New York Governor Andrew Cuomo announced at a press conference on Monday, March 23 that he was charging his former high-level aides William Mulrow and Steven M. Cohen with rebuilding New York’s economy in the wake of the coronavirus outbreak. Cuomo’s former aides have deep ties to Wall Street: Mulrow is a senior advisory director at the private equity giant Blackstone Group and Cohen is chief administrative officer of MacAndrews & Forbes, the conglomerate owned by billionaire Cuomo donor Ronald Perelman.
Mulrow’s specific conflicts of interest raise grave concerns that New York’s recovery efforts could abet Wall Street profiteering as the state’s millions of working class people suffer. In addition to his position at Blackstone, Mulrow holds lucrative board seats at a major gas and electric utility, a real estate developer, and a mining company, all of which create tremendous conflicts of interest with a just recovery.
Putting Wall Street insiders in charge of New York’s economic recovery raises concerns that the state’s response to the global economic collapse precipitated by the coronavirus pandemic will prioritize the profits of billionaire investors and further entrench New York’s deep economic inequality.
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Despite positive news coverage for his coherent press conferences during the outbreak, Cuomo’s response to the crisis has already drawn forceful criticism over his proposed cuts to Medicaid, his refusal to freeze rent and utility payments during the outbreak despite halting mortgage payments, and his insistence on including bail reform rollbacks in a fast-tracked state budget at a time when jails and prisons threaten to become hot spots of contagion.
Mulrow, Cuomo and the Corporations
William Mulrow is a senior advisory director at Blackstone Group, a massive private equity firm with $571 billion in assets under management controlled by billionaire Trump donor Stephen Schwarzman. Mulrow has also been a close advisor to Cuomo for years, moving back and forth between positions at Blackstone and roles in Cuomo’s administration and political campaigns over the past several years.
Most recently, Mulrow served as chairman of Cuomo’s 2018 re-election campaign while working at Blackstone. Before that, Mulrow served as Cuomo’s secretary, the top aide in the governor’s office. Cuomo appointed Mulrow to the Special Commission on Judicial Compensation in 2011 and in 2012, he named Mulrow as chair of the New York State Housing Finance Agency. Mulrow also worked on the re-election campaigns of former Governor Mario Cuomo, Andrew Cuomo’s father, in the 1990s.
In 2014, before Mulrow temporarily left Blackstone to be Cuomo’s secretary, he reported between $1.15 million and $1.25 million in compensation from the firm. Though he gave up his Blackstone pay while employed by the state government, Mulrow disclosed between $1.75 million and $2 million in investments with Blackstone in 2015.
Mulrow is also a member of several boards of directors, including Consolidated Edison, a private gas and electric utility that serves the New York City region, Titan Mining, a mineral extraction company that operates a zinc mine in Northern New York State, and JBG Smith, a real estate investment firm in the Washington, DC metro area.
Mulrow’s corporate positions create numerous conflicts of interest that make his selection to plan New York’s economic recovery alarming. The most significant of these is Blackstone Group’s history of profiteering from other economic crises to enrich investors at the expense of working people.
Blackstone Profits From Foreclosures
A comprehensive account of Blackstone’s business practices that raise concerns about putting Mulrow in charge of New York’s economic recovery is beyond the scope of this article. However, the few examples detailed below paint a picture of a corporation where private profit is elevated above human dignity and all other concerns.
Blackstone has become notorious in recent years for capitalizing on the foreclosure crisis that emerged after the collapse of the subprime mortgage market. Blackstone and other private equity firms bought up tens of thousands of homes that had been foreclosed-upon by lenders and converted them into rental properties. After a series of mergers in the single-family rental business, Blackstone’s company Invitation Homes emerged as the biggest landlord in the United States, with a portfolio of 82,500 homes, according to a recent New York Times story.
