By Victoria McGrane
March 17, 2009
Freshman New York Rep. Michael McMahon had a chance meeting with President Barack Obama last week, and he used it to issue a word of warning: Watch what you say about Wall Street.
“There’s a certain venom out there in the rhetoric that I hear in the halls of Congress or on television that is dangerous not only to these markets but could have a very damaging effect up on the people whom I represent,” McMahon said. “It’s a grave concern to me.”
It’s a grave concern for a lot of New York-area representatives.
Americans united around New York in the wake of the terrorist attacks eight years ago, but the Big Apple is now a different kind of ground zero: the target of white-hot anger from people who have lost their jobs or lost their savings.
McMahon, a Democrat, said that’s not fair, at least not to the people who live in his Staten Island- and Brooklyn-based district — a lot of managers and human resources staffers and other lower-rung Wall Street employees, plus the limo drivers and food vendors and other service-industry workers whose jobs depend on the health of the financial industry.
“Have there been abuses? Have there been sins committed? Yes,” McMahon said. “But there are thousands of people who should not be punished for the sins of a few greedy or misguided corporate executives.”
The financial services industry represented more than one-third of New York City’s private-sector payroll in 2007; it’s projected to shed 72,000 jobs by mid-2010, about a quarter of the job losses the city is expecting.
And it’s not just New York itself.
Some of Wall Street’s higher fliers commute into the city each day from Rep. Jim Himes’ nearby Connecticut district, which has its own mini-Wall Street in the financial firms and hedge funds located there. Himes — a former investment banker himself — is worried that that the backlash will come at a cost.
“Constitutionally. we’re here to reflect the people. And the people are mad as hell. So I’m comfortable with their representatives being mad as hell,” Himes said. “But the discussion of how we [overhaul financial regulation] has to be divorced from ‘I’m mad as hell.’ We have a shared interest in really building a stable, growing safe structure.”
Himes — who, like McMahon, is a member of the centrist New Democrat Coalition — serves on the House Financial Services Committee, where he’s working to rewrite the rules for the financial system with an eye toward preventing another major crisis without driving firms overseas.
Some other New York-area representatives are also preaching balance. “We need to react but not overreact,” said Rep. Leonard Lance, a Republican whose New Jersey district is home to many financial-sector workers.
But other members from New York are more willing to engage in the public flogging.
In 2007, Sen. Charles Schumer (D-N.Y.) championed Wall Street-friendly regulatory changes, warning that the existing tangle of rules and regulators threatened to force the industry to leave New York City. Now he’s calling for tougher rules as the way to save New York’s status as a global financial center — and pushing for a separate consumer protection entity for the financial system, a proposal loathed by the industry.
Rep. Carolyn Maloney, a Democrat who represents much of the East Side of New York and part of Queens, unleashed her frustration with Wall Street bankers at a House Financial Services Committee hearing earlier this year, grilling Bank of America CEO Ken Lewis about the billions in bonuses awarded to Merrill Lynch employees before Bank of America bought the imperiled investment bank. She has blasted American International Group for spending on lavish perks after taking billions in taxpayer-funded bailouts and for refusing to publicly disclose the big banks that are on the other side of its toxic bets.
She is also a lead sponsor of legislation to crack down on credit card billing practices, a pro-consumer bill she has championed before but that has gained real traction amid the public and congressional outrage at the banks. The banks argue that this is the worst possible time to enact new rules on them.
At the same time, she said she’s sympathetic to the pain her own constituents are suffering; she says some of her hardworking constituents want to hide the fact that they’re bankers, even though they’ve done nothing wrong.
“They are all being lumped in with that relatively small handful of people whose reckless behavior contributed so heavily to this huge crisis,” Maloney said.
She said she can best serve her constituents “by helping to get at the truth of what really happened.” To that end, she has introduced legislation with Rep. Peter King, a Republican who represents Long Island, that aims to clear up just where all the bailout money is going — a major source of voter angst.
David Wasserman, House editor for The Cook Political Report, said that members of Congress from the New York area may be feeling some angst themselves when they look at their fundraising numbers. With some firms going under and others laying off employees and cutting back generally, a chunk of the contributions New York representatives are used to getting isn’t going to be there anymore.
“Their donors are no longer willing to open their checkbooks for political causes,” Wasserman said. “This is discretionary spending. So it makes it harder for these members to raise the sums they typically do.”
The securities and investment sector has been the largest contributor for several lawmakers in the area, including Schumer, Maloney, Himes and Democratic Rep. Nita M. Lowey, whose New York district includes affluent commuter suburbs. It’s a top-five donor to many others in the region.
King, for whom the securities and investment industry was the second most-generous giver last cycle, said he thinks he’s on target for the year but that he’ll have a better feel for his numbers when his first-quarter reporting is done in April.
“People are sort of holding their breath,” he said of his constituents, many of whom work on Wall Street but not at the top levels. “They realize this could be bigger than all of us, and there is no immediate answer.”
As for the anger directed at Wall Street? “I think we just take that in stride,” King said. “We’re from New York.”