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The Fresh Prince of Jersey City
Originally appeared in Worth Magazine, September 93.
By Suzanne Costas
It is a picture-perfect morning on the banks of
the Hudson River,
a tableau of civic hope and pride -- blue sky, no
clouds, just a
couple of days shy of the Fourth of July, the
Statue of Liberty off
in the middle distance. The audience is studded
with police
cadets and firemen in dress uniforms. Flags fly,
and at the center
of it all an earnest young man stands at a podium
and talks about
his plans for changing society.
The only thing wrong with this picture is what
lies beyond it. Past
the Boy Scouts and the children's choir is Jersey
City, New
Jersey, a blighted metropolis of 230,000 just
across the river
from the gleaming towers of Wall Street. Were one
cataloging
the social ills that plague America, Jersey City
might be a good
place to start. Were one a 34-year-old Harvard
graduate with
heavy Republican connections, burning political
ambitions, and
Ken-doll looks, Jersey City would be a good place
to run away
from.
And yet here is Bret Schundler, just starting what
many think
may be a long political career, the first GOP
mayor of Jersey
City since the Democratic machine first gained a
foothold 75
years ago, addressing a jubilant inaugural crowd.
No, it's not an
exalted office, but this is, after all, an age of
symbols, and
Schundler is as compelling a symbol for "change"
as anyone out
there in the political firmament. The editorial
page of the Wall
Street Journal has all but predicted that one day
he'll be
president. (Then again, one of the paper's
editorial writers, John
Fund, lives in Jersey City and is a good friend of
Schundler's.)
Schundler is a millionaire Republican who
renounces greed, a
deeply religious man with an expansive social
vision, a
conservative intellectual trying to reach across
class, racial, and
party bounds. But most significantly, perhaps, he
is a politician
who understands finance. And that is something
Jersey City's
poor, largely minority voters responded to: The
centerpiece of
Schundler's campaign was an innovative plan to
lower property
taxes by bundling liens and selling them to
institutional investors.
Accordingly, bigfoot pols from across the
political spectrum
stand behind Schundler on the podium on this day,
hoping to
soak up a little of the rookie glow. Former HUD
chief and
perpetual conservative-in-waiting Jack Kemp gets
things going
with an effusive keynote address. Both New
Jersey's
unapologetically liberal Democratic governor, Jim
Florio, and
Christine Todd Whitman, Florio's Republican
opponent this fall,
face each other on opposite sides of the podium.
"History is being made here," Schundler begins,
with the
ingrained earnestness of a strict Presbyterian who
was
"evangelicalized," as a teenager. "In this 'city
of nations,' we have
united our people across lines of ethnicity,
class, and religion,
and even across the great divide of party"
The sun is brutal.
"People don't dream partisan dreams, they dream
human
dreams. You are tired of crime and drugs ruling
the streets. Your
spirits are weighed down by litter and graffiti.
You've had enough
of loud radios and car horns piercing the night
"You want jobs, not welfare. You believe that
those who receive
governmental assistance should be required to work
in exchange
for support"
People are holding their programs over their
heads.
"Entitlement thinking led our cultural elites to
expound on the Age
of Aquarius, sanctioning the sexual revolution and
experimentation with drugs, while de-emphasizing
respect for
law and established values How can we determine
what our
basic values should be? The wise psychologist
Abraham Maslow
said if you want to know what leads to
self-actualization, study
self-actualized people."
By the time eight clergymen representing different
faiths have
blessed Jersey City and its mayor, the audience,
which has
dwindled to a hardy, wilting few, can barely stand
through a
chorus of "God Bless America." As people run for
their
air-conditioned cars, Schundler, who has kept his
jacket on,
smiles and waves.
When Bret Schundler moved to Jersey City eight
years ago, he
wasn't thinking in terms of saving the city; he
wasn't even a
Republican yet. After graduating from Harvard in
1981, he
considered going into the ministry but instead
applied his idealism
to a more perishable mission, bouncing around the
country as a
campaign coordinator for Gary Hart's first
presidential run.
Along the way, he met his future wife, Lynn
Greenfield, a law
student from Seton Hall University, and by the
time the campaign
fizzled, he was $8,000 in debt.
So Schundler took a job in the municipal finance
department at
Salomon Brothers and moved to Jersey City, where
the cost of
living was low and the commute to Wall Street was
easy.
Salomon, the epicenter of Wall Street greed, was a
long way
from the seminary. But rather than acknowledge any
of the
apparent contradictions, Schundler spits out a
five-point
rationalization for Wall Street. "First, I needed
money. Second, I
wanted to be in a business where I needed to know
what was
going on in the world. Third, I wanted to use my
salesmanship, a
skill I'd learned working for the Hart campaign.
