Election 2016

The Idea That Hillary Clinton Took $200k+ Per Speech From Banks and Corporations Is Obscene

The typical American has to work five years to earn that much.

Photo Credit: www.youtube.com

Anderson Cooper: "But did you have to be paid $675,000 [for three speeches to Goldman Sachs]?"

Hillary Clinton: "Well, I don't know. That's what they offered."

Hillary is misleading us at best by saying that her $225,000-per-speech fee, paid three times by Goldman Sachs, was "what they offered." It was not what they offered, it was what Team Hillary demanded.

A review of her 2014 tax return, posted on her website, shows that $225,000 per speech was her minimum fee.  

She received $225,000 for 34 of the 41 speeches listed on her tax return. Of the remaining seven speeches, two were for 250,000 and the others for $265,000, $275,000, $285,000, $305,000 and $400,000. In total she received $9,680,000 for these speaking engagements in 2013.

Wall Street firms funded 14 of her 41 talks. In addition to Goldman Sachs, the list includes Morgan Stanley, Deutsche Bank, Fidelity Investments UBS and Bank of America. Her benefactors also include hedge funds and private equity firms like Apollo Management and Kohlberg, Kravis, Roberts.

In response to the media backlash over her Wall Street ties, Clinton has "postponed" a number of big fundraisers with financial-sector titans like Blackrock and the Mitt Romney-cofounded Bain Capital. The events, according to Politico, will be held “sometime after the New Hampshire primary.”

Why did Hillary Take the Money?

Carl Bernstein, Hillary Clinton's biographer, commented on CNN that the White House is "horrified that Clinton is blowing up her own campaign." He said they can't believe she took the money and didn't see the ethical problems that would dog her. It is not credible for her to argue that she took the money because she wasn't sure she was going to run for president or that she was "dead broke." She and Bill had raked in $139,000,000 between 2007 to 2014.  

One possibility is that Hillary wanted to send a message to Wall Street that she would not whip up populist rage against them during her campaign and that instead she would work with Wall Street to solve financial problems for the good of the country. We will find out more when and if her transcripts are found and released.

But the real reason may lie in the fundamental relationship between the Clintons and the world of power and wealth. Hillary, Bill and Chelsea (whose husband is a hedge fund partner) believe Wall Street is a vital part of the economy, composed mostly of very bright, honorable and talented people, like their classmates at Yale and Stanford. Sure, every now and again there are a few bad apples, but the barrel is fundamentally sound.  

How could she be so politically tone deaf on this issue? Because she lives in a world surrounded by so many of the best and brightest in and around Wall Street. Attacking them would be like attacking her community of friends and financial supporters. How could receiving fees from such decent, talented and productive people be wrong?

Isn't getting $225,000-per-hour also a fair speaking fee, given that's more or less what the Wall Street elites get per hour? So what's wrong with taking money from Wall Street?

The pundits point out that she has created a "perceived" conflict of interest, whether real or imagined. In essence they are saying that there's nothing inherently wrong with taking the money. It's not really tainted. Hillary states that she never changed her vote due to campaign contributions. But evidence is mounting via previous accounts by Elizabeth Warren, that Hillary may have switched her position on bankruptcy laws to please her New York Wall Street donors after becoming the senator from New York. 

But these attacks miss the most basic issue: Is the money tainted? Is she taking "blood" money? Sanders argues that "the business model of Wall Street is fraud." There is considerable data to support him.  

1. Fines and Settlements

Since 2009, Wall Street has paid $204,000,000,000 in fines and settlements. This is the equivalent to writing a $640 check to every man, woman and child in America including all undocumented residents. It's hard to imagine an industry running up such a liability unless the basic business model was deeply flawed.

The unlawful acts include the facilitation of money laundering for drug cartels and rogue nations, illegally evicting homeowners, selling fraudulent mortgages and mortgage backed securities, manipulating vital interest rates, insider trading, and facilitating off-shore tax evasion.

The damage done to homeowners and those who lost their jobs during the Great Recession is arguably far worse than the problems caused by drug trafficking. Yet millions, especially people of color, have been arrested, fined, convicted and jailed through the failed war on drugs, while not one of Wall Street's top banking executives has gone to jail or even paid a fine. (Conveniently, $204 billion has been paid by the companies, not by the top executives.)

2. Profits Extracted through Payday Lending

Loan sharking is something from "The Sopranos." But payday lending, the legalized form of loan shaking, is a mainstream Wall Street activity. An estimated 120 million payday loans are issued annually worth a total value of $42 billion.

One study reports that, "The average effective interest rate on a payday loan is 455% (APR). For a loan of $300, a typical borrower pays on average $775, with $475 going to pay interest and fees over an average borrowing cycle."  

Big Wall Street banks provide funds for the 17 primary payday lenders. The list includes Wells Fargo, Bank of America, US Bank, JPMorgan Bank, and PNC Financial Services Group. (Bank of America paid $225,000 for a Hillary speaking engagement on 11/13/2013.)

3. Financial Stripmining

Perhaps the most pernicious Wall Street activity involves corporate raids and stock buy-backs. Hedge funds, private equity firms and investment banks have bought up tens of thousands of corporations, loaded them up with debt and then milked them dry.  

They call it "unlocking value," but it is cold, hard, financial stripmining that adds no value at all to the target firms, while squeezing the livelihoods of the average employee. These Wall Street predators pressure corporation after corporation to use their revenues to buy back their own shares, thereby raising the share prices, enriching CEOs and the largest Wall Street investors.   

Before 1982, this was considered stock manipulation and deemed both illegal and dangerous to the financial system. However, a SEC rule change under the Reagan administration basically legalized unlimited stock buy-backs. In 1980, 2% of corporate profits went to stock buybacks. By 2007, over 70% of all corporate profits went to buy back their own shares. (For an excellent study of this financial stripmining, see Profits Without Prosperity by William Lazonick.)

So instead of reinvesting, Wall Street financially strips down the companies it targets. To pay all the debt and stock buybacks, corporations are broken up, jobs shifted overseas, wages are cut and benefits are reduced, if not eliminated. Millions of workers watch as their incomes decline and jobs disappear as money flows to Wall Street.

By 2006, 40% of all corporate profits went to Wall Street even though Wall Street accounts for only 5% of all employment. (For many more facts and figures on financial strip-mining see Runaway Inequality.)

As a result of this financial stripmining, the gap between the pay of the average worker and a top 100 corporate executive rose from 45 to 1 in 1970 to an incomprehensible 844 to 1 in 2014.

Give It Back

Some of the American people find it obscene for a presidential candidate to receive $250,000 for an hour's worth of speaking. Meanwhile, the typical American has to work five years to earn that much. Some are struggling with their underwater mortgages while trying to get by with jobs that pay far less than their former jobs that were shipped abroad. Many also have to contend with piles of student loans that won't go away.

Newer homebuyers are still suffering from years of predatory lending which stuck them with high interest mortgages even though they qualified for lower interest conventional mortgages.

As a result, many Americans see those $225,000 fees as an affront to their basic sense of fairness and justice.  

It may be extremely difficult for Hillary to overcome this gaping flaw. She's taking a pounding because she could not understand why some other Americans would detest the world Wall Street is creating. Hillary needs to do something very bold to prove to the American people that she can't be bought. Words are not enough. Although it may be far too late, there's one remaining possibility: Give the money back.

Les Leopold, the director of the Labor Institute, is currently working with unions and community organizations to build the educational infrastructure for a new anti-Wall Street movement. His new book Runaway Inequality: An Activist’s Guide to Economic Justice serves as a text for this campaign. All proceeds go to support these educational efforts.

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