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Mayor Bloomberg Isn't Very Streetwise

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New York Mayor Michael Bloomberg's recent proposal to ban large-sized sugary beverages sums up a troubling trend: Instead of attacking Wall Street, it's far easier to go after Main Street -- even though doing so doesn't address more dangerous problems threatening the fabric of our society.

Apparently it's OK for Wall Street to create financial "weapons of mass destruction" that gave us a crash course in financial crisis. Hardly anyone who indulged in that behavior even took much of a hit salary-wise, much less was called to account for the financial ripple effects that America's still struggling through. But hey, folks on Main Street should be "saved" from having the choice to purchase large sugary drinks.

Give me a break. Wall Street's a far sketchier neighborhood than Main Street with its citizens' (gasp) large drinks and super-sized fast-food meals. America's long-term health is threatened more by the ethics-starved theme that keeps repeating in an endless loop of greedy gluttony on Wall Street and other deep pockets of America.

Fat cats with dynamite
Bloomberg (the financial news source, not the mayor who created it) reported that Wall Street CEO compensation increased by an average of 20% in 2011. Buyout outfit KKR set the decadent tone for the data, with co-CEOs and cousins Henry Roberts Kravis and George Roberts making about $30 million apiece in 2011.

If our financial markets could muster some rational sense, that CEO pay increase would have been linked with stellar performance, but guess what: not a chance. Most financial companies' revenues, profits, and stock prices dropped or even plunged in 2011.

Citigroup's (NYSE: C  ) one of the biggest stinkers in this regard. Remember, it was one of the financial companies that failed the latest stress tests for U.S. banks. Still, CEO Vikram Pandit was awarded a whopping $15 million in 2011; he was identified by Bloomberg (the financial news source) as the banking chief executive who delivered the least shareholder value when judged on a three-year assessment of stock returns.

Thankfully, Citigroup shareholders got a clue and fought back against the absurdity of Pandit's pay package in light of the circumstances.

Since 2008, JPMorgan Chase (NYSE: JPM  ) CEO Jamie Dimon has gained a reputation for being a gold-standard leader even as many others on Wall Street weren't, but even his good reputation couldn't last.

Dimon's pay in 2011 increased 11% to an eye-popping $23 million while the stock price fell 20%. And more recently, Dimon's reputation received a layer of tarnish: JPMorgan recently lost at least $2 billion on investments in synthetic credit securities.

As Henry Blodget said at Business Insider, Wall Street's "just kids playing with dynamite," and the JPMorgan scandal has underlined that it's as true now as it ever was.

Define gluttony
The fact that Wall Street's finest are putting together potential financial bombs in his fair city doesn't seem to get much attention from Mayor Bloomberg, who's been on a weird health kick about New Yorkers' habits and waistlines for a while. Cigarette and trans-fat bans paved the way to a proposed ban on sugary drinks in containers that hold more than 16 ounces.

Apparently, Coca-Cola (NYSE: KO  ) and McDonald's (NYSE: MCD  ) are more dangerous to the American public than the dynamite on Wall Street, huh?

Here's Coke's response to Mayor Bloomberg's move: "New Yorkers expect and deserve better than this. They can make their own choices about the beverages they purchase." A McDonald's spokeswoman said, "Public health issues cannot be effectively addressed through a narrowly focused and misguided ban."

Granted, many people do say America's in the grips of an obesity epidemic. And of course, I can see the public officials' argument that such public health problems add up to public expenses, especially in this day and age.

Still, I can't think of a more public cost than the price we all paid to bail out too-big-to-fail banks whose employees made truly massive mistakes with their gluttonous appetites for profits over principle or even common sense.

Meanwhile, maybe it's a lot easier for Mayor Bloomberg to pick on the supposed typical American chugging down a gallon of soda than his moneyed buddies on Wall Street.

When executive Greg Smith resigned from Goldman Sachs (NYSE: GS  ) with a published criticism of the firm's culture and practices that spread like wildfire, Mayor Bloomberg visited the company and defended Goldman's importance to the city's economy. Incidentally, Goldman Sachs is also important to Bloomberg's economy, since the company leases Bloomberg terminals representing tens of millions in annual revenue.

Meanwhile, just yesterday, Bloomberg (the news source) reported: "New York City Budget Balanced With Help From Wall Street."

Let's really talk about healthy behavior
The current economic mind-set in America, most specifically on Wall Street, is absolutely starving for accountability and ethics lessons. In fact, the kind of behavior that Wall Street has shown over and over again is dangerous and always seems to firebomb Main Street while Wall Street gets off scot-free. The recent Facebook IPO served as a stark reminder that Wall Street's pathologically messed up behavior never seems to change.

