloomberg added: “And then Congress got involved ― local elected officials, as well ― and said, ‘Oh that’s not fair, these people should be able to get credit.’ And once you started pushing in that direction, banks started making more and more loans where the credit of the person buying the house wasn’t as good as you would like.”
Speaking to Occupy Wall Street in 2011, during his mayoral tenure, Bloomberg told the protesters they had it all wrong:
“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 …. They were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them.”
Bloomberg’s story of the financial crisis― that it was created by poor people and Congress ― is at odds with the basic explanation agreed upon by serious scholars. Banks packaged a lot of crummy loans into complex securities, then packaged those complex securities into more complex securities, then packaged those complex securities into more complex securities, and then made trillions of dollars worth of speculative bets on all of it.
There were, of course, a lot of consumer protection violations and lousy loans involved in this scheme. Conservative boogeymen Fannie Mae and Freddie Mac were responsible for about a fifth of the exotic mortgages issued during the housing bubble ― but that leaves 80% for Wall Street. And nobody made Wall Street decide to bet trillions and trillions of dollars on those loans. That was Wall Street’s decision. And they did it for the same reason Wall Street does everything it does: to make money.
Naturally, Bloomberg was a ferocious critic of the 2010 Dodd-Frank financial reform law, calling it “dysfunctional” and “stupid,” while assailing the fines assessed against banks for misconduct during the crisis as “outrageous.”
As Bloomberg was leaving office as mayor in 2013, former House Financial Services Committee Chairman Barney Frank (D-Mass.) went out of his way to trash him in an interview with Politico, saying Bloomberg cared more about his “rich friends” than he did about public policy.
“We never paid much attention to what he had to say, frankly, because I just saw him as kind of a shill for his industry,” Frank said. “This is a mayor of New York who’s a member of that industry, defending his industry from valid criticisms.”
This isn’t the kind of record you can wash away with a white paper. Wall Street is in Bloomberg’s bones.
In July 2015, Goldman Sachs CEO Lloyd Blankfein stopped by Bloomberg Tower in midtown Manhattan to opine on the upcoming presidential election. Interviewed by Stephanie Ruhle, Blankfein was considered so august a guest that Bloomberg himself joined for the event. After a rather dull paean to the virtues of compromise, Blankfein turned and smiled at Bloomberg. “There’s a lot of focus on New York billionaires these days, but my favorite one is not running.”
He’s running now.