King of New York: Michael Bloomberg

The billionaire had to drop his ambitions to be US president, but will have to settle for a third term as mayor of America's largest city

(JASON REED / REUTERS)

The slight fellow a few seats to my left had a marooned, almost woebegone look about him, hunched up against the cold in long coat and knitted ear-warmers. As a new president was being sworn under a January blue sky before us, all manner of private thoughts may have been burrowing in his brain like, "I should be at the Bermuda house improving my swing right now" or "That could have been me up there".

As one of America's richest men, Michael Bloomberg does not often have occasion to mull mistakes or regret, but the inauguration of Barack Obama was perhaps one of them. He looked like someone who had wandered into the wrong party perhaps because he had left the Democratic fold years before (for political expediency). Or he was recalling those heady days a few months before when half the country was chattering about his chances of running for president or, failing that, becoming vice-president.

How serious Bloomberg, 67, was about pursuing the ultimate prize is still a bit of a mystery to all but himself and a few advisers. There were always going to be problems, none insurmountable, with a Mike-for-Prez campaign: he is divorced, single, Jewish and entirely fickle on matters of party affiliation. (In 2007 he gave up his Republican membership too.) But had the Democrats not thrown up two such captivating candidates in the primaries, Barack and Hillary, 2008 might just have been his time.

As he campaigns to be re-elected on Tuesday for a third four-year term as mayor of New York, it's worth recalling why anyone ever took him seriously for the top job in the land. You will be pushed to find a campaigner with less charisma or street appeal (although his Democrat opponent for mayor, city comptroller Bill Thompson, might just qualify). His demeanour can seem cantankerous, and when it comes to taking politically unpopular decisions – on cutting services, clobbering smokers or raising taxes, for instance – he can be cold. But the answers, in no order of importance, are money, competence and money.

It is one of the less edifying truths of American democracy that being independently wealthy – Bloomberg is said to be worth $17.5bn, making him Gotham's richest resident as well as its most politically powerful one – affords an entirely unfair advantage in any race for high office. Bloomberg has been spending about $1m a day of his own money on his campaign of late and may break the $100m mark in his quest to stay in power.

Even the circumstances of his running for term number three are instructive. Until recently, New York, like lots of places in America, had a law forbidding elected officials from serving more than two terms successively. Once a supporter of the law, Bloomberg abruptly reversed himself last autumn and persuaded the city council to repeal it. A new biography of the mayor by The New Yorker's Joyce Purnick claims he waited until it was just too late to organise a city-wide referendum on the issue, which he probably would have lost. That looks like chicanery to some, and maybe it will cost him a measure of support next week. But with every poll showing him comfortably ahead of Thompson, he is not about to show remorse for it.

There is plenty of evidence that New Yorkers respond much more readily to steeliness in their political leaders than charisma or fuzz. Thompson seems like a very good person indeed, but he might not have the requisite deviousness or means-to-an-end determination about him. Few in this town would have considered a camping holiday with Bloomberg's predecessor, Rudy Giuliani, but he left the office of mayor with so much political capital he did run for president last year, albeit disastrously.

Mayor Mike, meanwhile, could barely be less connected to those he rules, though he would never admit it, with his serial homes, in Manhattan, Westchester, Bermuda and London, his love affair with golf and his very own helicopter. Never mind that he rides to work on the subway train. Or so his spin doctors like to say. But he also embodies what most New Yorkers, indeed Americans, aspire to: a billionaire businessman from humble, immigrant origins whose girlfriend, former state banking superintendent Diana Taylor, is on the best-dressed lists of the Upper East Side glamour circuit. He practices philanthropy, another peculiarly American pastime, to a degree few can match, except perhaps Bill Gates and Warren Buffett. He gave away $207m in 2007, making him the seventh most generous giver in the country that year. Most importantly, in most people's eyes he is someone who gets the job done.

