Views on the Bailout, from Harlem to Wall Street
Outside Samuel's Temple Pentecostal Church on 125th Street in New York, Shirl Moody sits at a fold-up table with a donation basket. As she does every day, Moody, 40, is collecting funds to support the church and its activities for the East Harlem community. Small packets of candy like Skittles and York Peppermint Patties are laid out to stir the generosity of passersby. On this morning in late September, she has collected about $1.50. And now a reporter is standing in front of the table asking Moody about the $700 billion donation the U.S. government wants to hand to Wall Street and various banks.
Moody calls that plan a "sham." She says she doesn't trust Treasury Secretary Henry Paulson, President George W. Bush, or the lawmakers who say it's needed to save the stumbling U.S. credit markets. "I think they're trying to force people's hand just so they'll benefit," she says. Moody believes it would just extend the current state of financial affairs: "The rich get richer, the middle class gets poor, and the poor get poorer." Instead, she suggests, $700 billion could go toward addressing the growing homeless rate and stocking food pantries. And Moody does not fear the consequences of congressional inaction on the financial crisis. "How could it get any worse?"
A 10-mile journey on the No. 4 and 5 subway trains down the east side of Manhattan—from Harlem to Wall Street—reveals a wide range of emotions toward Paulson's financial rescue plan, which is nearing a vote in the Senate and a revote in the House. Many, like Moody andapparently a broad range of Americans, are fed up with the fat cats of finance and in no mood to bail them out. But from Harlem to the ritzy Upper East side, through the tourist bustle of Times Square, and downtown to the winding streets of Wall Street, people have vastly different takes on whether U.S. taxpayers should ante up the money. That point of view depends a lot on what each individual has at stake in keeping the current system solvent.
Hop off the train at the 125th Street stop in Harlem, and you'll find few fans of the bailout. The once-impoverished neighborhood has developed quickly in recent years, benefiting from rising home values and an influx of chain stores such as the Body Shop and Pathmark. In theory, a bailout would keep that investment flowing. But Mantel Thomas, a 33-year-old social worker, sits at a Starbucks (SBUX) and compares the investment bankers who created the complex derivatives to "hustlers" on a street corner—the difference being that they're working on a massive scale, and probably with taxpayer money. He thinks some action is needed to prevent the pain from spreading, but isn't sure what will work. He thinks the threat to the U.S. economy as a whole is real and not just propaganda. Not that he expects a fair outcome: "If they send [the plan] through, will it actually help, or will we see more of the same?"
One stop further south brings you to 86th Street and Lexington Avenue, the edge of the fashionable Upper East Side. Just blocks from Central Park, this neighborhood is home of the high-end shops of Madison Avenue, high-rent apartment buildings and penthouses, art galleries, and the Whitney Museum of American Art. Residents are out walking a variety of pedigreed dogs, and groups of children are returning from private school in their uniforms.
Ronald Rieder, a 66-year-old professor and psychiatrist walking down Madison Avenue, says the markets are on his mind. "I spend a lot of time tracking it; I'm worried about my retirement funds," says Rieder, who is dressed in a beige suit, floral tie, and white sneakers. He says he thinks investment banks exhibited a "lack of foresight" as they created exotic derivatives from shaky mortgages. But unlike many of his uptown neighbors, he doesn't feel angry.
"I'm a psychiatrist— I deal a lot with feelings," Rieder says calmly. "Anger isn't going to help."
A Radical Solution
A few blocks down, Pia Byron, 28, says she's more confused than anything else about the plan. Byron works for a fashion advertising agency and is headed that day to her parents' apartment to celebrate Rosh Hashanah. She says she doesn't blame any one person for the financial mess but points to "systemic problems" that brought us here. Byron says she doesn't know if she supports the bailout, and worries that even if it passes, the current economic structure may not be sustainable. "We need a system geared more around everyone looking after each other," she says. "I wonder if it requires changing the whole foundation to balance the scales in some way. A radical solution could in a way be the most realistic."
