In a recent CNN/Des Moines Register/Midiacom poll, Elizabeth Warren has risen to the top of the Democratic Presidential Nominees in Iowa. In another poll at the Daily Kos, her closest competitor, Bernie Sanders, is 25 points behind her while the alleged front-runner Joe Biden is 30 points behind. Having been so critical of Wall Street, it’s interesting that she’s been able to rise to the top without the traditional financial backing or support from big banks or financial firms.
Most of Warren’s political career has been built on criticizing big banks and Wall Street. She has always eschewed big money and been persistent in shining a light on how their behavior and practices impact the middle-class in America. She has steadfastly refused to cater to financial institutions’ or the Wall Street elite’s interests.
To say that Elizabeth Warren’s relationship with Wall Street is tense would be an understatement. To say that financial institutions are excited by the idea of an Elizabeth Warren candidacy or presidency would be an overstatement.
After the financial markets imploded in 2008, then US House Majority Leader Harry Reid tapped Warren to be the chair of the Congressional Oversight Panel. The panel was created to oversee the implementation of the Emergency Economic Stabilization Act which helped keep the world’s economy from collapsing. Even though Warren has always been an ardent supporter of the free market, the degree of financial malfeasance she encountered there would embolden her already passionate defense of the middle-class.
In 2010, President Obama named Warren Assistant to the President and Special Advisor to the Secretary of the Treasury. In this role, she helped establish the Consumer Financial Protection Bureau. An agency created to protect consumers from misbehavior from financial institutions. As of 2017, the bureau has been responsible for returning $12 billion to people who had been swindled from large financial institutions.
However, when it came time to appoint the CFPB’s inaugural director, the rabble of financial institutions and Republican members in Congress gave President Obama pause. They feared that she would be too aggressive in her pursuits. In the end, he overlooked Warren and appointed Richard Cordray.
Undeterred, Warren ran for the Democratic nomination for Senator from Massachusets in 2012. Even though she received a record 96% of delegates votes, Republican and Democratic business leaders in the state were still vehemently opposed to her. The US Chamber of Commerce went so far as to call her and her candidacy “a threat to free enterprise.”
Like her campaign today, Warren managed her senatorial campaign without the aid of big banks or Wall Street. She raised a then-record $39 million which proved critical in helping her defeat Republican rival, Scott Brown. With her victory, she became the first female Senator from Massachusets.
Once in Washington D.C., Senator Warren got a seat on the United States Senate Committee on Banking, Housing and Urban Development. The very committee that regulates the banking industry in America.
Elizabeth Warren had arrived at the front line of American politics and went straight to work.
Warren immediately lambasted her fellow committee members for not having taken any Wall Street banks to trial in the aftermath of the 2008 collapse. Warren then went after the Treasury Department for not having prosecuted international bank HSBC for laundering drug cartel money. She even helped push out two Wells Fargo CEOs as a result of their checking and credit card scandal. When Wells Fargo CEO Tim Sloan appeared before her committee in 2017, she spoke to him bluntly:
“At best you were incompetent, at worst you were complicit.”
Elizabeth Warren wasn’t making many friends among the big banks.
When she decided to run for president, a large swath of Americans including financial institutions, Wall Street titans and the ultra-wealthy largely dismissed her. As a staunch believer in free markets and a “capitalist to her bones”, this has done little to assuage them, including the Democrats of Wall Street.
One of the trouble spots is Warren’s commitment to a free market that works for everyone, not just the rich, the financial institutions and Wall Street. To be fair, her plan to reform Wall Street zeros in on three things. One, the special treatment of private equity firms and two, her desire to roll-back the de-regulations that Trump enacted. Her third idea, actually introduced with bi-partisan support in 2015, calls to update and reinstate the Glass-Steagall Act of 1933.
That seems to be more troublesome for the banking and Wall Street community. Reinstating Glass-Steagall would enforce the separation of commercial and investment banking and prohibit Federal Reserve member banks from:
- dealing in non-governmental securities for customers,
- investing in non-investment grade securities for themselves,
- underwriting or distributing non-governmental securities,
- affiliating (or sharing employees) with companies involved in such activities.