He grew up in various middle-class neighbourhoods of Boston as the child of parents of Russian and Jewish descent. It was by no means a silver-spoon upbringing – his father was a book-keeper – but ambition infected him early. It eventually propelled him to study at Johns Hopkins University in Baltimore, which has since become one of the biggest beneficiaries of his giving, and thereafter the business studies school at Harvard. Fresh from there, he joined what was then the Salomon Brothers brokerage house, quickly rising to become one of its partners. Famously, however, he was sacked after the bank merged in 1981 and, with a $10m severance money in hand, went on to set up a financial data services company. Innovative Market Systems was renamed Bloomberg LP in 1986 and by 1987 it had installed 5,000 of its terminals with banks and other customers on Wall Street. Today, Bloomberg boasts 250,000 terminals worldwide and has grown to include its news wire service. It is 88 per cent owned by the mayor, though he withdrew from running it before his first run for New York mayor in 2001. It is no wonder that he can afford to do his current job on a public salary of just one dollar a year.

It was during that first run for the job that Bloomberg abandoned the Democratic Party and joined the Republicans. Again, it was a cold calculation. (There were simply too many Democrats of quality running and few Republicans.) At first, few pundits took his candidacy seriously. But he was crucially endorsed by Giuliani, who was to guide New York through the horror of 11 September shortly before polling day. In Bloomberg, voters saw a sober man ready to continue leading in very sober times. It helped that, on social issues, he did nothing to hide his liberal inclinations. He has remained active on gay rights, often speaking to gay groups including during this campaign, pro-abortion and anti-death penalty. It didn't matter to New Yorkers that in 1975 he had divorced his first wife, Yorkshire-born Susan Brown, with whom he had two daughters, Emma and Georgina. That the women who were his post-divorce dates included the likes of Diana Ross and the actress Marisa Berenson did him no harm either.

And in his first two terms, Bloomberg mostly lived up to his promise of no-nonsense leadership. The astonishing drops in crime rates that Giuliani had achieved continued and deepened under his mayoralty. He seized control of the city's troubled schools from the state and is credited with significant improvement in graduation rates. He also fostered a boom in development and construction that has changed the face of parts of the city, even if it is now mostly stalled by the recession and was perceived by some to have favoured developers rather more than residents, especially the poorer ones.

And on lifestyle issues, he has been an effective if occasionally annoying scold. It was Bloomberg who stopped New Yorkers from smoking in bars and restaurants, who banned trans-fats from their fast food and obliged such purveyors as McDonald's to list calorie numbers on everything they sell. And he has been the first mayor to recognise that New York has to do its part to fight global warming and has become an evangelist for emission controls and tree planting around the country and the world.

And if the manner in which he short-circuited the term-limit rules does stick in the craws of many voters and will cost him part of the margin of his likely victory next week, few in New York begrudge his ability effectively to buy the office again, although Thompson and his supporters surely do.

As Jacob Weisberg of Slate magazine put it, "He may whine about our diets, our manners, our carbon emissions. But after eight years, many New Yorkers seem to agree that it's nice having a sugar daddy to take care of you."

A life in brief

Born: 14 February 1942 in Boston, Massachusetts. Father William Henry Bloomberg and mother Charlotte Bloomberg.

Educated: A graduate of Johns Hopkins University, Baltimore, in 1964 with a bachelor's degree in electrical engineering, Bloomberg then went on to gain an MBA from Harvard Business School in 1966.

Family: Married Susan Brown in 1975 but divorced in 1993. They have two daughters, Emma (born 1979) and Georgina (born 1983). Bloomberg has a long-time girlfriend, Diana Taylor, a former state superintendent of banks.

Career: Worked for Salomon Brothers investment bank from 1966 until 1981, using his severance pay to found Innovative Market Systems, which evolved into the Bloomberg LP financial news and information service that made his name and fortune. In March this year he was reported by Forbes to be worth $16bn, putting him at No 17 in its list of billionaires. Succeeded Rudy Giuliani as Mayor of New York in 2002.

He says: "This is a city council that's actually trying to make our city better rather than just talk about it."

They say: "He embodies all the qualities of a superb leader. He has shown understanding and support for all communities." Sila Calderon, former governor of Puerto Rico