It Will Be Extremely Difficult for Hillary to Say No to Wall Street
The highlight of Saturday night's Democratic debate was when former Secretary Clinton invoked the September 11 attacks to try to defend her courting of Wall Street donors. The awkward defense of her political ties even spawned a rare New York Times editorial criticizing Clinton.
The fact is, there is no way that Hillary Clinton can pretend she doesn't have a cozy relationship with an industry that personally enriched her family, formed the basis of political support for her career and is doing everything it can to make her president.
Dollar Dollar Bill
After leaving the White House, Bill and Hillary Clinton had a steady source of income; pensions from both the federal government and Arkansas. They also both wrote books that generated millions of dollars of income. That's why, over the next 10 years, Bill Clinton raked in over $125 million in speaking fees, almost all of them from for-profit mega-corporations and trade associations. Shortly after presiding over a historic and catastrophic deregulation of Wall Street, Mr. Clinton's first paid arrangement was a $125,000 speech at Morgan Stanley. His next speech was at Credit Suisse First Boston, for the same asking price. The same year Wall Street banks started to pour funds into the the joint Clinton bank account, Hillary went on to vote for a bankruptcy bill that made it much harder for people to qualify for Chapter 7 bankruptcy; the bill was backed primarily by banks and credit card issuers.
An interesting figure during this period was Elizabeth Warren. Before she was Senator Warren, she was a consumer advocate and professor at Harvard University. She personally briefed First Lady Hillary Clinton on the perils of rolling back bankruptcy protections. Despite going on to support the bill, Hillary was sympathetic to Warren's arguments, telling her, “Professor Warren, we've got to stop that awful bill.”
Clinton's vote for the “awful bill" in 2001 ultimately did not give it the support it needed to pass, but it did pass four years later. At that time, Clinton didn't vote at all, an easy way to avoid responsibility as she prepped for a presidential race a few years later. In an interview with Bill Moyers, Warren explained the change in attitude from Senator Clinton: “It's a well-financed industry....She has taken money from the groups, and more to the point, she worries about them as a constituency.”
During this time, the Clintons amassed more and more personal wealth from Bill's Wall Street speeches. Over the course of the years since they left the White House, Bill Clinton collected millions of dollars from financial firms.
When time came to bail out Wall Street, Hillary Clinton showed no hesitation. She demanded little accountability, and supported the Wall Street bailout bill that Bernie Sanders opposed. She then appeared on MSNBC's conservative program "Morning Joe" to boast about governing from the center.
Although she claimed during the first Democratic debate that she was raising warning flags in 2007 about the financial crisis and told Wall Street to “cut it out,” a review of what she actually said paints a different picture. She made a speech at NASDAQ once the foreclosure crisis was well under way (December 2007), and she emphasized that blame shouldn't solely be on the banks, saying that “certainly borrowers share responsibility as well. Home buyers who paid extra fees to avoid documenting income should have known they were getting in over their head.”
Hillary joined the Wall Street speech circuit after leaving her position as Secretary of State. She gave two $200,000 speeches to Goldman Sachs, where she reportedly decried the demonization of the industry by the left wing of her party.
The Most Loyal Fundraisers
While Wall Street was making the Clintons astronomically rich, it was also funding Hillary's path to political power. Over the course of her career, four of the top five donors to her Senate campaigns were Wall Street banks—Citigroup, Goldman Sachs, JP Morgan Chase, and Morgan Stanley (the fifth is DLA Piper, a law and lobbying firm that sometimes employs Wall Street clients).
In her current campaign for office, just like her 2008 presidential run, Wall Street plays a crucial role. Her first fundraisers were in New York City, one at the home of financier Steve Rattner, who in 2010 agreed to pay a $10 million settlement in connection with a pension-kickback scandal. Among her top 20 donors are three megabanks she has refused to break up: Morgan Stanley, JPMorgan Chase and Bank of America.
Federal Elections Commission data on Hillary For America's fundraising reads like a Rolodex of Wall Streeters. From Goldman Sachs come maxed-out contributions from vice-presidents Richard Lerner and Wenchi Yu. Managing director Michael Paese is another maxed-out donor. Goldman Sachs Japan vice chair Kathy Koll joined dozens of other Goldman senior staff in giving a large contribution, $2,700. There are five donations from JPMorgan Chase vice presidents; Bank of America managing director Omeed Malik is a maxed-out donor.
The message is clear: Wall Streeters don't believe Clinton is against them. Which might be why they also made sure the Clintons have a well-funded foundation.
Financiers of the Foundation
The Clinton Foundation is the third rung of influence-peddling.
After then-Secretary Clinton helped negotiate a weak settlement with tax-dodging Swiss bank UBS, it gave $350,000 to the Clinton Economic Opportunity Initiative. Goldman Sachs has given at least a quarter million dollars to the Foundation, per its own disclosures, and CEO Lloyd Blankfein even appeared alongside Hillary Clinton at a Foundation event in 2014. A year before, the Center for American Progress, a Wall Street-funded think tank run by a former Hillary aide, welcomed Blankfein for an event.
It was as if the harsh politics of the Great Recession had ended; Clinton Democrats were welcoming Wall Street back in from the cold.
When Sanders raised the issues of Clinton's deep and binding ties to Wall Street, she reacted with anger, telling him he was impugning her integrity. She said she has all sorts of donors, and that Wall Street money will not impact her decision-making.
Sanders responded by saying that every candidate who takes large amounts of money from special interests claims they are “going to be independent. Well, why do they make millions of dollars of campaign contributions? They expect to get something. Everybody knows that.”
Some may conclude that Clinton will rise above the politics that defines most politicians, and indeed her own career of giving Wall Street what it wants; that she will make good on her rhetoric of distancing herself from the industry and not being influenced by its money. That is certainly possible, but is it likely? It is also possible that Ted Cruz, who is building his campaign off support from the oil and gas industry, will decide he is not impacted by that special interest's funds, and transform into a stunning environmentalist. But it's improbable.
Presumably Clinton does not want to be a one-term president, and if current trends continue, election 2020 will have even greater costs than our election next year. It is unlikely that she will simply disregard the industry's favors to her personal wealth, political campaigns and foundation.
This is why Sanders gets the best of the argument the two had on Saturday. Wall Street is well-positioned to exert enormous influence over the potential candidacy of a President Hillary Clinton. Given its misdeeds, that is a troubling prospect.