Buffalo BEAST - Buffalo's New Best Fiend
 

August 24 - September 7, 2005
Issue #82

  ..Buffalo's Best Fiend
   
Evolution Rock
Jesus or Darwin? An ultimatum
Allan Uthman

Keepin' it Real
Cindy Sheehan, representin'
Shawn Ewald

It's Gettin' Hot in Here
Global Warming: Warming the Globe?
Kit Smith
Large & in Charge
Bob Wilmers, Buffalo's control freak
Donnie Dobovich
People Like You
You people just don't get it

Michael Manville

No Strategy, Just Exit
Fractured left threatens itself

Stan Goff

The Real Greatest Americans
Screw the Discovery Channel
Erich Schulte

The BEAST BLOG
Buffalo in Briefs
The Sports Blotter
The Week in Sports Crime
Page 3
Celebrity Math
Separated at Birth?
Beast-O-Scopes
Kino Korner: Movies
[sic] - Letters
 Cover Page

COMIX:
Idiot Box
Perry Bible Fellowship
Bob the Angry Flower

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Large & in Charge
Bob Wilmers, Buffalo’s Control Freak
By Donnie Dobovich

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.

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