Felix Rohatyn Is Our New Robert Moses

The Unaccountable Elitist

Felix the Fixer has overreached, again.

Last March Felix Rohatyn gave us the first hint that he really wanted to be Robert Moses or Nelson Rockefeller. It was then that he suggested poor neighborhoods be bulldozed and converted into industrial parks, with lower business taxes as an incentive.

“Take a 30-block area,” Rohatyn said, “clear it, blacktop it, and develop an industrial park … Get a few of the best people, focus on the problem, figure a reasonable solution, even if we can only afford to get 60 or 70 per cent of the facts, and move.”

When he was attacked by Congressmen Rangle and Badillo, and gently criticized by the Post and Times, Rohatyn dropped the notion from his public discourse. But according to Rohatyn confidantes, he has never abandoned the idea that the real answer to our fiscal crisis is the reduction of the city’s population of poor people by about a million. This theory of urban triage is popular among the technocrats of the new junta that rules New York.

Last week, the Robert Moses inside Rohatyn surfaced again. Francis X. Clines published a front-page story in the New York Times quoting Rohatyn as sug­gesting that some of the money the city saves from the “stretch out” of MAC’s debt obligations be used to help finance a new convention center.

This required bold, cosmic, Moses-type thinking. Free tuition is dead. The city’s survival, after the federal revolving loans expire in 1978, is in doubt. Forty-nine more day-care centers are closed. More than 4000 cops and sanitation workers are unemployed. Eight fire houses are closed. Two munic­ipal hospitals are closed. And the Democratic National Convention has just successfully been held in the existing Madison Square Gar­den. But Rohatyn wants to spend public money, that doesn’t even exist yet, to build an unnecessary edifice which will benefit a few landlords, a few lawyers, a few city contractors, a few bond underwriters, and a few unions.

Clines’s story contained a quota­tion from Rohatyn that must be the most insensitive sentence uttered this year by a public figure in New York City. Rohatyn was saying the extra money from the MAC “stretch out” should not be used only to rehire fired city workers, or to restore services. “We don’t want to see this money simply thrown away,” Felix the Fixer said.

Beautiful. Unemployment among black teenagers is 40 per cent. There have been 7000 fires so far this year in the South Bronx. In Mott Haven there is a new breed of superrat that is immune to poison, and spreading. Heroin is coming back while we fire undercover narcotics cops. Brownsville looks like Beirut. Mothers are quitting jobs to go on welfare because of the day-care closings. Firemen are having heart attacks working do­uble shifts because of the layoffs. And Rohatyn doesn’t want to waste money on people. He wants to build a pyramid to the ego, another World Trade Center, another World’s Fair, another Albany Mall. And what about the $1 billion in notes which come due in No­vember of 1978? Where will that money come from?

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I called several people whose judgment I respect — because that judgment is both independent and usually takes into account the pub­lic interest — and asked them what they thought of Rohatyn’s idea.

“I can’t believe Rohatyn is serious,” said Richard Lewisohn, the city’s former finance administrator and a member of the Urban Development Corporation. “It’s in such poor taste to propose a con­vention center at this time, when we are still in real danger of bankruptcy, when we still have to worry about meeting the next payroll. It will take five years to build. It won’t generate revenue until a few years after that. And the Democratic convention proved we do all right with what we have … When you’re broke, you just don’t do something like this. It’s not a responsible priority.”

I next spoke to Manhattan Coun­cilman-at-Large Henry Stern of the Liberal party. “It’s a terrible idea. The problem is Rohatyn has no interest in the delivery of ser­vices to people. He doesn’t use city services himself. He is a rich man who lives in a hotel. He doesn’t use schools, or day care, or sanitation.”

Donna Shalala, the most sensi­tive member of the MAC board of directors, said: “All I know is that Felix was talking for himself. He never even discussed the conven­tion center with the MAC board at a meeting.”

Next I talked to Theodore Kheel, lawyer, labor mediator, and mass transit expert. He said: “I am in favor of the ‘stretch out’ of the debt, but I don’t think the savings should be used for either a convention center or for cost-of-living increases for the municipal unions. I don’t think the city should be using its funds for a private project like the convention center. For the city to get into another Yankee Stadium deal would be catastro­phic … A convention center at the Hudson River site would cost $400 million, including debt ser­vice, probably a little less at [Don­ald] Trump’s 34th Street site. We don’t have that money.”

Councilman Robert Wagner, Jr., told me: “It’s a very bad idea … Rohatyn’s problem is that he thinks the entire city gov­ernment only consists of the banks and the municipal unions, and he is the only broker between them. Rohatyn’s concept of government doesn’t include neighborhoods, elected officials, non-municipal unions, fired city employees, or poor people.”

