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NYC's de Blasio a foe of Wall Street? Not likely

Friday, 1 Nov 2013 | 12:13 PM ET
Bill de Blasio, New York City Mayoral candidate.
Timothy Clark | AFP | Getty Images
Bill de Blasio, New York City Mayoral candidate.

Many on Wall Street seem scared of the man likely to be their next mayor.

They're worried that the "populist" Bill de Blasio—who has a near 45-point lead over pro-business Republican Joe Lhota going into Tuesday's New York election—will raise their taxes and turn a deaf ear to their concerns.

But some observers say the unease over Democrat de Blasio is more than a bit inflated.

"The fear that he's going to turn against Wall Street is overblown," said Nick Colas, chief strategist at ConvergEx, a brokerage and investment research firm based in NYC.

"You can understand where the fear comes from after having a mayor that's understood Wall Street for years," Colas said, referring to Mayor Michael Bloomberg. "But I put this down to fear of the unknown more than anything else."

De Blasio has ridden an undercurrent of populist anger against some business interests, especially the real estate industry. De Blasio the candidate has harnessed that sentiment by using get-tough language toward Wall Street and talking up higher taxes for the city's wealthiest. But some observers doubt that de Blasio the mayor would really seek to alienate an industry that's critical to the city's economic health.

"De Blasio will do his best to keep his campaign promises, but that doesn't mean it comes at the expense of Wall Street," said Christiana Geer, a professor of American politics at Fordham University. "There are so many ways he can work with Wall Street to keep them happy."

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After 12 years of business-friendly Bloomberg, Wall Streeters like Lloyd Blankfein of Goldman Sachs, and billionaire investor Wilbur Ross are reportedly upset over de Blasio's campaign rhetoric.

De Blasio, currently the city's public advocate, has called for a tax hike on incomes over $500,0000 from 3.876 percent to 4.41 percent, in order to fund local prekindergarten services.

(Read more: The post-Bloomberg era? Socialites express fear)

(The average Wall Street salary is around $367,000 a year with top executive compensation in the multimillions, according to the New York State Comptroller. The nonfinancial average salary in NYC is $69,200)

"Those making $500,000 to $700,000 are the most anti-de Blasio," said Chadrin Dean. a managing partner at executive search firm Sanford Rose Associates. "They enjoyed the years of Bloomberg and are going to highly scrutinize a newcomer, especially one with more liberal ideas."

One issue for Wall Street is De Blasio's support of the Dodd-Frank financial regulatory reforms, which financiers say go too far in curbing investment growth.

De Blasio also came out against the New York Police Department's controversial "stop and frisk'' policy that critics say unfairly targets minorities. It's a longtime anti-crime policy used by police that Bloomberg and some, like Ross, have strenuously defended as making the city safer to live in.

(Read more: In New York, the billionaires have all the fun)

De Blasio's past includes being an activist against U.S. policy in Central America during the 1980s. In 1990, he is said to have described himself as a "democratic socialist."

Liberals often compare de Blasio to the then-presidential candidate Barack Obama in 2008, as part of a leading edge of anti-Wall Street populism.

Mayor 'lacks the power' for tax changes

But turning campaign talk into reality, as most politicians and the public know, would be difficult. The would-be mayor's tax hike, for example, would need approval from state lawmakers in Albany before it could go into effect.

"The mayor of New York simply lacks the power to tax along the expansive lines that the Democratic candidate seeks," said Bill Singer, a lawyer at the securities law firm Herskovits PLLC.

"There is little appetite to raise taxes in a state still recovering from Hurricane Sandy and still in the shadows of the Great Recession," he added.

Wall Street contributed $3.8 billion in taxes to the city in 2012., 27 percent more than in 2011.

"He would need Governor Cuomo to help pass his tax idea," said Fordham's Geer. "He would need the people to put pressure on Cuomo to make this happen. If he frames the argument right, Cuomo might hot have any choice but to try and get the tax raise."

(Read more: Ultra-rich hedge funders to poor: We feel your pain)

So far, fellow Democrat Cuomo has said that he likes the pre-K goal, but not the tax hike.

"Cuomo is unlikely to bite the hand that feeds him," said Aaron Pacitti, professor of economics an Siena College. "He will be soliciting campaign contributions from these exact people for his likely 2016 presidential bid."

Wall Street outreach

De Blasio has reached out to Wall Street. Earlier this month, he addressed financial executives at a luncheon in Midtown Manhattan, saying that "Wall Street is our hometown industry."

He reportedly consults with big time investors, and his wife, Chirlaine McCray, once worked in public relations at Citigroup.

He's also been friendly to real estate. In 2006 as a city councilman, de Blasio supported the massive development in Brooklyn that created the Barclays Sports Center, citing the developer's promise to build nearby low-income housing as part of the project. Only half of those units have been built.

De Blasio is now calling for more affordable housing in New York, something that Bloomberg failed to provide, according to critics.

"If de Blasio wins, we'll see how skilled he is as a politician," said Geer. "New Yorkers will have patience with him as long as he explains why ... he can't do something he promised. They're ready for a change, so they will give him some time."

As for the billionaire de Blasio is expected to replace—Bloomberg took a salary of one dollar a year as mayor—he will be missed by Wall Street, said Carol Roth, a partner at the investment bank Intercap Merchant Partners, and a contributor to CNBC.com

"Bloomberg did a very good job of being a friend to Wall Street and listening to them," she said about the former financial firm CEO and founder of the global financial data and media company, Bloomberg LP.

"There were clear benefits to having him as mayor," she added. "He didn't push Dodd-Frank and didn't make Wall Street the bad guy. He was part of Wall Street. Having a shift from Bloomberg to de Blasio is a concern,"

But making Wall Street happy is never easy, said ConvergEx strategist Colas.

"The only person as mayor that would give them comfort is probably Lloyd Blankfein, but he's not running," Colas said. "The New York economy is about finance and Wall Street. That's not going to change if de Blasio wins."

—By CNBC's Mark Koba. Follow him on Twitter @MarkKobaCNBC.

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