More Reason For NY Democrats To Be Upset With Obama Administration

At a time when New York City Democrats are smarting over the way President Obama snubbed Democrat Bill Thompson in his election bid to unseat incumbent mayor Independent Mike Bloomberg last week and Governor David Paterson is trying to overcome largely negative ratings and antipathy from the White House, President Obama has decided to campaign for Connecticut Senator Chris Dodd, who's embroiled in scandals arising from his cozy relationship with Countrywide Mortgage.

Embattled Senate Banking Committee Chairman Christopher Dodd (D-Ct.), whose low approval ratings make him one of the most vulnerable Democrats seeking re-election next year, gets help from President Obama tonight.

Obama will appear at a $1,000-per person fundraising event for Dodd in Stamford.

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Dodd’s low approval ratings stem from several factors, including the sluggish economy and questions raised about favorable treatment he received on a mortgage from Countrywide Home Loans.

So, why is Obama willing to appear with Dodd? Well, it's all about the politics of securing passage of financial services overhaul legislation. Never mind that Dodd is ethically challenged over his ties to the industry and his committee has failed in its oversight function on numerous occasions. In fact, Dodd purposefully excluded AIG from employment compensation limits, causing a kerfuffle over bonuses provided AIG executives paid out from bailout funds, even though Congress was well aware of the existence of the exclusion.

New York Democrats have to wonder why they aren't getting the support that their fellow Democrats in New Jersey and Connecticut received, even though in both instances, the candidates were seriously flawed.

Democrats Ought To Own Up To Their Own Problems

For all the talk about how the GOP is enduring a schism as a result of losing NY-23 between the conservatives and moderates in the party that enabled Bill Owens to win the district for Democrats for the first time in nearly a century (not counting redistricting), it seems that the Democrats have some serious fence mending of their own.

It seems that New York Democrats are wondering why the White House - and President Obama in particular - didn't do more to help Democrat Bill Thompson in his effort to thwart Mike Bloomberg's third term as Mayor of New York City.

The conventional wisdom heading into election night was that Bloomberg would win comfortably, and the media began calling the election for Bloomberg early in the evening, but the results started showing something most unexpected. Thompson was getting far more votes than anyone expected and the race was far closer than imagined.

It turns out that Thompson was actually a pretty good candidate to run against Bloomberg and his incomparable wealth and lavish spending to win reelection for a third term:

This was a race most Democrats now believe they could have won. Numbering among the co-conspirators in the Democrats’ defeat, in the view of some party leaders and activists, are Democratic grandees, from President Obama — who did not campaign for Mr. Thompson — to the City Council speaker, whose support could not have been softer, to two powerful labor unions that remained studiously neutral.

By the next mayoral election, it will have been 20 years since a Democrat occupied the mayor’s office, and the second guesses were many on Wednesday.

“Bill Thompson was always closer than people thought, and on our side, if people had been behind him more, there would have been more checks, more endorsements, more attention, and that might have made the difference,” said State Senator Eric T. Schneiderman of Manhattan. “It really is disgraceful that a lot of people in the Democratic Party stayed home or kept their checkbooks closed.”

Barbara Fife, a deputy mayor under David N. Dinkins, acknowledged many ills, from an honorable but lackluster candidate to a too-quick willingness of many prominent Democrats to write off Mr. Thompson’s campaign as stillborn.

But she wondered at a Democratic president who could barely bring himself to utter the mayoral candidate’s name, much less to make a swing through New York. “He made people feel this was not winnable; Bill got lumped in with Paterson in many minds,” Ms. Fife said. “Obama had lists he could have given, and support. But he never said boo.”

How indeed. Bear in mind that Democrats outnumber Republicans 5-1 in New York City. It's inexcusable for a sitting Democratic president to not campaign for a Democrat in the City, unless there's more going on behind the scenes.

It is possible that the White House thinks having Bloomberg as mayor may provide some cover on policy prescriptions down the road, particularly on climate change and environmental legislation, or perhaps on health care. In fact, it appears that Bloomberg and Obama may have had a quid pro quo on noninterference in the other's electoral races.

Would it have helped? We don't know. It seems, however, that while Obama and Bloomberg don’t share the same party line, they do share a tacit understanding that they each wield a lot of influence. And given their mutual respect for one another, they won't butt into races where one or the other is competing. Bloomberg didn't weigh in on the presidential race (except for having a cozy breakfast at a New York diner that screamed photo-op, of course).

And he asked Obama not to meddle in the mayoral race. Quid pro quo.

Wary of pressure for Obama to campaign for Thompson, since he was doing the same across the river for Corzine, Bloomberg's aides recruited Geoffrey Canada, chief executive of the Harlem Children's Zone, to call Obama's senior adviser, Valerie Jarrett, and ask her to to ask him, more or less, to not choose sides in the mayoral race, according to an amazing Times analysis of the behind the scenes wrangling that propeled Bloomberg to a third term. Bloomberg has personally given $600,000 to the Harlem Children's Zone.

