Bloomberg veers left with plans for Wall Street regulations and transactions tax

Clark Mindock
AFP via Getty Images

Michael Bloomberg, the billionaire who built his fortune by selling a tool to help handle the financial industry, is veering left as a Democratic presidential hopeful with a new set of policies taking aim at Wall Street in what amounts to a reversal of his own past criticism of financial regulations.

The plan released on Tuesday morning would toughen banking regulations and introduce a financial transactions tax, alongside other ideas like strengthening the Consumer Financial Protection Bureau (CFPB) that would seem natural to come from more progressive candidates in the field like Elizabeth Warren and Bernie Sanders.

Mr Bloomberg, who has mounted a non-traditional 2020 campaign that sees him foregoing the first four nominating contests that generally lend credibility to campaigns, has amassed a personal fortune estimated at around $64 billion through his eponymous financial analysis and media company.

And, in the past, he has taken hits for criticising financial regulations like the post-Great Recession Dodd-Frank Wall Street reform law, and for blaming the housing crisis that largely created that recession on the end of racist red lining practices by banks.

“Given how profoundly the 2008 crisis undermined faith in the establishment – and given how close it brought the world to economic collapse – authorities everywhere should be doing all in their power to fix the flaws it revealed,” the plan reads.

Central to the ideas set forth in his plan is unwinding the Trump administration’s efforts to roll back Dodd-Frank, which was signed by Barack Obama in 2010 and gave the federal government stronger oversight over the financial sector, implemented crisis prevention measures, and implemented harsher penalties for abusive conduct.

In 2014, while still registered as an independent after being a member of the Republican Party through 2007, Mr Bloomberg called that very plan “dysfunctional”. He was among the harshest critics of Dodd-Frank outside of the GOP umbrella.

“The trouble is if you reduce the risk at these institutions they can’t make the money they did,” Mr Bloomberg said then. “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.”

The new plan also calls for a strengthening of the 1977 federal law that aimed to end racial discrimination in mortgage lending, which has been referred to as redlining. Mr Bloomberg had previously blamed the end of that practice, which denied loans to customers who lived in areas identified as having high populations of minorities, for the 2007 housing crisis.

“Once you start pushing in that direction, banks start making more and more loans where the credit of the person buying the house wasn’t as good as you would like,” he said in 2008.

As for the CFPB, Mr Bloomberg has said he would bolster the agency, which was championed by Ms Warren, who is also running for president.

That agency — which has put in place restrictions on short-term, high interest “payday” loans and on discriminatory auto loan premiums — has been weakened by the Trump administration.