Michael Bloomberg’s $94b fortune is thanks to Wall Street – now he wants to shake it up

Bloomberg’s plan appears to repudiate positions he has taken on financial oversight over the years, when he often argued that rules aimed at reforming Wall Street were bad for the economy.

Michael Bloomberg made his billions selling data to Wall Street.

Michael Bloomberg made his billions selling data to Wall Street.Credit:Bloomberg

The new proposals suggest how far to the left Democratic presidential hopefuls considered moderates have felt they needed to tack. This is especially so for Bloomberg, a former Salomon Brothers trader whose estimated $US63 billion ($94 billion) fortune came from selling data to Wall Street.

In 2010, for instance, Bloomberg urged Democratic lawmakers not to get too tough on banks, and he criticised the Volcker Rule, which prevented banks from making risky trades for themselves rather than clients. He called the proposed new restrictions “shortsighted,” with the potential to reduce middle-class jobs.

A spokeswoman for the Bloomberg campaign, Rachel Nagler, rejected allegations of flip-flopping.

“Context matters,” she said. When the Volcker Rule was introduced, “Mike was sceptical of regulators’ ability to divine traders’ intent,” which was how the law required regulators to judge investments, she added. Bloomberg’s new plan would focus “on the outcome of speculative trading — big gains and losses — rather than on traders’ intent”.

Some of Bloomberg’s other views on financial regulations have taken heat in recent days. He has had to defend comments he made in 2008 linking the financial crisis to the end of red-lining, the discriminatory housing practice in which banks made it harder for people of colour to borrow to buy a home.

In 2011, he said, “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.”

But as he seeks to shore up his argument as the choice for moderate Democrats in the 2020 race, Bloomberg has shifted gears.

As part of his Wall Street plan, he is now embracing a tax of 0.1 per cent on all financial transactions, a position that he shares with fellow candidates Senator Bernie Sanders, Senator Elizabeth Warren and Pete Buttigieg, as well as Representative Alexandria Ocasio-Cortez. Last year, Ocasio-Cortez co-sponsored a bill in the House that called for such a tax.

The surcharge on trading, meant to raise money to pay for social programs such as expanded healthcare coverage, has been roundly criticised by the sort of pro-business groups that Bloomberg had long been sympathetic to, like the US Chamber of Commerce.

Democratic presidential candidate Michael Bloomberg.

Democratic presidential candidate Michael Bloomberg.Credit:AP

But Nagler, the campaign spokeswoman, argued that such a tax “is an effective and relatively painless way to raise more tax revenue from the wealthy,” citing its use in Britain and Hong Kong. A 2018 analysis by the Joint Committee on Taxation estimated that a tax similar to the one proposed by Bloomberg would raise $US777 billion over 10 years, albeit with a lot of uncertainty around “how much transactions would drop in response to a tax.” Any drop in trading would probably be bad for Bloomberg LP, the company that feeds investors data and helps them arrange the buying and selling of securities.


Much of Bloomberg’s plan is an effort to bolster or restore elements of the 2010 Dodd-Frank law, which, like the Volcker Rule, were reversed or reduced under President Donald Trump. For example, Bloomberg proposes making stress tests for banks more stringent and reinstating the requirement to produce annual “living wills,” which are complex documents that detail how banks would unwind their operations in a bankruptcy.

Elsewhere in his plan, Bloomberg says he would merge Fannie Mae and Freddie Mac, two government-owned housing giants. He would strengthen consumer protections that govern payday lending and financial advisers, as well as give the Consumer Financial Protection Bureau oversight of auto lending and credit reporting. Borrowers of student loans would be automatically enrolled into income-based repayment plans with payments capped at 5 per cent of disposable income.

Progressive critics are likely to argue that Bloomberg’s proposals don’t go far enough. Some Democrats have proposed a wealth tax, while Warren has called for a complete overhaul of the private equity industry, and Sanders wants to break up the big banks.


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