Bronx Borough President Robert Abrams observed: “To take money from a ‘stretch out’ and use it for a questionable project like the convention center is bizarre. The developers have never been able to make a convincing case that the convention center de­served the incredibly high priority it has been given … The convention center has become an icon for the real estate industry and other power brokers. I can show Mr. Rohatyn a thousand places in the Bronx where the money can be better spent.”

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Felix Rohatyn has become a potentially dangerous man. He has accumulated immense unaccountable power. A possibly idle Rohatyn remark becomes a front-page story in the Times. And is interpreted as law by the toadying pals who follow him. He is now chairman of MAC, and last week he was added to the Emergency Financial Control Board, replacing Albert Casey. William Ellinghaus, the previous chairman of MAC, quit that post when he was appointed to the EFCB, because he said he could not perform simultaneously in both jobs. And critics said there was an inherent conflict between the fiduciary responsibilities of the MAC job, and the political and economic role of the EFCB. (Councilman Wagner says Roha­tyn has “a clear conflict of interest holding the two jobs.”)

In addition to now wearing these two hats, Rohatyn remains a se­nior partner in the global invest­ment banking company of Lazard Freres, and continues as a director of five corporations, including the infamous ITT (400,000 employees, $12 billion in annual business) and Engelhard Minerals, which owns many of the diamond mines in South Africa.

Moreover, Rohatyn has decisive influence with Governor Carey, and excessive legitimacy and credibility with publishers, editors and reporters at the three daily newspapers. Josh Friedman of the Post is a noble exception. So is Jim Brown of the Times editorial board. The love affair between Rohatyn and the Times is another parallel with Robert Moses.

Despite all this power, which he derives without the consent of the governed, Rohatyn so far has avoided taking the small, demo­cratic step of making a full finan­cial disclosure to the public.

Four months ago the Board of Public Disclosure ruled that members of MAC and the EFCB had to disclose the “nature and source” of all their assets, invest­ments, and liabilities, although not the exact dollar amounts.

Donna Shalala, William Elling­haus, David Margolis, and Thomas Flynn complied immediately. But Rohatyn, Herbert Elish, and sev­eral others requested a formal exemption from the disclosure re­quirement. (Rohatyn gave as a reason his fear that his children would be vulnerable to kidnapping if his wealth were disclosed.)

On July 2, the Board of Public Disclosure met and rejected Rohatyn’s application for an exemption, and gave him until July 30 to say whether he will disclose. If the answer is yes, then Rohatyn will have until August 15 to actually submit a statement of his assets.

This is not an academic exercise. As the truly brilliant merger master of Lazard, Rohatyn married Kinney to Warner Brothers; Lockheed to Textron; Loews Theatres to the Lorillard Corporation; Gulf & Western to Kayser-Roth; ITT to Hartford Fire Insurance Company — the last of which earned Lazard $6 million in fees and commissions.

Is it possible that Rohatyn owns substantial stock not only in scandal-tainted conglomerates like ITT and Lockheed, but also in companies that do business with MAC or the city? For some reason, he has delayed full disclosure since March. Is he trying to hide something? By July 30, unless he swings an exemption, or another delay, we should know.

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Felix Rohatyn has many attrac­tive qualities. He is a narrow ge­nius, at making mergers and sell­ing bonds. He has a wonderful mordant wit. For a banker, he lives a modest and slightly bohe­mian life. Unlike most bankers, he is a Democrat. He is personally dedicated and hard working. He was a hero, as a teenager, in the European resistance against the Nazis. He played a valuable role several years ago fighting the Arab boycott of Jewish firms.

But he is still a danger. He has too much unaccountable power. He doesn’t understand the city. He has no sense of neighborhood. Since he is not elected, he is not required to mingle with ordinary people, to see the casualties of his ideas.

His notion of blacktopping whole communities might have been forgotten as an aberration. But this new idea of building a convention center, instead of restoring free tuition, or hiring back cops and firemen, or reopening day-care centers, convinces me that Roha­tyn could be the most dangerous citizen of all. He is an elitist with invisible power, who doesn’t know what he doesn’t know.

Rohatyn’s Point of View

In an interview with me, Ro­hatyn offered the following ex­pansion of his thinking on his convention center idea:

“I am not an expert on con­vention centers. I don’t know where it should be located. I feel strongly no one should make a windfall profit on the building of a center. The only judgment I have is that it should be built, because we must de­feat the psychology that the city is dying.

“With the loss of manufactur­ing jobs, New York will have to become a center of tourism. A convention center would be a factor in improving tourism. Also, there will be little construction activity in the near future. I think construction activity is desirable.

“In terms of public money, all I am suggesting is taking perhaps $15 million a year, if we can restructure the debt, and using this $15 million to create a revenue stream that would per­mit some authority. to sell the bonds.”

A new convention center would cost at least $200 million for construction plus another . $200 million in interest on the debt to the banks.

— .J.N.