Fourth, I wanted
to work with sharp people. Fifth, I wanted an
entrepreneurial
environment."
Rudeness was a fact of life at Salomon, but
Schundler didn't
mind. In fact, he was kind of turned on by the
atmosphere. It
may have been brutal, but it was egalitarian. "I
thought it was the
quintessential American firm," Schundler says. "It
didn't matter if
anyone liked you or what your surface
characteristics were.
What mattered was your value to the bottom line."
By 1987, Schundler was bored with the fixed-income
business
and decided to move on to something a little
sexier. He took a
job at C.J. Lawrence, an economic-research firm.
As the new
kid, he was stuck with the dregs accounts. His
territory was
New England, but it didn't include Boston.
"I can't think of one decent account the poor guy
covered the
whole time he was here," says Ed Sonderling, one
of Schundler's
former colleagues at Lawrence.
The trading day ended at 4 p.m., and most traders
were out the
door by 5:00. "Nine times out of ten, Bret was
still at his desk
long after the other salesmen went home," recalls
an equity
analyst who worked with Schundler. Under his own
initiative,
Schundler spent these long hours analyzing the
savings and loan
crisis. He saw that big money was to be made
cleaning up the
debacle by investing in the thrift disaster's
biggest beneficiary, the
Federal National Mortgage Association. He started
buying
Fannie Mae warrants after the '87 crash with an
exercise price of
$7 per share.
"I've never seen a guy who acted on his
convictions like Bret
did," says Sonderling. "He put every dime he had
into Fannie
Mae, and then he leveraged it. It was like putting
200 percent of
your eggs in one basket."
His boss and colleagues thought he was nuts.
Fannie Mae was a
complicated company that few took time to
understand, but
Schundler had it all figured out. By 1989, it was
one of the
top-performing stocks on the Big Board. In
February of 1991,
when Schundler converted his warrants into stock
worth $30 a
share, he was $4 million richer.
"It was time for a change," Schundler says,
picking up the story
in the living room of his comfortable, though
hardly opulent,
brownstone in Jersey City's historic Van Vorst
district. "As much
as I liked my job, I felt it wasn't what I was
called to do. I
wanted the freedom to do something that didn't pay
a lot of
money. My goal was liberation." Even though it is
early evening,
Schundler's tie is still tightly knotted. Neither
he nor his wife
drink anything, though their guest is offered a
solitary glass of
apple juice.
Once he had enough money to live like he didn't
have a lot, he
took what amounted to a rich man's vow of poverty:
he invested
most of the money in stocks and mutual funds and
put the rest in
the bank. He spurned the traditional accoutrements
of
wealth__the palatial suburban home, golf on the
weekends, the
fancy car. "Our commercial culture requires all of
that stuff,
because that's how you sell things," he says,
hardly the creed of
the Reagan-Bush Republicans.
In the time that Schundler started amassing his
fortune, he also
started leaning to the right. He'd become involved
with some
neighborhood organizations soon after moving to
Jersey City and
in 1988 helped co-found the Coalition for Fair
Taxation, a group
that opposed a tax re-evaluation done under
then-mayor
Anthony Cucci, a Democrat. After Michael Dukakis
won the
Democratic nomination in 1988, Schundler switched
parties. The
Democrats, he reasoned, had entered into an unholy
alliance with
Hollywood, Hyannis, and the unions. The GOP was
the party
looking out for "the bourgeois middle class."
In 1989 Schundler left C.J. Lawrence, and he and
Lynn
embarked on a round-the-world trip. It was not a
vacation; it
was more like an exploratory mission. "He went to
places most
people don't go to, China, Bangladesh," recalls
Jack Murphy, a
vice- president of sales at C.J. Lawrence. "I
think he found God
on the trip."
Not surprisingly for a man who experienced his
religious
conversion when he was hardly out of puberty,
there were no
dramatic Saul-on-the-road-to-Damascus moments. To
hear him
talk about it, he could have spent those ten
months staying up
late poring over back issues of the Economist.
"I'd go to a place
like Thailand," Schundler says. "Not very
industrialized until
recently, you know, though they do allow foreign
investment.
There is tremendous economic development there.
But in India,
which has a tremendous educational system, the
economy is
hurting due to protectionism. That led me to
believe that policies
that don't allow people to do things are
destructive. Why is
Jersey City so poor? Because the Democratic
machine didn't
bequeath prosperity."
By the time Schundler returned from the trip he
had made up his
mind: He would leave Wall Street and go into
politics. In 1991,
he mounted an unsuccessful bid for the New Jersey
state senate,
spending $150,000 in the process.