There may be an obesity epidemic in America, but we're going to pay a far higher price for the epidemic of nearly sociopathic behavior that emanates from many supposedly "high places," particularly Wall Street. When it comes to healthy behavior and the public good, Mayor Bloomberg has philosophically cracked down on the wrong Street.

If you're thinking about the political landscape and its effect on public companies, our analysts believe These Stocks Could Skyrocket After the 2012 Presidential Election. Click the link for the absolutely free report.

Check back at every Wednesday and Friday for Alyce Lomax's column on environmental, social, and governance issues.

Alyce Lomax does not own shares of any of the companies mentioned. The Motley Fool owns shares of Citigroup, Coca-Cola, Facebook, and JPMorgan Chase. Motley Fool newsletter services have recommended buying shares of Coca-Cola, Goldman Sachs, and McDonald's. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (13) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 06, 2012, at 11:37 AM, name7865 wrote:

    Right on !!

  • Report this Comment On June 06, 2012, at 2:05 PM, 2Blackriver wrote:

    While Wall Street has certainly contributed to the "financial crisis", many commentators ignore the role of the federal government in establishing an environment that was conducive to the creation of the "financial weapons of mass destruction".

    The foundation for the sub-prime mortgage industry was established by Jimmy Carter's Community Reinvestment Act and reinforced by Clinton's strong arm tactics to ensure an affirmative action type policy at mortgage lenders.

    Add in the criminal, duplicitous actions of Fannie Mae, Freddie Mac and the revolving door of professional politicians on the Boards of these entities and you have a "financial weapon of mass destruction" armed and ready.

    TARP and the concept of "too big to fail" either propped up failing companies, or forced funds on financial institutions that did not want the money.

    The risk environment for private enterprise artificially contracts and the weapons timer starts ticking.

  • Report this Comment On June 06, 2012, at 2:22 PM, BMFPitt wrote:

    Democracy ensures that you get the government you deserve.

  • Report this Comment On June 06, 2012, at 3:05 PM, 2Blackriver wrote:

    Roger that.

  • Report this Comment On June 06, 2012, at 5:34 PM, BlazerMania wrote:

    To the Alyce imposter who wrote this article,

    I normally really enjoy Alyce's writing. So I will politely ask whoever actually wrote this article to please return Ms. Lomax's obviously stolen computer to her so the real Alyce can continue her wonderful contributions to TMF, as this article is just plain irresponsible. What in the world is a mayor (even if it is of New York) supposed to do about limiting executive compensation and federal government sponsored bailouts?

    I'm all for what the author is trying to get at (that Wall Street is still getting away with legalized stealing), but bringing Bloomberg and his well-intentioned efforts into the discussion (especially as part of the title) serves no useful purpose and is clearly nothing more than a shameless attempt to capitalize on a current hot topic. Not to mention I did not read a single actionable recommendation, idea, or suggestion for Bloomberg in the entire article.

    I look forward to the return of the real Alyce Lomax. And a note to TMF editors: you are equally responsible for the theft of Ms. Lomax' computer.

  • Report this Comment On June 06, 2012, at 6:54 PM, CaptainWidget wrote:

    Movie stars are making more now than ever before, despite the overall quality of movies decreasing by leaps and bounds.

    Should Mayor Bloomberg focus his efforts on reducing stratospheric movie star pay instead of managing his city?

  • Report this Comment On June 06, 2012, at 8:05 PM, matthewluke wrote:

    And how is a mayor of a city (even New York City) suppose to do any of the things you are suggesting?

    Unless American's Nanny can appoint a Board of Wall Street and get the board to do exactly what he wants because he appointed each and every one of them...

    Even if Nanny Bloomberg had such overreaching regulatory power, why would we trust him to use it? There are so many holes in just this idiotic soda bad of his. Why would you want him regulating Wall Street?

    I know you're just using the popular news story of Bloomberg soda bad as the way to attract more readers. You obviously (or at least I hope so) couldn't actually be arguing for Bloomberg to regulate Wall Street. I usually like your articles Ms. Lomax (whether I agree or disagree with your opinion), but the premise of the article was just bad. So bad it is hard to focus on anything else in the article.

  • Report this Comment On June 06, 2012, at 11:50 PM, somethingnew wrote:

    Good call. I read about this a couple days ago and had similar thoughts. I think this is a perfect example of the king telling the peasants what they can/cannot do. As someone who only drinks on occasion it would be real easy for me to say that the number of bottles of wine a person buys per night should be limited to 1 because buying any more might contribute to an automobile accident. I wonder how many of Bloomberg's buddies would go for that one.

