The [Wednesday] Papers

"Patrick Arbor, the former chairman of the Chicago Board of Trade involved in an ugly divorce case, acknowledged in court documents that he dodged paying income taxes for 30 years on assets he has outside the United States and only made amends with the government last year after he was prompted by his wife's attorneys," Shia Kapos reports for Crain's.

Arbor has been a civic titan around these parts for decades, and as such, the subject of, well, not quite lionizing press but kitty cat press, from his mountain climbing exploits to his business punditry to his political climbing (he was/is pals with both Richard M. Daley and trader/U.S. Senate candidate Blair Hull, just to throw out two names).

That's how civic titans get covered.

But I'll go out on a limb here and say most civic titans are dirty. That's how they become civic titans. And that's how we should approach them until proven otherwise.

It's not that everyone with money and/or power is corrupt, but the starting point for any journalist - especially in Chicago - ought to be one of skepticism, not admiration. After all, the central mission of journalism is to provide a check on power. I mean, whatever happened to "If Pat Arbor says he's an upstanding citizen, check it out"?

It's not that it's a journalistic failure any time someone who has been gushed over is discovered at a late date in their newsworthiness to be a cheat and a hustler; obviously journalists aren't going to "catch" everyone participating in wrongdoing - or even the vast majority of people behaving badly. It's just to say that those with the most power, wealth and influence should be viewed critically, not heroically as if their ascent to the top could only have been accomplished by a unique and self-determined set of smarts and work ethic the rest of us are too dumb or lazy to tap. Usually the truth is far more complex and disheartening.

There's a whole set of questions you could ask of someone like Arbor about the role of their work in society and how their wealth was accumulated - and gets spent - without falling back on stale narratives. Like these:

"Patrick H. Arbor is almost everything the Chicago Board of Trade used to be: A self-made mogul living in a bachelor's high-rise condo off Michigan Avenue that's still decorated in dark 1970s wallpaper," Janet Kidd Stewart wrote in the Sun-Times in 1993.

But there are differences - both in personal style and in attitudes about CBOT business. The steak-and-martini images of old don't fit the CBOT's new chairman, who abhors smoking, exercises with a vengeance, and plays Italian folk tunes on an acoustic guitar.

And Arbor, 56, knows it's time to redecorate. He'll take down the wallpaper this year at home - and try to give to the 145-year-old financial futures exchange a face-lift.

"The Board of Trade can no longer rest on its laurels," Arbor said. "We have to have passion and fire in our bellies if we're going to be successful."

There was only one other person - an ally - quoted in the story, which ended like this:

But Arbor is no stranger to overcoming obstacles.

"I can see my whole life looking out this window," he said from his Gold Coast home. It is a view that takes in not only the riches of his adult life but his struggles growing up as a West Side youth. His mother committed suicide and Arbor spent a tough childhood partly in a Chicago orphanage.

On a very clear day, he might even see Harwood Heights, the suburb where he became Illinois' youngest mayor at age 27 in 1964.

Such personal climbs are the stuff of legend at Chicago's futures exchanges. But such successes aren't being repeated as profits get squeezed and trading becomes complicated by new products and sophisticated computer technology.

Arbor said several years ago that Chicago's financial community drew the "best and brightest" young minds.

"I think that's changed a little," he said last week. "The success stories of yesteryear are not being heard today. The best and brightest are gravitating toward Wall Street and to the off-exchange products, and that concerns me."

So does the competition from upstart exchanges such as the London International Financial Futures and Options Exchange. LIFFE's volume grew 86 percent in 1992, compared to the CBOT's 7.6 percent increase.

"We need another surge of prosperity," Arbor said. "Yes, I have a couple of tough years ahead of me. But I think I have the energy and the vision - plus a good executive committee and a membership rich with ideas - to lead us through it. We've been through tough periods before."

Ugh. What's the point?

Now, maybe Arbor was a swell guy until, well, until he started hiding his money overseas. But I doubt it. People usually aren't built that way. They have a worldview. Arbor's was built on the worldview of a trader, who is by definition a hustler.

And he's long been allergic to taxes. To wit:

"President Clinton's proposal to impose a transaction tax on futures trades will die in Congress for the fourth year in a row, the Chicago Board of Trade's top official said Monday," the Tribune reported in 1993.

"'They've seen the light of day three times before, and they'll continue to see the light,' Chairman Patrick Arbor told reporters in Washington, describing members of Congress. The estimated revenue for the U.S. government from a futures transaction fee is about $235 million over four years, but industry leaders say the tax would drive business overseas."

Right next to Arbor's money.

*

Some folks locally too have been calling on a transaction tax for years to help the Chicago Public Schools, among other possible uses. Instead, we've given Arbor and his buddies tax breaks.

"The Chicago Mercantile Exchange (CME) took a stunning 54 percent of its $8 billion in revenue as clear profit," Paul Buchheit wrote in a letter to the Tribune in 2011.

"That's a higher percentage than any of the top 100 companies in the country! Yet, CME is threatening to leave Illinois if its tax bill isn't reduced.

"A tax break to the nation's most profitable corporation would put Illinois residents at even greater risk of economic collapse. The governor should look in the opposite direction, toward a financial transaction tax (FTT).

"Right now, a Chicago mother pays more than 10 percent in sales taxes for a pair of shoes for her child. A millionaire Chicago investor pays zero percent in sales taxes for a financial instrument.

"How much money could be generated by an FTT in Illinois? CBOE handles over a billion contracts a year with a dollar volume of close to a trillion dollars. A one-quarter of one percent tax on contracts would return $1.5 billion dollars, enough to pay off Chicago's budget deficit.

"The CME Group, which includes the Chicago Board of Trade, handles about three billion annual contracts worth well over one quadrillion dollars. One-thousandth of one percent of that (about a dollar for every $100,000) would pay off the total budget deficit of Illinois."

Just this past January, two congressional Democrats tried to revive a financial transactions tax again in an effort Reuters (or the Tribune) immediately labeled as a "long-shot," because why take it seriously?

"The congressmen have introduced the idea before, but it did not move forward as President Barack Obama's Treasury Secretary, Timothy Geithner, has said the United States opposes the levy."

Let's try again and call it the Arbor Tax.

*

"In testifying last year, Arbor said he didn't think at first that he had to pay taxes on the offshore accounts but that he then realized it was a violation of state and federal law," the Tribune reports.

The former Chief of the Board of Trade didn't realize he had to pay taxes on those accounts. Which he created in order to dodge paying taxes.

"Since filing for the amnesty program to pay off the taxes, Arbor said it's provided a relief for a burden 'that has been on my shoulders for many, many years.'"

Why would it have been a burden for many, many years if he didn't think he had to pay taxes on those accounts?

*

"As part of a federal amnesty program, he will pay back taxes for the past eight years, he says," Kapos reports.

So he'll make good sometime into Hillary Clinton's second term.

-

See also:
* Mark Brown: Ex-CBOT Chief Accused Of Fleeing County To Keep Millions From Ex-Wife.

* Mark Brown: Ex-CBOT Chair's Divorce Messy, Rich With Intrigue.

* Mark Brown: Ex-CBOT Chief Invites Friends To 'Discuss' His Messy Divorce.

* Chicago magazine: By Far The Best.

-

The Political Odds
Freshly renewed.

On The Skiffle Trail
A Rock & Roll Journey From New Orleans To Chicago To Britain And Back.

Sirens Behaving Badly
Updated.

The Traveling Kings Of Chicago
Updated.

Remembering Andy Pafko
Historic Cub, Local Hero.

-

The Beachwood Tip Line: Transaction facts.

© 2006 - 2021, The Beachwood Media Company