At his old firm, no one was surprised that their
intense,
opinionated colleague was seeking a broader
platform. "We had
a lot of political discussions," says Sonderling.
"He'd weave these
rather elaborate political theories and
philosophies into almost
any conversation. Most of us couldn't understand
half of what he
said. He's very persuasive, because he doesn't
stop. You either
end up agreeing with him or you faint."
Bret Schundler's missionary zeal may have gotten
him into
politics, but he got to the Jersey City mayor's
office through the
back door. His predecessor, Gerald McCann, was
convicted of
bank fraud, mail fraud, and tax evasion and is now
in jail. The
reeling machine couldn't produce a credible
candidate. Schundler
snuck into office in a special election last
November, one of two
Republicans on a ballot crowded with 17
featureless Democrats.
Six months later, in May, he handily won a
four-year term
against a weak, disorganized Democratic ticket.
About a week before the inaugural ceremonies, he
is sitting
behind the big desk in the mayor's office,
ostensibly talking about
his plans for Jersey City. But even a simple
conversation with
Schundler can turn into a rambling soliloquy. Here
is a typical
Schundler soundbite: "I think society is an
anthropomorphized
world, to use a Marxian term. It is something we
have largely
constructed. Using reductionist theory, there are
some basic
principles that drive everything else. Everything
becomes
epiphenomenal. We have gone astray in some severe
ways in
this country, and it is causing great suffering
and pain. And even
the most well-intentioned are making things worse,
because they
have fundamentally missed the boat with regard to
the nature of
human beings."
He is just warming up.
"The Democrats' fundamental thesis that the
elimination of
deprivation through entitlement programs would
bring about the
millennium was wrong. And the Republicans who
refused to pay
for anything failed to accept the fact that we are
social beings.
Do you know the story of the Buddha?"
Uh-oh.
"The Buddha was born the son of a wealthy king,
and a seer told
the king that your son will be the greatest
political leader that
ever lived, if you don't allow him to see
sickness, suffering, and
death. If he sees those things, he'll be moved by
those things and
become a great religious leader. The king tried to
isolate his son
from all those things. But the Buddha went walking
one day and
saw a sick person. Then one day he walked out and
saw
poverty. And one day he saw a dead person. He left
the palace
and became the Buddha."
Schundler is on auto-pilot, seemingly unaware that
he is talking
at, not with, someone.
"Ronald Reagan, I would argue, was a reaction to
the
Democratic thesis. His whole thesis was that
government was
bad; get rid of it. But there are people born ten
yards behind the
starting line."
Schundler wasn't one of them, which may help
explain what has
brought him to gritty Jersey City. In Victorian
England they had a
phrase for it: the white man's burden. "When I
think about my
upbringing, I think about my father talking about
our being
responsible to make the world a better place," he
says "God
gave me a heaven first, and now I owe him one. "
He was raised in the quiet suburb of Westfield,
New Jersey, the
youngest of nine children. His father operated a
plant nursery,
now run by five of his siblings. His mother was a
refugee from
Nazi Germany. It was a very serious household. At
dinner the
family might discuss such topics as the Khmer
Rouge's routing of
the Cambodian middle class. As a teenager, while
his peers ran
around drinking beer and smoking pot, he kept to
the straight
and narrow. "My father always challenged us," he
says. "'What
should you do to make the street clean? What
should we do to
provide for the poor?' He suggested very strongly
that it was our
responsibility to accept these challenges. When I
was at
Harvard, I remember feeling that that was a
burden. But I
couldn't shake the fact that these problems were
my
responsibility. I almost wished that I didn't have
a father who
brought me up with that sense of responsibility,
because it was
so burdensome."
Understandably, Schundler's intimacy with
philosophy, scripture,
Buddhism, and finance made Jersey City's
Democratic
opposition nervous. During the campaign the
Democrats railed
against Schundler's Harvard education, but that
only made them
look like they thought Jersey City deserved less.
They attacked
his financial background, characterizing the plan
to bundle tax
liens as a "scheme" cooked up by a "Wall Street
shark." They
brought Jesse Jackson to town so he could imply
that Schundler
was a racist because his family's nursery sells a
fertilizer imported
from South Africa.
For his part, Schundler just charged ahead and did
what he does
best: talk. During the campaign he pushed school
vouchers and
property-tax cuts. He noted that although the city
spends $9,200
on each pupil, a majority do not graduate, and he
vowed to take
on the teachers' union. He said he'd try to reduce
taxes by 33
percent over his four-year term.
The linchpin of Schundler's economic plan was the
tax lien sale.
The scheme was actually quite simple. More than 20
percent of
the city's property owners didn't bother to pay
their taxes, and
with a $40 million budget deficit, Jersey City
lacked the
wherewithal to go after these tax cheats.
