After
control board architect Bob Wilmers made the cut in The
Beast’s twenty-five most loathsome Buffalonians, a peculiar
thing occurred. The Buffalo News published
a knee pads-and-mouthwash profile of Wilmers on the front
page of its business section the following Sunday (“The
man who made M&T big league,” 8/14/2005). Wilmers, longtime
boss of M&T Bank, was depicted as a hero to the local
business community in the piece, penned by Jonathan Epstein.
Mere coincidence? We think not. It’s worth a taking a critical glance at the
News article, not just to debunk the mythic treatment
of Wilmers, but to attempt to understand how Buffalo’s elite
leaders validate their failed policies and political corruption
through a mutual admiration society amplified by the Buffalo
News and other sympathetic media outlets.
While
Wilmers and his admirers have no problem attacking the vanishing
traces of middle class stability represented by Buffalo’s
teachers, firefighters and police, it’s quite possible that
the banking boss has a bit of a glass jaw when the spotlight
of political satire is focused on him personally. So at
the risk of sounding redundant, we’re going to talk about
“Control Board Bob” again. With one hand plugging our noses,
we’ll wade through the fawning article in question, which
could have been more appropriately titled “The man who keeps
Buffalo bush league.”
Super-Bank
Contrary
to the article’s assertion, Wilmers
did not arrive in Buffalo to “shake things up.” In fact,
if it were not for M&T’s conservative
portfolio, one could easily imagine the bank succumbing
to the same bug that swept the rest of the Savings &
Loan industry. Known as the S&L crisis, this great Reagan
era ripoff claimed a lot of innocent
victims, but Wilmers was not one
of them.
The
acumen shown by Wilmers during
this critical period, then, must be attributed to restraint,
at best, rather than a penchant for swashbuckling creative
entrepreneurship. His original mission might have been to
“take over a small, struggling bank in a city in decline,”
but in the wake of the S&L disaster, it quickly became
one of being the biggest buzzards in town, feasting on the
entrails of failed competitors such as the old Big E and
Goldome.
Part
of the overcompensating hubris and inflated self-identity
of that “Talking Proud” era was that Buffalo was on the
verge of becoming a major regional banking center. Turns
out that Chicago had nothing to worry about, after all.
“Two
decades later,” the article continues, “Wilmers
has proved his critics and doubters wrong.” Who are these
critics and doubters, and what was the substance of their
argument? We’re never told. In fact, criticism of Wilmers
was muted and sporadic until he embarked on his jihad against
organized labor with the advent of the Buffalo Fiscal Stability
Authority, and still his role in our city’s demise is poorly
understood.
Glass-Steagall Repeal: Bigger is
Better
The
fact that M&T is now one of the top twenty banks in
the U.S. is offered as indisputable proof of Wilmers’
genius. Who can argue with a Buffalo bank cracking the top
twenty, after all?
The
article fails to mention that the super-bank movement reached
its pinnacle with the repeal of the Glass-Steagall
Act. This “free market reform” allowed banks to merge with
securities firms and insurers. One of the prime movers behind
that legislation was Citigroup. Arthur Leavitt Jr., a board
member of M&T and former Chairman of the Securities
and Exchange Commission, is a longtime friend of Citigroup
CEO Sandy Weill.
The
Glass-Steagall Act was a piece
of legislation passed in 1933, in the midst of the Great
Depression. The idea was to erect financial firewalls to
prevent a repeat of the Crash of 1929. Under the new Global
Economy consensus of the Clinton/Bush era, such protections
are considered quaint.
M&T’s
most important acquisition of recent years was also not
critically discussed in the News article. Again,
M&T merely picked up the pieces in the wake of a major
scandal when an Allfirst bank
employee, John Rusnak, somehow
managed to lose over 690 million dollars of bank funds trading
currencies on the internet from the comfort of his home.
The
rogue trader story worked: Rusnak’s
little gambling problem earned him a seven-year prison sentence
and his superiors at the bank were not prosecuted.
Making The Numbers
“…and
he has rewarded shareholders who have seen $3,625 invested
in 1980 grow to $1 million today.”
M&T
investors have done well, to be sure. But its successes
in the stock market, like those of Wilmers
admirer and Buffalo News Chairman Warren Buffett,
have not translated into any sort of economic rebound in
Western New York. Is there no connection, or do these successes
come as a result of the economic deterioration here?
Is there a host-client relationship at work? This line of
inquiry is closed to discussion in Buffalo.
According
to Epstein’s article, the real secret to M&T’s
success is its market dominance. The author of the article
fails to make the connection between the monopolistic behavior
of institutions such as M&T and the Buffalo News
and the area’s continued economic decline. Instead, the
spread of M&T alumni to other local lenders is praised
and shown as a model of economic expansion.
Both
M&T and the News enjoy virtual monopolies in
their respective fields here in Western New York, and thereby
share an interest in keeping Buffalo an unattractive market
for would-be competitors. Nobody likes a one-horse town,
unless they happen to own the horse. The News’ shameful
record of incessant cheerleading for an impressively long
string of failed endeavors and people (Masiello,
Giambra, the Rigas
family, etc.), would hurt their market share if there were
another paper to buy. As it is, the News enjoys a
dangerous hegemony over public information and issue framing—and
therefore public opinion. If a powerful man with an agenda
like Wilmers can influence our
only daily’s coverage—as it seems he can—it’s a clear conflict
of interest, and greatly diminishes our ability to gather
objective information on subjects of vital interest to our
region’s future.
The Education Banker
The
News presents Wilmers’
manipulation of the Buffalo School Superintendent search
and his cynical hostage-taking of Westminster School as
examples of social activism and community involvement, when
in reality they are part of a much larger initiative that
has been brewing over the last two decades to privatize
public education in the U.S.
