Senator Charles E. Schumer is known as an advocate for the financial industry, but he has kept a low profile as Congress considers regulatory reform.
WASHINGTON — Senator Charles E. Schumer of New York has long been known as one of Wall Street’s best friends on Capitol Hill, but there are apparently limits to that friendship.
Senator Charles E. Schumer has long been among the top recipients of campaign donations from the financial services industry.
After years of being a go-to guy for the elite of high finance, Mr. Schumer has embraced new legislation that would put constraints on his hometown’s leading industry.
The stance has put him at odds with Mayor Michael R. Bloomberg, caused consternation among his allies at the investment houses and led to suggestions that he was putting political ambition ahead of protecting New York’s interests.
“There are some on Wall Street who want me to say Wall Street right or wrong, and I’m not going to do it,” Mr. Schumer said in interview on Thursday, a few hours after Democrats brought their overhaul of financial rules to the floor.
“Clearly they did a lot of things wrong,” he said. “Too many Wall Street firms had no one looking over their shoulder, and they went off the deep end.”
Mr. Schumer acknowledges that his evolution on the issue has not been without some anguish as he navigates gingerly between the financial patrons he has mined for millions in campaign donations for himself and his party, and constituents who were hurt by the economic collapse.
Normally among the most visible and audible of Democrats, Mr. Schumer has taken an uncharacteristically low profile on the touchy subject, a strategy that somewhat boomeranged when it drew some tabloid heat in New York, as well as a criticism from Mr. Bloomberg.
An outspoken defender of the financial industry, Mr. Bloomberg has opposed imposing new costs on or limiting the size of banks, in part out of concern that undercutting Wall Street’s profitability could eat into the city’s tax revenues.
The mayor expected Mr. Schumer to join him in backing Wall Street, and when he did not, Mr. Bloomberg used private meetings, including one on April 12 with Senator Mitch McConnell of Kentucky, the Republican leader, to express frustration with Mr. Schumer’s position.
Mr. Schumer said he was caught off guard by reports of the friction since the mayor had not mentioned it to him, sparking an air-clearing phone conversation between the men on Wednesday.
“He said, ‘I don’t want to get in a fight with this’ and I said neither do I, but you have to tell me — I may agree, I may disagree — which parts of this bill are good in your opinion, and which are detrimental to New York,” Mr. Schumer recounted. He said their respective staffs are now trying to identify the trouble spots.
The mayor’s rebuke also stirred some resentment among other members of the New York Congressional delegation, who at a private meeting Thursday made their views known to a representative of the mayor’s office.
Aides insist that Mr. Schumer and Mr. Bloomberg remain friendly and they expect no lasting repercussions from the dust-up. Mr. Schumer’s wife, Iris, served as a commissioner in the Bloomberg administration until 2007, and the couple is known to dine with Mr. Bloomberg and his companion, Diana L. Taylor.
But with the legislation now heading toward a showdown in the Senate, Wall Street has been left to defend itself with little public help from Mr. Schumer, who has long been among the top recipients of campaign donations from the financial services industry.
Beyond his concerns with the substance of the issue, Mr. Schumer also has to balance pressure from a crucial constituency at home against national political trends. With Senator Harry Reid of Nevada, the majority leader, facing a tough re-election fight this year, Mr. Schumer is often mentioned by Democrats as a possible successor as party leader. In the current climate being seen as too close to Wall Street would not be an advantage.
Mr. Schumer said any suggestion that a leadership contest was a driving factor in his thinking is “bunk,” saying he does not expect one since he anticipates Mr. Reid will win.
“This is about doing the right thing for the country and doing the right thing for New York. Period,” he said.
Mr. Schumer said he had used his influence as the third-ranking Democrat in the Senate and his senior membership on the Banking Committee to help draw up balanced legislation that seeks to correct flaws in the regulation of the financial industry while avoiding a legislative response that was punitive or vindictive.
Colleagues give him credit for applying his expertise on what is a complicated subject.
“He understands that world very well,” said Senator Christopher Dodd, Democrat of Connecticut and chairman of the Banking Committee. “He understands the importance of getting a structure in place that works. He knows these people, he knows these institutions and he understands the importance of reform.”
“The last thing we want to do is put these people out of business,” Mr. Dodd said.
Even as Mr. Schumer has become a staunch supporter of the Democratic bill in his public comments on the issue he seems to prefer criticizing Republicans to criticizing Wall Street.
While Mr. Reid, the majority leader, used a news conference Thursday to lash out at the “endless greed” on Wall Street, and the No. 2 Democrat, Richard J. Durbin of Illinois, said, “Wall Street and many big banks got away with murder,” Mr. Schumer took aim at Republicans, accusing them of spreading lies about the Democratic legislation.
“It’s time for Republicans to step up to the plate and do the right thing,” he said.
Mr. Schumer said he was comfortable with where he found himself on the Wall Street bill.
“In instances when you have difficult terrain,” he said, “follow your internal gyroscope and have a thick skin for the criticisms and it will all work out.”
Michael Barbaro contributed reporting from New York.
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