Market meltdown ties Bloomberg's hands
NEW YORK - On the morning after Lehman Brothers Holdings Inc. filed for bankruptcy, Mayor Michael Bloomberg was in the middle of a news conference in Brooklyn when an aide slipped him his BlackBerry with an urgent message.
"Barclays - Lehman announcement - Not yet," read the e-mail from another aide back at City Hall, relaying a message from Lehman chief executive Richard Fuld, a longtime friend of the billionaire mayor.
Earlier that morning, Fuld had told the mayor that British bank Barclays PLC was poised to buy part of Lehman. Fuld said one way Bloomberg could help would be to publicize the good news at his daily news conference. But the e-mail on Tuesday morning derailed that plan.
More than any other time in Bloomberg's tenure, the public and private careers of the former CEO are merging as he tries to manage a city that is ground zero for the nation's financial meltdown. He calls old friends like Fuld to offer assistance. He gives advice to presidential candidates and economic leaders, gets hints about the next wave of bad news and what the losses might mean for the city's economy. He offers to help different parties network and gives his insight on how the markets and policymakers are going to react to the developments of the day.
But while his desk in City Hall may be just blocks from Wall Street, where he started out as a salesman on the equities desk at Salomon Brothers some 40 years ago, it can sometimes feel like miles away because there is very little the city government can do to help this crisis.
The 66-year-old Bloomberg, who built his estimated $20 billion fortune after founding the financial information company that bears his name, is matter-of-fact but seemingly frustrated about his place in it all.
"There's no one person to blame, other than all of us, and there's no one solution, other than all of us pulling together," he said.
The city, unlike the state and federal government, has essentially no significant authority to step in during this crisis. What is perhaps most discouraging for Bloomberg is that he must balance the budget as the industry's losses bleed into the local economy. For every billion dollars in Wall Street profits, the city reaps $70 million in direct taxes and sees even more revenue from money spent here.
Without the ability to take action, he is drawing heavily on his other favorite managerial move - trading information. And it helps that he knows whom to call.
Over sirloin and red wine at the Palm in Washington, D.C., Wednesday night, Bloomberg had the ear of the World Bank president.
The conversation with Robert Zoellick, who came to the World Bank from Goldman Sachs Group, turned quickly to talk of the nation's economic turmoil.
The next morning, Bloomberg was chatting with another longtime pal, Morgan Stanley chief executive John Mack, as the investment bank's stock price was tanking amid reports that it was scrambling to strike a merger or investment deal.
Later that night, Democratic presidential candidate Barack Obama was calling. Aides said Bloomberg talked about what had led to the current crisis, what might be coming next, and then told Obama that he and Republican nominee John McCain have to think about where they would draw the line on federal bailouts of failing companies.
"Nobody's going to just listen to any one person, but you distill in your mind and combine the ideas that you get from a lot of different people," Bloomberg said Friday.