  • Report this Comment On June 07, 2012, at 1:36 AM, matthewluke wrote:

    Question to Ms. Lomax:

    What would be your suggestion to those in Washington about CEO pay? If you could talk directly to your own Senator and Congressman/woman, what exactly would you like them to do (assuming you'd want government doing anything at all about CEO pay).

    Side note: It is surprisingly easy to schedule time to talk to your own representative. Not just talk to them, but often go to their office in Washington and speak face to face. I think most people would probably assume it is impossible for the average person to do so, but it is actually quite amazing how simple it is with only a little effort.

  • Report this Comment On June 07, 2012, at 2:48 PM, TMFDarwood11 wrote:

    I'd suggest the writer view the "documentary" Ethos by director Pete McGrain. Pay absolutely no attention to the "talking head" in the movie.

    It's available via Netflix streaming.


    As to the relevance, the conclusion and culprits of the movie, after looking at the politicians, the bankers, the military-industrial complex is the evil consumer. Wow, who would have guessed. The source of the problem is you and I.

  • Report this Comment On June 07, 2012, at 3:17 PM, TMFLomax wrote:

    Hey everyone,

    Sorry I've registered some disappointment from some of you about this article. However, the proposed ban on large drinks struck me as ridiculous -- not least of the reason is it's basically a ban on large containers; you're free to buy two smaller ones for the same amount of sugary beverage. Who's really trying to get "attention" here?

    I don't believe that regulating or legislating behavior really works, but if Mr. Bloomberg is going to venture into that realm (which of course, he already has on the "health" kick), NYC (Wall Street) is rife with behavior that personally, I believe is far more damaging/unhealthy to far more Americans than large drinks or deciding to eat food with trans-fats. I was just trying to make the point that maybe more people should be having more discussions about ethics, not whether people decide to guzzle down large sodas with their burgers or what have you. Plus, there's something holier-than-thou in these bans on things that generally affect individuals who make the choices, as opposed to Wall Street's often irresponsible behavior, which let's face it, in extreme situations like the last bubble, seems to affect everyone BUT those who perpetrated it, and too many people blow that behavior off as somehow perfectly reasonable.

    I'm not arguing that government and consumers were blameless in the outcomes of the financial crisis and other economic problems, but hey. Folks at the big Wall Street firms are supposed to be incredibly smart, are they not? That's what they get paid the big bucks for, supposedly.

    Raise awareness about irresponsible behavior that hurts others is probably my point here. Maybe we can't "ban" it, but at the very least acknowledge it and say it's wrong, and like I said, I think Mr. Bloomberg focused on the wrong "street" with this one, but far be it for him to criticize the other.

    I doubt this helps for those of you who weren't crazy about this article, but I'm standing by my reason for writing this. I think the truly "healthy" behavior is when people take responsibility for how their actions affect other people, especially when the ripple effects go far beyond their own spheres.



  • Report this Comment On June 07, 2012, at 4:26 PM, Momentum21 wrote:


    If you don't think that diet has far reaching social consequences I think you need to research the topic in more detail.

    I would contend that someone's health is in fact more important than someone's money...but we can argue that point I guess.

    The fact of the matter is that sugar has proven to be more addictive than cocaine in the lab. Obesity in America is an epidemic that also taxes the healthcare system due to a domino effect of illness. Cheap processed food and refined sugar weighs most heavily on folks with the least amount of discretionary income.

    Why is it so "ridiculous" for someone to attempt to regulate something that clearly has extremely negative health consequences? We do it with drugs, cigarettes and alcohol already.

    Perhaps we should be doing more to regulate Wall Street but think you are comparing apples and oranges here. -1 from me since I don't think you thought much past a good headline on this article.

  • Report this Comment On June 07, 2012, at 5:12 PM, TMFLomax wrote:

    Actually, at the core of my argument is a discussion about ethics (and probably spiritual health as opposed to physical health), not money (although of course greed is a big part of the ethical breakdown I'm referring to here, and yes, another angle of this is that we have all heard that people with less money end up eating more cheaper, less healthy food).

    Of course it is better to try to be healthy but many of us make the wrong choice -- I still think those are individual choices (although yes, I get the argument that that injures our atrocious health system). And I'm just getting the impression that some people believe it's better to tell certain people how to behave than others.

    Anyway, I'm getting the impression that some of us aren't agreeing on this topic on the least. Maybe some other day we will agree on another topic. ;)


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