"He didn't pick sides in your race. Don't pick sides in his," a close adviser to the mayor told the Times by way of describing the Bloomberg campaign's pitch to the White House.

Still, to snub a Democrat in the City isn't going to sit will among one of the biggest Democratic party enclaves in the nation.

The White House slapped Rep. Anthony Weiner after he criticized the sorely lackluster White House efforts in backing Thompson, saying that Weiner should have manned up to face Bloomberg himself. Weiner responded by saying the White House should just call him fat; a reference to the failed Corzine attack ads against Chris Christie that threw Christie's weight into the campaign.

Others have come out to criticize Weiner as well for not running against Bloomberg, but the question would remain as to whether Obama would have come out in support of the Democratic party candidate in light of his understanding with Bloomberg. I would posit that it wouldn't have mattered who ran against Bloomberg in the race; Obama is not likely to have come out to campaign for any Democrat knowing the behind the scenes machinations.

Let the Spin Begin

President Obama and other Democrats are trying to spin the disastrous election night results that found candidates that Obama supported losing to Republican challengers in Virginia and New Jersey. They also have to be wondering if the failure to campaign for another Democrat might have cost Bill Thompson a chance at upsetting incumbent NYC Mayor Mike Bloomberg.

First, let's start with New Jersey, which was the biggest race of the night. Incumbent Democrat Jon Corzine was attached to the hip with President Obama throughout the campaign, and Obama's people were thoroughly involved in his campaign efforts. To argue that the loss in New Jersey doesn't inure to Obama's detriment stands in the face of the statements made by President Obama and Gov. Corzine.

Both pledged that a Corzine win would help both men fulfill their common agenda. That clearly takes a hit now that Corzine was sent packing by New Jerseyeans.

The election in New Jersey wasn't as close as Paul Mulshine wishes it to be. He claims that Chris Christie doesn't have a mandate.

Corzine capitulated very early in the evening and while most experts were expecting the New Jersey results to go down into the wee hours of the morning, the results showed Corzine losing early and often throughout the state. Corzine conceded at about 10:20 pm (according to Christie's speech announcing his win at 11pm, when he said that Corzine called 40 minutes earlier to concede). The size of the vote showed just how much discontent there was and it also showed that Chris Daggett was not a factor in the race. He garnered just about 5% of the vote.

The state is in a pissed off mood about out of control state spending and taxes and Corzine's answer was to increase sales tax and allowing property taxes to continue creeping skywards because there was no interest in tackling the difficult issue of controlling spending. Christie at least represents something other than the tax and spend nature found in Trenton. Corzine was despised by most New Jerseyeans because he was ineffectual and never lived up to the hype of being a financial wizard. Daggett was a distraction candidate at best, and voters saw through that.

For those who wonder how to get New Jersey out of the fiscal mess, it starts in one place - state spending. If the state spends more than it takes in, it requires tax hikes. If you promise benefits that are indexed annually, the costs for those benefits rise as does the government's commitment to fund them; Corzine was actually arguing during the budget negotiations this year that municipalities could skip payments so as to avoid making tough decisions elsewhere in the state budget.

That's just it; all the tough decisions on how to pay for state programs - and whether a state program's continued existence is justified, gets put off because the answer is invariably to increase taxes and fees. That has to end if the state wants to regain a competitive edge and encourage job growth.

Bill Thompson lost a narrow election to Bloomberg. That wasn't how the New York City mayor's race was supposed to unfold. Most pundits were expecting a landslide victory, and yet Thompson lost narrowly in a low-turnout election. One has to wonder whether an appearance by President Obama on Thompson's behalf could have charged up Democrats to get out and vote for Thompson. Get out the vote efforts by Democrats in New York City could have turned the election on its head, and yet Obama only provided a wave and a weak endorsement of Thompson in comparison to the fawning attention Obama paid to Corzine across the river.

Why did Bloomberg win in such a fashion? Could it have been the fact that people resented the fact that he did an about face on term limits and had them overturned? Did people resent that he spent nearly $100 million to get reelected? Perhaps.

A much more likely explanation is that the turnout was so low, that only the die-hard voters showed up at the polls, and due to the sheer number of registered Democrats who vote party line that it guaranteed a close election.

One final race that deserves a look is NY-23, where Democrat Bill Owens overcame efforts by out-of-district conservative Doug Hoffman to win in a largely Republican district after Republican Dede Scozzafava dropped out. This was a special election, where the party bosses chose the candidates, and the outcome there will have limited impact going forward for the national GOP, although quite a few will argue that the Sarah Palin/Glenn Beck/Rush Limbaugh wing of the party took a hit because they backed the conservative candidate who forced the Republican "moderate" to drop out and therefore lost the district for the GOP altogether.