As Blackstone and other Wall Street landlords accumulated rental properties, they applied rapacious private equity logic to the business of housing thousands of people. Blackstone created new rental-income backed financial instruments to finance its buying spree. Tenants of Blackstone-owned homes have found that the company skimped on maintenance and upkeep of its homes and shifted the cost to tenants, resulting in infestations and plumbing issues. A 2018 report by Alliance of Californians for Community Empowerment (ACCE), Americans for Financial Reform (AFR), and Public Advocates found that Blackstone and other Wall Street landlords engaged in rapid rent hikes, stacking predatory fees, and aggressive eviction practices in pursuit of profit.
Over the course of 2019, Blackstone sold its stake in Invitation Homes, bringing in $7 billion. The firm sold its last shares of Invitation Homes in November 2019, wrapping up its foreclosure crisis profiteering just as the first cases of coronavirus infection were emerging in China.
Other areas of Blackstone’s business raise questions about what a Blackstone-led economic recovery in New York State would look like.
Blackstone is a 49% owner of the Starrett-Lehigh building in Manhattan, along with RXR Realty, whose CEO Scott Rechler has given, along with his immediate family, more than $631,000 to Cuomo’s campaigns. As we wrote in our 2018 report “Selling Out New York’s Immigrants,” the Starrett-Lehigh building is home to field offices for Immigration and Customs Enforcement (ICE)’s Homeland Security Investigations division. According to the General Service Administration January 2020 lease inventory, RXR and Blackstone will earn $15.3 million in rent from the federal government this year for office and parking space in the building.
Blackstone also owns two decommissioned coal plants in upstate New York – the Cayuga Generating Station in the Finger Lakes and the Somerset Generating Station in Lockport, near Buffalo – that are seeking subsidies to convert the facilities into data centers. Though hailed by environmental activists who opposed an earlier proposal to cover the Cayuga plant into a fracked gas-powered plant, evidence suggests that spending public money to subsidize privately-owned data centers (which themselves are major consumers of electric power) is a better deal for the corporate owners than it is for communities.
Mulrow’s Board Positions Raise Conflicts of Interest
Mulrow’s position on the Consolidated Edison board of directors presents another significant conflict of interest with rebuilding the state economy. With millions of people out of work due to the pandemic and unable to pay their bills, community advocates and some politicians have called for a moratorium on utility payments and debt forgiveness in order to keep families from losing access to heating and power after the immediate public health threat from the coronavirus is resolved. Italy and France have already implemented such measures.
While Cuomo has ordered utilities not to shut off service to clients who have suffered financial hardship from the pandemic, charges for service will still accumulate over the period of the shut-off moratorium, possibly saddling households with insurmountable debt after the moratorium is lifted.
Consolidated Edison reported $11.7 billion in revenue from its utility businesses in 2019, which would take a major blow if a moratorium on utility payments were enacted. Mulrow – who sits on the Con Ed board’s Finance; Management Development and Compensation; and Safety, Environment, Operations and Sustainability committees – has earned $357,353 from the company since 2017. Mulrow’s 4,637 shares of stock which were worth $407,592 on March 6, before the stock market started crashing due to the pandemic and concurrent oil price war.
Mulrow also sits on the board of directors of JBG Smith, a real estate investment firm in the Washington, DC metro area whose parent company benefited significantly from Cuomo’s government and which profited directly from Amazon’s decision to locate a second corporate headquarters in northern Virginia. JBG Smith was spun out of Vornado Realty, a major New York real estate firm, in 2017, and remains closely tied to it. Vornado CEO Steven Roth is currently chair of the JBG Smith board and Vornado controls half of the company’s board seats. Mulrow is a “Vornado Board Designee,” according to regulatory documents.
Mulrow’s appointment to the JBG Smith board occurred under suspicious circumstances and timing.
In September 2016, Cuomo announced the selection of a team led by Vornado Realty to re-develop the Farley Post Office building at Penn Station and thanked Mulrow, his secretary at the time, for being part of the “tremendous team” that put the $1.6 billion deal together.
Following the selection of the Vornado team, the deal continued to be negotiated through 2017. Coincidentally, Empire State Development approved the commercial transaction with the developer on April 17, 2017, the same day that Cuomo announced that Mulrow was leaving the administration “for the private sector” and to chair his re-election campaign. Cuomo named Roth to a Penn Station task force the next month, in May 2017.