James
Williams was the sole candidate presented to the school
board for an up or down vote. Wilmers’
hiring of the search team put immense pressure on the Board
to hire Williams. Likewise, Westminster was another example
of Wilmers’ philanthropy. M&T
supported Westminster financially, even though it was a
public school. Naturally, the school flourished, with increased
funding and prestige. Then, as the school district faced
serious financial problems, an ultimatum was issued: Either
Westminster would become a charter school or M&T’s
support would be withdrawn. The strategy was to bankrupt
the district and create a land rush of charter schools to
replace the public education system. Dr. Williams was brought
in because he has experience in this department, having
left the Dayton, Ohio school district in shambles.
Now
the push is on to force the district’s unionized workers
to agree to switch to a single health care insurer. They
are assured there will be no reduction in services with
the elimination of competition, despite the fact that this
flies in the face of the principles of capitalism. Predictably,
the News has welcomed this measure and harshly criticized
the teachers’ union for attempting to get something in return
for the concession, and most other media outlets have followed
suit (another writer at this publication has espoused this
opinion as well). Low blows have been leveled against the
teachers, especially the criticism that they don’t care
about the children they teach. But it’s the teachers’
union, not the kids’ union. If they put the interests of
the children first, they wouldn’t be doing their job. Again,
instead of assessing the dispute in a sober, objective manner,
the News has assumed the role of advocating Wilmers’ position exclusively, and vilifying those who disagree.
At
what point do intersecting market-dominant entities begin
to inhibit competition, quality of service and economic
growth in their host communities? Don’t ask an executive
from Wal Mart.
Cheerleaders
Not
surprisingly, all of those quoted at length in Epstein’s
article are members of Wilmers’
inner circle, with the obvious exception of Buffalo Teachers
Federation president Phil Rumore.
Of these cheerleaders, practically all are products of inherited
wealth – serious wealth. This chorus of praise drones on
relentlessly:
“I’m
hard-pressed to name anyone who’s done more for the community
in the past years,” says new Buffalo Control Board figurehead
and Gibraltar Steel scion Brian Lipke.
“Bob
really surprised a lot of us in how he truly became a Buffalo
guy,” says Rich Products inheritor Bob Rich.
“...it’s
just been a virtuoso performance,” says friend and defense
industry CEO Robert Brady.
“He
cares more than a lot of us do that are from here, or he’s
certainly more active about it,” says Buffalo ex-pat and
3rd generation trust fund kid Brent Baird.
“Under Bob’s management, the institution has been a model for serving
customers, shareholders, and the community,” according to
a note from the press office of Warren Buffett.
“He’s
not easily discouraged and he shouldn’t be,” Delaware North
kingpin Jeremy Jacobs says of Wilmers’
plans for Buffalo Public Schools .
“He
just doesn’t seek the adoring public or the aggrandizement
or the accolades,” says Harvard pal and Buffalo Partnership
czar Andy Rudnick, Wilmers’ hand-selected
enforcer.
Would
it surprise you that an anonymous source claimed
that Wilmers is nice to his kids
AND his stepkids? Now that’s a scoop. I guess the source requires
anonymity to protect him from recriminations from the powerful
and vindictive anti-child lobby.
Perhaps
the most telling quote came from the aforementioned Brian
Lipke: “The leadership of the business community all recognizes
that when Bob Wilmers calls, you return the call immediately.”
In other words, we all know who calls the shots in this
town, and in whose good graces it is essential to remain.
“Critics
Agree”
Of
all of this, maybe the most offensive portion of Epstein’s
article is the section addressing Wilmers’
“critics.” Epstein reports only that “labor
unions and some politicians”—both largely despised groups
in our area’s current political climate—have some problems
with Bob’s meddling. Nowhere is it suggested that regular
people might have a bone to pick with the Midas-like CEO.
Adding insult to injury, Epstein adds: “But even his critics
concede he has done more for Buffalo and Erie County during
the past two decades than almost anyone.”
I wonder what kind of research Epstein engaged in before
writing such a sweeping proclamation—shockingly, he never
called any of us here at The Beast. With this sentence,
followed by a painfully respectful quote from Rumore,
Epstein leaves his readers with the impression that Bob
Wilmers is such a fabulous guy
that even his opponents are smitten with him. Epstein rounds
out this segment of his journalistic fellation, subtitled “Some are critical,” with another couple of worshipful
quotes, from M&T Director Brett Baird and Wilmers
himself, just in case we didn’t get the point.
As if to underscore this well-timed valentine from shameless
News publisher Stanford Lipsey
to Wilmers, the sycophantic Epstein blew another kiss his way
in Saturday’s business section, citing a study which lists
Wilmers as “underpaid” at $1.06
million a year, barely mentioning the fact that he owns
over half a billion in stock and options (“Study
says some bankers in area are underpaid,” 8/20/2005).
Alpha and Omega: the Control Board
In an interesting biographical note, the article mentions
that Wilmers took a gig as NYC
Mayor John Lindsay’s Deputy Finance Commissioner.
This
was the era of New York City’s Fiscal Control Board. It
was also an era that saw one of the great rip-offs in New
York City history, in the form of a corrupt school construction
authority. Buffalo now has a control board—and a new school
construction authority. The control board could have taken
the less onerous form of a municipal assistance corporation,
but that didn’t have enough “teeth.” The bonding for the
school authority went to Salomon, Smith, Barney, a subsidiary
of Citigroup. A new network of charter schools would eliminate
the need to build some of those new schools, wouldn’t it?
Wilmers
appears to be closing out his career in his adopted community
of Buffalo in roles that are familiar—to the manor born
and above legitimate scrutiny.
