Senator Charles Schumer, a Democrat from New York, has taken some heat for his split with his party over a plan to raise taxes in the hedge fund and private equity industries.
Some scratch their heads and wonder if the frequent crusader for the middle class is being overly influenced by political contributions from the buyout kings, who would see their personal taxes more than double under the plan.
But there really is no mystery. Schumer, a career politician and life-long New Yorker, is being true to his city, where many of the buyout firms are based.
In January, Schumer and New York City Mayor Mike Bloomberg issued a 134-page report, produced by McKinsey & Co., that said the city was in danger of losing its global lead in financial services over the next 10 years. London is a major competitor, as are Hong Kong and Tokyo.
The report focuses on public markets, but cites a particularly “worrisome” trend of major US-based private equity issuers going to Europe for new listings.
So, for Schumer, resisting the tax hike is protecting New York City’s economy.
The senator, though, hasn’t lost his affinity for the middle class. In March, he issued an analysis that said Upstate New York was at the tip of the nation’s foreclosure crisis and more than 50,000 families there could lose their homes.
“The subprime market is the wild west of mortgage loans and it’s time we bring a sheriff into town,” Schumer said.
A lot of folks would agree with him on that issue.
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