New York City comptroller candidate Alan G. Hevesi yesterday called on incumbent Elizabeth Holtzman and fellow candidate Herman Badillo to limit campaign contributions from Wall Street firms hired to underwrite city bonds.
Hevesi, a state assemblyman from Queens, made the announcement at City Hall only a day after Badillo criticized Holtzman for falling to address the city's budget problems and her failure to develop an alternative to Mayor David N. Dinkins' plan to close a $2.1 billion budget gap.
Many fiscal monitors, including Holtzman, say the Dinkins plan relies too heavily on one-shots and government aid that will not materialize.
In letters to both Holtzman and Badillo, Hevesi asked them to "refuse to accept more than a total of $10,000 from the partners, employees, relatives of partners and employees, [political action committees] and corporate entities affiliated with any single member of the city's" bond syndicate and bond-underwriting legal staff.
Hevesi said during a press conference that he will probably abide by the limit even if Holtzman and Badillo refuse. A source in the Hevesi campaign said Hevesi fears that if he commits to the limit "he will remove pressure to get them to do it. "
Holtzman, through a campaign spokesman, said in a statement: "In an ideal world, we would have 100% public financing for elections and I heartily endorse that idea. But there are campaign finance limits on the books, and we strenuously abide by those limits."
Holtzman has applied for public matching funds through the New York City Campaign Finance Board, which limits contributions to $6,500 for each individual and $5,000 for each firm.
Ken Frydman, a spokesman for Badillo, said Badillo "has just received the [campaign financing] proposal and he's studying it. We feel that this is aimed at Elizabeth Holtzman."
Both Hevesi and Holtzman are seeking contributions from firms that underwrite city bond business. It is unclear how much money Badillo has raised or will raise from these firms.
Speaking last week at a municipal finance conference sponsored by Empire State Report, Holtzman said she would be opposed to a ban on campaign contributions from underwriters of city debt. "To imply ... that the [underwriter selection] process is corrupt does the process a great disservice and the public a disservice," she said.
Holtzman and officials representing Mayor David N. Dinkins maintain that selections to the city underwriting team, one of the most lucrative underwriting slots in the nation, are based solely on a firm's ability to sell city debt and develop innovative financing techniques.
During the press conference, Hevesi, who will face Holtzman and Badillo in the Democratic primary for comptroller this summer, said he also sent the letter to all seven senior managers in the city's bond syndicate and the city's 22 co-managers, asking them to comply with the limit. He added that Dinkins should also place a $10,000 limit on campaign contributions.
A spokeswoman for the Dinkins' campaign said the mayor will continue to abide by the rule in the city's campaign finance laws that limits the size of individual donations but does not limit the amount of money individual firm members can contribute.
Heather L. Ruth, president of the Public Securities Association, a lobby group representing municipal bond underwriters, said several firms in the industry do not contribute money to candidates with power to select underwriters.
Ruth said the association cannot adopt a rule forcing its members to limit contributions for fear that it would violate anti-trust laws. She said voluntary limits could place some firms at a disadvantage when seeking bond business.
New York City, the municipal market's largest issuer, sells most of its debt through negotiations with underwriters. Once a year, it must renew its authority to sell the debt through negotiated bid by obtaining state legislative approval.
Hevesi said he will soon introduce state legislation to require competitive bidding "to the greatest extent possible" on city general obligation bond sales.
Hevesi said the campaign financing limits and the competitive legislation are designed to end "conflicts of interest" or "appearances of conflicts of interest" that emerge after bond firms, which contribute to political campaigns of public officials, are awarded lucrative bond underwriting contracts.
Holtzman is under investigation for naming Fleet Securities as a co-manager in its bond syndicate after the firm's affiliate bank made a $450,000 loan to her failed U.S. Senate campaign.
Last month, Holtzman's office confirmed that she personally asked several city bond underwriters to raise specific sums of money for her comptroller campaign.
At the time, campaign officials denied that Holtzman had asked for specific sums of money from bond underwriters, while confirming that she had contacted members of Wall Street firms to contribute to her campaign.