It does, however, have serious repercussions in New York as the state GOP needs to address how they chose candidates and needs to work on building up candidates who are fiscal conservatives that will present a message of improving the economic situation upstate by reducing the crushing tax burden faced by New Yorkers and that improving the tax climate will result in an improved business climate, encouraging new businesses and job opportunities. Hoffman never got that far; Scozzafava was a pro-union hack insider whose actions should have raised eyebrows given that her and her husband were toying with the idea of jumping ship and changing party affiliations.

NYS Pension Pay To Play Investigation Expands To Include NYC Comptroller's Office

New York City Comptroller William Thompson called for an investigation of his own office into dealings with Quadrangle and placement agents, but NYS Attorney General Andrew Cuomo looks like he's going to expand that investigation even further.

Scrutiny in recent days has focused on deals between the city pension funds, overseen by Mr. Thompson, and the Quadrangle Group, a private equity firm whose deals are one of the focuses of parallel corruption inquiries by Mr. Cuomo’s office and the Securities and Exchange Commission.

Mr. Thompson, the leading Democratic challenger to Mayor Michael R. Bloomberg in this fall’s election, called for the investigation of his own office and its transactions with Quadrangle to clear the air, though Mr. Cuomo suggested in his own statement that he was undertaking a broader review. (Also see The New York Post.)

Quadrangle was founded by Steve Rattner, who is now serving as President Obama's car czar. Quadrangle hired Hank Morris to serve as a placement agent, and Quadrangle is under investigation as to whether it failed to disclose the hiring of Morris to various pension funds around the nation, including New York City and New York State.

That's on top of an ongoing SEC probe:

The development is the latest in a widening investigation by Cuomo's office and the Securities and Exchange Commission. At the center of the two-year probe are millions of dollars in payments made by private-equity firms and hedge funds to middlemen known as placement agents who helped the firms win investments from New York state's pension fund. The firms include District-based Carlyle Group and New York-based Quandrangle, co-founded in 2000 by Steven Rattner, who stepped away from the company in February to lead Obama's auto industry task force.

The scandal prompted New York State Comptroller Thomas P. DiNapoli on Wednesday to declare a ban on the use of placement agents by investment firms that do business with the state pension fund. DiNapoli also announced his own review of pension fund investments in firms under investigation by Cuomo and the SEC.

Paying fees to placement agents is a common industry practice and is not illegal -- unless it was a kickback to win business. While the former chief investment officer for New York's state pension fund, David Loglisci, and two politically connected placement agents, Hank Morris and Ray Harding, have been charged on multiple felony counts, none of the investment firms or their executives have been charged with any wrongdoing.
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Placement agents are paid fees for performing work such as arranging meeting with potential investors and preparing marketing materials for them, and coaching investment managers on how to pitch their funds. Authorities allege that Morris did nothing of the sort and conspired with Loglisci to sell access to the $122 billion he managed.

Firms that did not play along allegedly suffered, according to a source familiar with the case. A Dallas-based private equity firm, Pharos Capital, has told investigators that it was approached about the need to pay a middleman after it was already far along in discussions about a potential investment. Pharos was then told by Loglisci that that person, a friend and hedge fund manager, Barrack Wissman, needed to be hired. Sensing something was not right, Pharos declined, the source said, and ended up losing the potential investment. Wissman last week pleaded guilty to a felony charge.

For the moment, it appears that Cuomo is looking to get concessions from various investment managers instead of seeking prosecutions in a rather difficult set of circumstances.

UPDATE:
The Daily News reports that Assembly Speaker Shelly Silver was busy trying to shepherd several equity funds in seeking business with the NYS pension fund. In fact, Silver sat in on meetings between the Comptroller's office and these private equity firms. It smacks of impropriety, although Silver's flack claims no wrongdoing:

Silver twice arranged sitdowns with the controller, who has sole control over pension investments, the Daily News has learned.

One of the most powerful men in Albany, Silver a few years ago accompanied investor Shlomo Kalish of Jerusalem Global Ventures to meet with then-Controller Alan Hevesi to discuss a possible deal.

More recently, Silver and Richter met with Controller Thomas DiNapoli. Richter, the hero of the 1994 Stanley Cup team, is a partner with Environmental Capital Partners.

The pension fund ultimately took a pass on both deals.

But the involvement of Silver - whose spokesman Dan Weiller confirmed the meetings - has raised serious questions among government watchdog groups.

"At a minimum, it's an appearance of impropriety," said Susan Lerner, of Common Cause-New York. "It's very inappropriate because it looks as if the speaker is using his office as the most powerful elected official in the Assembly to try and influence the controller, an independent elected official," Lerner added.

"It has a tacit stamp of approval from the speaker when he's sitting there during the meeting, and that's extremely troubling," Lerner said.

Weiller said the speaker has no financial connection to Kalish, Richter or their firms, and that there had been no deals for him to receive any fees. He said Silver met Kalish, who could not be reached for comment, during a trip to Tel Aviv with the American Israel Friendship League.