Not surprisingly, Elizabeth Warren’s support among banks, those on Wall Street and the monied elite remain small, but not invisible. According to OpenSecrets.org, nearly half of her campaign funds have been raised through small donations, less than $200. This may help explain why her campaign has reported only receiving donations from 30 employees from the world’s top 20 investment banks.
While Donald Trump is not overwhelmingly loved by the Wall Street denizens, it’s no surprise he would be their preferred choice. Even among Democrats. Given the sickle he has taken to both taxes and regulations, some jokingly refer to him “orange Jesus”.
The Democrats on Wall Street have taken an “anyone but them” (Bernie Sanders and Elizabeth Warren) approach in deciding who to donate to. Their support is currently divided among Joe Biden, Kamala Harris and Pete Buttigieg, who have all taken high-dollar donations from Wall Street.
Bernie Sanders, an avowed Democratic Socialist, has placed Wall Street squarely in his cross-hairs. He has unabashedly made bashing them central to his campaign. Warren has not.
While there is a growing, but still low, muttering of acceptance that Elizabeth Warren may be the Democratic nominee, she is not loved by the Wall Street and financial Democratic elite. Her proposed tax on fortunes over $50 million and updated Glass-Steagall proposal isn’t helping her win any recruits.
While no love is lost there, it’s their hatred for former President Obama that continues to be having a ripple effect.
After the 2008 crash, the newly elected president enacted regulatory oversight for banks while lending money to them at exceptionally low rates. Of course, they tolerated the regulations but loved the bailout loans and were quickly able to rebound. What they didn’t love was Obama’s rhetoric that accompanied their bailout. Which by any account was mild, almost like the scolding a parent might give a child for losing their allowance.
Nonetheless, with their business’ saved and quickly turning a profit, they felt “disrespected”. In an article from The Observer in September of 2010, the major financial institutions were angry, “Bankers were offended. They speak of betrayal. Feelings have been hurt.”
So “hurt” and “disrespected” in fact, that in 2012 and 2014, there was a radical swing in financial contributions from private equity and investment firms on Wall Street. In 2012, 73% of donations went to Republicans and 27% to Democrats and in 2014, 65% went to Republicans and 35% went to Democrats. By 2016, even though total contributions had doubled, the parity between the parties had narrowed to 52% to 48%.
2018 was an even split at 50% and 50% and, as of now, donations are tracking at 51% for Republicans and 49% for Democrats.
As Warren continues to gain traction, the animus between the financial community and her campaign is starting to bubble up. However, it may not be having the impact they’re hoping for. In September, claiming to speak for Wall Street, CNBC financial host Jim Cramer said, “She’s got to be stopped” and that a win for her “would be a loss for big banks.” At which point, Warren immediately turned it around and used it as an advertisement.
Most recently, Facebook founder Mark Zuckerberg has jumped into the fray. In a leaked audiotape recorded at a Facebook “all hands” meeting, he threatened to sue the US government to keep from being broken up, another tentpole of the Warren campaign. He claims he would win any such battle and says bluntly that a Warren presidency would “suck.”
Again, Warren took to Twitter and turned it around and shared it with her 3.3 million followers.
It’s worth noting there is a precedent for winning the presidency against the wishes of Wall Street and the financial institutions. The upper class had no love for four-time elected Democratic President Franklin Delano Roosevelt. In speaking about the “old enemies of peace-business and financial monopoly” in October of 1936, he stated: “They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.”
The groundswell pushing Elizabeth Warren to the front of the Democratic pack doesn’t show any signs of slowing down. If her history with big banks and Wall Street remains the same, it’s unlikely Warren will warm up to them.
Even more unlikely is that they would move beyond tepid acceptance if she were to win the Democratic nomination.
That said, if the presidential election in 2016 taught America anything, it’s that in this day and age, all bets are off. Anything is possible.