Hillary Clinton is smiling today as she launches her campaign to become the first woman president. Will Wall Street be smiling with her?
Perhaps the best way to open the topic of Hillary Clinton and Wall Street is with the following story from David Corn in Mother Jones in July of 2014:
Hillary Clinton delivered a much-touted policy speech at the New America Foundation in Washington, where she talked passionately about the financial plight of Americans who "are still barely getting by, barely holding on, not seeing the rewards that they believe their hard work should have merited." She bemoaned the fact that the slice of the nation's wealth collected by the top 1 percent—or 0.01 percent—has "risen sharply over the last generation," and she denounced this "throwback to the Gilded Age of the robber barons."
Sounds great, I suspect most here would agree. Corn went on to note:
Here was Hillary, test-driving a theme for a possible 2016 presidential campaign, sticking up for the little guy and trash-talking the economic elites. She decried the "shadow banking system that operated without accountability" and caused the financial crisis that wiped out millions of jobs and the nest eggs, retirement funds, and college savings of families across the land. Yet at the end of this week, when all three Clintons hold a daylong confab with donors to their foundation, the site for this gathering will be the Manhattan headquarters of Goldman Sachs.
Taken in isolation, the story would be easy to dismiss. So she held a meeting a Goldman Sachs? But the event was illustrative of a long-running connection.
I'll explore this connection on the flip.
One can have many arguments about Hillary and Bill Clinton. The vote for the AUMF, welfare reform, and NAFTA can be argued in various ways. But one you cannot have is about the connection between the Clintons and Wall Street. It is simply a fact. Consider the top 10 donors to Hillary Clinton's campaigns:
| Donor |
Amount
|
| Citigroup Inc |
$782,327 |
| Goldman Sachs |
$711,490 |
| DLA Piper |
$628,030 |
| JPMorgan Chase & Co |
$620,919 |
| EMILY's List |
$605,174 |
| Morgan Stanley |
$543,065 |
| Time Warner |
$411,296 |
| Skadden, Arps et al |
$406,640 |
| Lehman Brothers |
$362,853 |
| Cablevision Systems |
$336,288 |
Five of the top 10 donors to Hillary Clinton were Wall Street investment banks, and many were the beneficiaries of the Wall Street bailout. Two others, DL Piper and Skadden Arps, are Wall Street law firms.
If you understand the origins of the financial deregulation that were at the heart of the financial crisis, these donations should hardly come as a surprise. It was Bill Clinton who signed the repeal of Glass-Steagall, which removed the walls separating banks, securities firms, and insurers.
More troubling is the story of the Clinton administration and the financial derivatives at the heart of the financial crisis. When Brooksley Born, the head of the Commodity Futures Trading Corporation ("CFTC"), raised concerns about the enormous risks derivatives were creating and the lack of transparency surrounding them, the Clinton administration worked to silence her and make sure the CFTC did not regulate them.
Some have argued the repeal of Glass-Steagall was not the cause of the financial crisis (although I think it had some role), but the decision to prevent the CFTC from regulating derivatives definitely had a part in the collapse. It is obviously critical to note that eight years elapsed between the end of the Clinton presidency and the Wall Street crisis, and the primary blame rests with Bush and not Clinton, after all. And make no mistake, Jeb Bush’s strategy is to capitalize on the fact that "George Bush is quite possibly the best friend Wall Street has ever had in the White House." But the truth is the deregulation of financial institutions built momentum in the later part of the Clinton administration.
Given this record, the support the Clintons have received from Wall Street is not surprising. And make no mistake: Wall Street has hopes for Hillary Clinton. Consider this from the author of a book on Goldman Sachs and its influence:
While the finance industry does genuinely hate Warren, the big bankers love Clinton, and by and large they badly want her to be president. Many of the rich and powerful in the financial industry—among them, Goldman Sachs CEO Lloyd Blankfein, Morgan Stanley CEO James Gorman, Tom Nides, a powerful vice chairman at Morgan Stanley, and the heads of JPMorganChase and Bank of America—consider Clinton a pragmatic problem-solver not prone to populist rhetoric. To them, she’s someone who gets the idea that we all benefit if Wall Street and American business thrive. What about her forays into fiery rhetoric? They dismiss it quickly as political maneuvers. None of them think she really means her populism.
The problem is that without real regulation of the financial industry, any recovery will be limited, and the possibility of another financial meltdown turns into a probability. Volumes have been written about how the financialization of the U.S. economy has increased inequality and prevented a full economic recovery.
Equally importantly, however, is the political problem this creates. In poll after poll, significant majorities of Americans believe that the economic system is rigged against them. In a 2014 exit poll, 63 percent agreed that the "U.S. economic system generally favored the wealthy," yet only 41 percent believed that the government should do more to solve problems. Markos saw something similar in the 2010 exit poll and concluded:
Of the 35 percent who think Wall Street is to blame for our economic problems, 57 percent voted Republican -- the party that does nothing but carry water for Wall Street.
So why is that? It's because people think there is no difference between the parties when it comes to the rich and powerful. And why should they? Obama's finance team is essentially a branch office of Goldman Sachs and company. Treasury was more concerned with using HAMP as a way to protect the banks than help struggling homeowners stay in their homes. In a bizarre role reversal -- the White House economic team tried to water down the finance reform bill that came out of Congress.
It's not hard to see why people have gotten the sense that Democrats aren't much better on Wall Street matters than Republicans (even if they are).
The simple truth is that the connection to Wall Street has hurt Democrats on multiple levels. The failure to prosecute executives has created the impression that government plays favorites (and it is hard to argue it doesn’t). Indeed, Eric Holder famously noted that Wall Street banks were
too big to prosecute. It has fed the perception that government is simply corrupt and cannot be trusted. This perception is devastating to the party that advocates using government to solve problems.
To be sure, Barack Obama has his own connections with Wall Street. Amazingly, even though not one senior Wall Street executive was prosecuted for actions stemming from the Wall Street meltdown, Obama has "hurt Wall Street's feelings."
Hillary Clinton is not Bill Clinton. The election is not tomorrow. But there is a history when it comes to Hillary Clinton and Wall Street. Throughout their political careers, the Clintons have been close to Wall Street, and both the party and the country have paid for it as a result. We should be asking tough questions about this connection. Hoping that the Senate will push Clinton left strikes me as wishful thinking. The time to push her left is now—the time to be making demands about the agenda on which the next election will be fought is now.
