Hedging on Wall Street: Clinton's Finance Reforms Reek of Weak-Kneed Populism
While offering new reforms for financial industry, few seem to think that presidential candidate would present any significant challenge to ruthlessness of the big banks
As Bernie Sanders continues to draw record crowds and appears to be winning the battle for small-donor contributions, the campaign of Democratic frontrunner Hillary Clinton—even as the former senator and secretary of state attempts to strike a more populist tone—continues to show it knows where the deep pockets are: Wall Street.
And as the Associated Press reports on Wednesday morning, the campaign's strategic approach is rather easily documented:
Clinton's economic agenda targets companies that focus on short-term profits and high-speed trading instead of investing in workers. The Democratic presidential candidate's finance operation is going after their executives for another purpose — donations.
A day after proposing higher capital gains taxes on short-term investors, Clinton raised at least $450,000 Tuesday night at the Chicago home of Raj Fernando, a longtime donor. His firm, Chopper Trading, specializes in high-frequency transactions and was recently purchased by Chicago-based competitor DRW.
Clinton's summertime fundraising circuit highlights a central tension of her campaign: how to encourage financial executives to open their wallets for her presidential effort even as she comes out with plans aimed at reining multimillion-dollar paychecks. Since her first presidential campaign in 2008, income inequality has become a bigger force in Democratic politics, with liberal voters clamoring for candidates who will take a sharply populist turn and enforce tough new regulations on Wall Street.
Despite her newly announced proposals, which also include calling for higher tax rates on private equity and hedge fund managers, CNBC reported on Tuesday that all of Clinton's "rhetoric has mattered little" to those who support her in the financial industry.
Citing campaign figures made available last week, CNBC notes that "already among the biggest donors to Clinton's political career, employees of some megabanks have funneled big money into her bid for the 2016 nomination." Accordingly, employees from some of Wall Street's most powerful financial firms—Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Bank of America Merrill Lynch—"gave about $290,000 to Clinton's campaign committee through June 30, according to a MapLight analysis of Federal Election Commission data. While it makes up less than 1 percent of the roughly $47 million raised by Clinton's committee this cycle, it follows a precedent set in her 2008 presidential campaign, when the firms' employees were among her biggest donors."
As current head of the Democratic Party, President Obama—despite overseeing a Justice Department that failed to prosecute a single high-level Wall Street executive for the criminal behavior that led to the collapse of the global economy in 2007—is often derided as being too anti-Wall Street by some simply for "talking tough" about Wall Street. However, Lisa Gilbert, director of the Congress Watch division at Public Citizen, told CNBC that Clinton is a Democrat who still attracts Wall Street money, because she maintains an "institutional connection" to the financial industry given her former role as a New York senator.
Writing for the Washington Post, Anne Gearan described Clinton's approach as "bashing Wall Street... but only a little." Calling the candidate's strategy "carefully calibrated," Gearan explained:
None of the proposals she has put forward so far appear close to the major crackdown on banking practices, financial loopholes and astronomical salaries favored by many liberals. [...] Eventually she will have to address issues of income inequality more directly, and to answer liberal demands for a specific proposal to raise then minimum wage.
Clinton’s own longstanding ties to Wall Street, both as a New York senator and two-time Democratic presidential contender, have made her suspect in the eyes of some of the Democratic Party’s most liberal voters. Those voters wield particular influence now, when they can point up the shortcomings of the Democratic front-runner by backing a competitor or withholding support.
As an example of this Wall Street's perception, AP spoke with Tom Nides, a vice chairman at Morgan Stanley and a former employee at the State Department under Clinton, who said her new policies haven't caused any waves on Wall Street and predicted they're unlikely to hamper Clinton's fundraising.
"She's been tough, but I don't think she's been irrational," Nides said. "People in our industry know they'll have someone who has a good reputation or at least someone who will listen to them."
Sen. Bernie Sanders, meanwhile, has made Wall Street malfeasance and greed a centerpiece of his presidential campaign, repeatedly railing against the power that is wielded by the combined hegemony of the financial industry and allied corporate powers.
"Over the last 30 years there has been a massive transfer of wealth from the middle class to the top one-tenth of 1 percent,” Sanders said earlier this month. "We need policies now which help the disappearing middle class, not just the millionaires and billionaires. It is time to take on Wall Street, take on corporate America and create an economy that works for all Americans and not just the very wealthy."
When it came to judging Clinton's positions on such issues, Sanders added, "I welcome Secretary Clinton’s discussion of the economy and look forward to an issue-oriented debate as to which set of policies will best represent the working families of our country."