Crediting his experience
at Salomon Brothers, Schundler proposed that the
city deal with
these IOU's the same way Wall Street would: sell
them.
He suggested bundling the liens on the most
attractive properties
and peddling them at a discount to an
institutional investor as a
collateralized security. The investor, he
reasoned, would throw
more resources toward a tax collection effort than
the city could
afford to. The city would make 57 cents on the
dollar, a $25.5
million windfall to its $290 million budget.
There was only one problem with the plan. It was
illegal to
collect tax liens for less than 100 percent of
their cash value. So
Schundler used his first six months in office, the
time between the
special election in November and the real one in
May, to get the
law changed. It didn't hurt that the senate
president, Donald
DiFrancesco, was not only a Republican but was
also a good
friend of Schundler's; he had even employed Lynn
Schundler in
his law office.
The First Boston Corporation, initially the
adviser to the city on
the sale, was the sole bidder on the package of
2,900 liens
attached to commercial, industrial, and
residential properties.
(Neither the company nor the mayor would
characterize it as
such, but essentially it was a backroom deal.) In
July, a trust
established by First Boston paid $25.5 million in
cash and put up
the remainder of the $45 million purchase price in
the form of a
promissory note. The city expects to begin
receiving payment on
the note between 1996 and 1998. Between now and
then, it
should receive net interest totaling $6 million.
Fred Terrell, managing director at First Boston,
says the
company is starting to get calls from other
municipalities. Alas,
things aren't likely to go as smoothly next time
around. "The
number of mayors who can talk about interest
rates, the yield
curve, and capital markets in this country is
small," says Terrell.
"You can count 'em on your hand. Bret talks the
language of
Wall Street."
Does Schundler, a man with an uncanny knack for
quitting while
he's ahead, have ambitions beyond city hall? He
won't exactly
say yes, but that's not just because he's being
sly and evasive,
like most politicians. Rather, he seems incapable
of giving a
succinct, simple answer to any question. "I have
more power
today to change America than Bill Clinton," he
says. "Bill Clinton
can't effect school vouchers; that's not a federal
issue. But it is
more important for America than whatever he's
doing with the
deficit. If I can get school vouchers in Jersey
City, it will change
the face of American education and establish a
paradigm for
government which will change how we provide
governmental
services."
As Schundler continues his monologue, it becomes
clear that his
ambitions are more extravagant than school
vouchers__or even
the presidency. "The great core tenets of all
religions," he says,
"are: Affirm life in spite of circumstances and
love your neighbor
as yourself. If you create a society based on
those premises what
you're creating is a society where people feel
fulfillment in the
mutual well-being of one another. To the degree
you focus on
that you make progress. If I can make Jersey City
into heaven,
everything else is a layup."
Schundler's opponents in Jersey City, who seemed
to treat him
with a mixture of contempt and confusion before he
became
mayor, now speak of Schundler as if their chief
fear is that he will
lose interest in the plight of the city. After
all, it would be easy to
plant a few trees in the park, cut taxes modestly,
blitz the city's
budget deficit with a lot of fancy-sounding
financial tricks, and
then claim to have turned the city around. By this
reasoning,
Jersey City could be to Schundler what Arkansas
was to Bill
Clinton__an economic and political backwater where
good
intentions and policy wonking can create a modest
success that
is easily exaggerated.
People in Jersey City are already bracing for
disappointment.
"Being an urban mayor is the most difficult job in
the country,"
says Paul Swibinski, president of Vision Media, a
New Jersey
public-relations and advertising firm specializing
in campaign
consulting. "It's a test that breaks a lot of good
people. Now if
he can deliver on his promises and make dramatic
changes, then
I wish him luck. But if he makes the mistake of
running for higher
office before the task at hand is done"
Take the controversy Schundler stepped into just
the day before
his inaugural ceremonies, testing last year's U.S.
Supreme Court
decision regarding prayer in school by offering a
prayer during
graduation ceremonies for Jersey City's Academic
High School.
He didn't let the school know of this plan, but he
did notify the
media in advance. "I don't believe I broke the
law," he said a few
days later. "The ACLU has been trying to bully
people. They
want zero religion expressed in the school. Well,
children
shouldn't be raised as house plants. Schools
shouldn't teach
religion, but they can expose children to
different religions.
"You know, a lot of people believed what Martin
Luther King
was doing was wrong. But you know what the
scripture says,
'Act upon what you believe.' "
Paul Swibinski sees it differently. "He projected
himself into an
issue that has almost nothing to do with Jersey
City. I mean, is he
running already?"
Suzanne Costas is an associate editor of Worth.
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