Now it's back on the train and on to Grand Central Terminal on East 42nd Street. Walk west several blocks and you reach Times Square, where the ball drops each New Year's Eve and constantly flashing signs and advertisements keep things lit up 24 hours a day. For the past year or so this area has been filled with visitors from Britain, Germany, Italy and Japan taking advantage of the strong mileage of their currencies against a falling dollar. The Brown family from Leeds in Yorkshire is among them. Alison Brown, 51, her husband, son, and his girlfriend have been in town for a week of nonstop shopping.
"You name it, we've shopped there," says Alison, a civil servant for Leeds' unemployment office. In the time the Browns have been in town, Europe has experienced its own banking crisis (BusinessWeek.com, 9/30/08). Alison Brown says she's not happy that "the bankers who got us into this mess can get away with it," but personally doesn't have to worry. "Our government bailed us out" of the crisis, she says, referring to Britain's recent takeover of Bradford & Bingley mortgage bank, as well as Northern Rock back in February. She says she and her family feel secure in Britain, while she's unsure about the average American's fate. "We're not in as much trouble as people are here," she says. "No one knows what the fallout will be [in the U.S.]."
Around the corner, a couple from Atlanta is picking up tickets for the Broadway show Frankenstein. Paul Greenberg and his wife, Audrey, have more at stake in the U.S. government's actions. "Something's got to be done," says Paul, 75. "I don't like the plan, but it's a necessary evil."
Clone of the Bankers
Greenberg says he supports the Paulson plan because he fears a deep recession or depression even more than a government giveaway. He remembers watching as a young boy as his father "struggled desperately" to feed the family during the Great Depression of the 1930s. He also doesn't want to lose the funds he has invested in the market. But that doesn't mean he trusts the bailout's main backers. "I'm a conservative, but I don't trust Mr. Paulson," he says. "He's a clone of the Wall Street bankers."
In Midtown, as in many areas of the city, many people's jobs depend directly on the rich staying rich (BusinessWeek.com, 9/28/08). Julius Gilbert, 59, drives a stretch limousine for Chris Limousine on Staten Island. Waiting for potential clients outside the Renaissance Marriott in Times Square, Gilbert expresses anger about the financial crisis but says he is resigned to the idea that something needs to be done to solve it: "If [the bailout] doesn't pass, what will happen? The rich don't have to worry. But we have to worry."
Gilbert says his income is already down this year, and he knows other drivers have been getting laid off as the finance industry contracts. "Somebody's got to come and balance everyone out," he says, referring to dealmakers in Washington. "If they don't sort it out, it will kill the working person."
Wall Street's financiers, too, are thinking day and night about Washington's next move. Get off the train at the Bowling Green station, and you're in the heart of the financial district at Manhattan's southern tip, home to the New York Stock Exchange. The narrow cobblestone streets begin to grow crowded soon after the market closes at 4 p.m. One popular gathering spot is the Wall Street institution Harry's, a mahogany-appointed bar that has been featured in such novels as Tom Wolfe's The Bonfire of the Vanities and Brett Easton Ellis' American Psycho. For 30 years, Harry's has been a favorite stop for traders to celebrate hefty returns or mourn big losses.
David Henderson, 54, stands at the bar sipping a scotch and chatting with a friend who is a managing director of La Branche Financial Services. Henderson, an independent broker at his own firm, Raven Securities, has strong views on the talks in Washington. He admits that investment banks' excesses caused the current mess but thinks Washington must act quickly to help the markets.
Henderson, like many in finance, refers to Paulson's plan a not as a "bailout" of Wall Street, but rather a "rescue" of the financial system that would benefit everyone. His chief worry is that politicians act quickly and don't attach too many bells and whistles to a bill so that it clears the needed political hurdles. Unlike Greenberg from Atlanta or Moody from Harlem, he has complete faith in the men at the helm of the Treasury Dept. and the Fed.
"We're lucky to have Paulson and Bernanke," Henderson says. "They know what we're dealing with. Some of these lawmakers don't have a clue." He worries about further delays—just a day before, after all, the stock market had plummeted (BusinessWeek.com, 9/29/08), erasing more than $1 trillion in value when the House rejected the plan. But he remains confident that the government will take action and "do the right thing."
They've "got to stop this bloodletting," says Henderson, taking another sip.