The Farley deal finally closed in June 2017 – one week after Mulrow was first named as a “Vornado Board Designee” to the JBG Smith board of directors.
The Penn Station project is of vital importance to Vornado’s business strategy. Vornado is the dominant real estate owner in the Penn Station area, with nine million square feet in holdings. Steven Roth has repeatedly referred to Penn Plaza, the complex surrounding Penn Station, as the “big kahuna” of Vornado, and has described his company as the “early mover” there. In 2016, he told Wall Street analysts that “we welcome Governor Cuomo’s spotlight on Penn Station and the Penn Plaza district.”
Vornado has since consolidated control over the project, and owns 95% of the joint venture. The $1.6 billion project includes $970 million in public subsidies from Empire State Development, the Port Authority, the MTA, Amtrak, and the federal government. Even more, Vornado has entered into a 99-year lease on the building and will control retail and office space.
Vornado CEO Steven Roth, his wife Daryl, and his son Jordan are also top donors to Cuomo, having given $459,000 over the course of his political career. $95,000 of this came on December 1, 2016, just months after Cuomo named Vornado as one of the firms to develop the new rail facility (at that point, Mulrow still worked for Cuomo). Steven and Daryl Roth gave the maximum legal contribution, $65,000 each, to his re-election campaign, and Jordan and Daryl produced a Broadway gala fundraiser for him in June 2018.
Mulrow’s appointment to the JBG Smith board of directors by Vornado has been quite lucrative.
JBG Smith is the top corporate beneficiary of the Amazon HQ2 deal in northern Virginia as a result of its holdings in Crystal City and Pentagon City. Its properties were central to northern Virginia’s Amazon bid, and it officially closed on a series of lucrative lease and sale transactions with the company in April 2019. Additionally, it recently told investors that it controls 71% of the office market in what it refers to as “National Landing,” the Pentagon City/Crystal City/Amazon area (the new name was part of the attempt to land HQ2). Properties that were previously considered a burden on the company – which is also the federal government’s biggest landlord in the Washington, DC area – all of a sudden became much more valuable.
Mulrow’s 12,071 shares of JBG Smith stock were worth a total of $459,422 at the stock market’s close on March 6 before the crash.
Finally, Mulrow sits on the board of directors of an obscure Canadian mining company called Titan Mining, which has benefited from significant subsidies and regulatory approvals from New York State and the Cuomo administration.
In June 2018, Cuomo announced the opening of Titan Mining’s Empire State Mines in apress release, championing it as an example of job creation and economic development. New York provided several forms of subsidy to the project, including the allocation of low-cost power through the New York Power Authority (NYPA), $330,000 for a job training program, and a $500,000 loan from NYPA through the North Country Economic Development Fund. The New York Power Authority also produced a video championing the mine opening, in which Titan Mining executives thank Governor Cuomo and the New York Power Authority for their support.
Mulrow joined the board of Titan Mining in October 2018; however, prior to that he had been on the board of a related firm called Arizona Mining from June 2017 until it was bought out in June 2018. Another Arizona Mining director, former House of Representatives Speaker John Boehner, came along with Mulrow to the Titan Mining board, and former New York State Governor George Pataki is also a board member.
The coronavirus pandemic has laid bare the failures of the governing ethos of running society like a business, prioritizing the maximization of profit over the collective provision for human needs. New York Governor Andrew Cuomo’s selection of William Mulrow to steer New York’s economic recovery suggests that he is approaching the pandemic with the same logic as the Buffalo Billion and other upstate economic development schemes. This approach has seen billions of public dollars spent subsidizing private industry and real estate development, fostered corruption reaching all the way up to Cuomo’s inner circle, and ultimately provided only dubious benefit for the communities it was meant to help.
Cuomo has the opportunity to reshape New York’s economy in way that honors and values all state residents by taxing the wealthiest people and companies to rebuild a robust social safety net. It is deeply disquieting that the governor is signaling that his recovery effort will follow the same corporate playbook that has made the outbreak so devastating for the United States and New York in particular.