Moneybox

Bloomberg Should Have to Answer These Three Questions About the Financial Crisis

Michael Bloomberg speaks into a podium that says "Mike for Black America," as black supporters sit behind him.
Democratic presidential hopeful Michael Bloomberg, who won’t explain why he’s done a 180 on financial regulation.
Mark Felix/AFP via Getty Images

Does Mike Bloomberg really want to get tougher on Wall Street?

He says he does, I guess. This week, the former New York City mayor released a surprisingly robust collection of proposals for regulating the financial services industry, many of which have been on progressives’ wish list for a long while. Bloomberg is now officially in favor of a financial-transactions tax, which would raise some revenue and slow down high-speed trading. He wants to limit risk at big banks with higher capital requirements, stronger stress tests, and a rebuilt Volcker rule. There’s a good checklist of consumer protections on things like overdraft fees, debt collection, and credit reporting. In total, it’s about nine pages of mainstream Democratic ideas.

But it’s a bit hard to take it all at face value for the simple reason that Bloomberg spent the vast majority of his life as a notorious Wall Street booster. He made his billions selling firms the information terminals that their traders spend all day hooked to. And after the financial crisis, he was a vocal critic of the very regulations he now claims he wants to defend and expand. He lobbied to weaken Congress’ post–financial crisis reforms in 2010 and warned lawmakers that they shouldn’t take “punitive actions” against the financial sector. He later called the Dodd-Frank Act’s rules “stupid” and suggested that they would hurt the economy by preventing banks from lending. He repeated the conservative myth that Congress had set the financial crisis in motion by forcing banks to make mortgage loans to low-income borrowers. For the entire Obama era, Bloomberg wasn’t a “moderate” on these issues. He was a fount of misguided conservative conventional wisdom.

Now Bloomberg would have us believe he’s done a 180. His plan even calls for expanding the Community Reinvestment Act, the very law that economic conservatives like him once blamed for triggering the mortgage meltdown. Are we being trolled?

What makes all of this particularly hard to swallow is that Bloomberg hasn’t even really tried to explain his supposed philosophical flip. His advisers have addressed elements of it. They say he now supports the financial-transactions tax, after previously opposing it, because the idea has worked in places like Hong Kong and Britain. A campaign spokesman made some halfhearted efforts to put out the fire after a clip emerged in which Bloomberg seemed to suggest the end of redlining—the practice in which banks refused to lend in black neighborhoods—helped bring about the financial crisis. (I thought it was widely misinterpreted; really, he just seemed to be repeating the still-troubling idea that Congress was at fault.) His PR team insisted to the New York Times that he wasn’t really flip-flopping on Dodd Frank and that actually his new plans address what he viewed as flaws in regulations like the Volcker rule. But Mayor Mike hasn’t actually stood up at a podium and described how he came to change his mind on the fundamental question of how much regulation is the right amount, or even clearly explained whether he still believes Washington lawmakers and not, say, the geniuses at Bear Stearns and Countrywide were at fault for the greatest economic catastrophe in generations.

I’ve tried to ask Bloomberg’s campaign about this topic three times now, and have gotten zero responses. Here’s the last email I sent his spokesman, Stu Loeser, and his press team.

Hi Stu, 

Given that Mayor Bloomberg has released an ambitious Wall Street regulation plan this week, I had a few questions I was hoping the campaign would answer. 

1) The mayor has previously blamed the financial crisis on Congress, rather than reckless behavior by banks. As he put it in 2011: 

“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.”

Does the mayor still believe Congress was responsible for the mortgage crisis? And if he’s changed his mind, why? 

2) The mayor previously called Dodd-Frank’s financial industry regulations “stupid laws” and suggested they would harm the economy. “The trouble is, if you reduce the risk at these institutions, they can’t make the money they did. If they can’t make the money they did, they can’t provide the financing that this country and this world needs to create jobs and build infrastructure.”

Does the mayor still think Dodd-Frank’s regulations were “stupid,” and if not, why has he changed his mind? 

3) Given Mayor Bloomberg’s past statements on these topics, why should Democratic voters trust his promise to regulate Wall St. more stringently?

Best,

Jordan Weissmann

So far, crickets. And if Bloomberg has explained himself on this issue to anyone, I haven’t been able to find it.

Look, I don’t anticipate a particularly forthright answer to any of these queries. The campaign has already tried to talk around the fact that Bloomberg once called the Affordable Care Act a “disgrace” by suggesting that he was just disappointed that it didn’t include a public option at the time. I don’t really expect Bloomberg to get explicit about the bargain he seems to implicitly offering voters, which is that he’ll let go of his more conservative views on issues like finance and govern like a Hillary Clinton–style Democrat if the party will give him a shot at Trump.

But the fact that Bloomberg isn’t even trying to make a halfhearted effort to explain how his thinking about Wall Street has supposedly evolved makes it really difficult to believe he’ll keep that bargain. It’s especially disconcerting since financial regulation is one area where a president can single-handedly make a big impact through his choice of appointments.

My hope is that Bloomberg will be forced to talk about Wall Street and the economy during Wednesday night’s debate in Las Vegas. But even if he isn’t, Bloomberg should offer some clarity. He’s spent a lot of this campaign trying to reassure voters that he’s macho enough to take on Trump by trading insults on Twitter. Personally, I’d prefer someone brave enough to answer basic questions about his beliefs.