Hil­lary Clin­ton: Wall Street’s fa­vorite en­emy

Kuwait Times - - ANALYSIS -

Hil­lary Clin­ton be­gan her pres­i­den­tial cam­paign by promis­ing to do what it takes to rein in Wall Street. Boosted by Wall Street’s tough­est crit­ics, US se­na­tors Bernie San­ders and El­iz­a­beth War­ren, the Demo­cratic can­di­date has de­clared “the deck is still stacked in fa­vor of those at the top” and said she would raise bank fees and tighten bank­ing reg­u­la­tions. She has en­cour­aged reg­u­la­tors to break up too-risky banks.

And yet, Wall Street ap­pears un­per­turbed by the prospect of a Clin­ton pres­i­dency. In fact, the bank­ing in­dus­try has sup­ported Clin­ton with buck­ets of cash and stocks have sold off on days when the Clin­ton cam­paign stum­bles. Pri­vately, bankers say that they trust her to re­main a prag­ma­tist who will keep the cur­rent reg­u­la­tory regime laid down by the Dodd-Frank Wall Street re­form leg­is­la­tion passed in 2010. “I don’t think Clin­ton wakes up think­ing about Wall Street,” one se­nior bank­ing in­dus­try lob­by­ist said.

There are hints in ap­par­ently leaked email dis­cus­sions among Clin­ton’s cam­paign staff that bankers are not far off the mark when they count on her to tread lightly. Pressed dur­ing the cam­paign by pro­gres­sive Democrats to call for a re­vival of the Glass-Stea­gall Act that would re­quire sep­a­ra­tion of com­mer­cial and in­vest­ment bank­ing, Clin­ton ul­ti­mately re­fused. She also weighed an­other pro­gres­sive fa­vorite - a tax on fi­nan­cial trans­ac­tions- but in­stead rec­om­mended a far nar­rower plan to tax only canceled or­ders by high speed traders.

Ul­ti­mately, what bankers most like about Clin­ton is that she is not Don­ald Trump. Many fi­nanciers fear her un­ortho­dox Repub­li­can ri­val could dis­rupt global trade, dam­age geopo­lit­i­cal re­la­tion­ships and rat­tle mar­kets, in­dus­try an­a­lysts and par­tic­i­pants say. “Those are the kind of things that cor­ner of­fices think about,” said Karen Shaw Petrou of Fed­eral Fi­nan­cial An­a­lyt­ics Inc, whose firm ad­vises fi­nan­cial firms about US reg­u­la­tory pol­icy. “The over­rid­ing con­cern about Trump has dom­i­nated peo­ple’s think­ing.”

Trump’s can­di­dacy has up­ended tra­di­tional po­lit­i­cal al­liances and bankers that usu­ally con­trib­ute more to the Repub­li­cans have been fling­ing money at Clin­ton. Em­ploy­ees of the 17 largest bank hold­ing com­pa­nies and their sub­sidiaries have been send­ing her $10 for ev­ery $1 they con­trib­uted to Trump, ac­cord­ing to a Reuters anal­y­sis. In 2012, the same group con­trib­uted twice as much to Repub­li­can can­di­date Mitt Rom­ney as it did to Pres­i­dent Barack Obama’s re-elec­tion cam­paign.

Devil You Know

Peo­ple who work for hedge funds and pri­vate eq­uity firms have con­trib­uted more than $56 mil­lion to Clin­ton’s pres­i­den­tial cam­paign and the sup­port­ing groups that face no le­gal cap on do­na­tions. Trump’s cam­paign and re­lated groups re­ceived just $243,000 from donors in the same sec­tor, ac­cord­ing to data from the Cen­ter for Re­spon­sive Pol­i­tics.

“It’s ba­si­cally go­ing with the devil you know over the devil you don’t,” said Brian Gard­ner, a man­ag­ing di­rec­tor of New York in­vest­ment firm Keefe Bruyette & Woods. What also helped, he said, was the fa­mil­iar­ity with Hil­lary and Bill Clin­ton dat­ing back to the 1990s when her hus­band was pres­i­dent and ush­ered in a pe­riod of fi­nan­cial dereg­u­la­tion. “There is a close­ness and a com­fort level be­tween the ti­tans on Wall Street and the Clin­tons,” he said.

For bankers, the big­gest worry is a sce­nario where Clin­ton wins and the Democrats take con­trol of the House and the Se­nate, with pro­gres­sives such as War­ren and San­ders hold­ing sway over ev­ery­thing from new tax laws to ap­point­ments of reg­u­la­tors. Al­ready, War­ren has called for im­me­di­ate dis­missal of the Se­cu­ri­ties and Ex­change Com­mis­sion Chair Mary Jo White. Last year, War­ren suc­cess­fully led a move­ment to de­rail Obama’s plan to ap­point banker An­to­nio Weiss to the top job at Trea­sury.

War­ren and other pro­gres­sives will press Clin­ton to be tough on Wall Street in re­turn for their cam­paign sup­port. Clin­ton “leaned heav­ily on Se­na­tors El­iz­a­beth War­ren and Bernie San­ders, and pro­gres­sive ideas, when she needed to ex­cite vot­ers,” Adam Green with the Pro­gres­sive Change Cam­paign Com­mit­tee said. “El­iz­a­beth War­ren has proven she’s a very pow­er­ful ally to have on your side. And it’s well known she’s also a for­mi­da­ble op­po­nent to have against you,” Green said.

How­ever, re­cent polls sug­gest it is un­likely that Democrats will take the House and the fu­ture of the Se­nate is far from cer­tain. Even if the Se­nate goes Demo­cratic, it is likely to be led by New York Sen­a­tor Chuck Schumer, a mod­er­ate who has rep­re­sented Wall Street with the in­dus­try’s back­ing. Clin­ton has said she will pro­pose a “risk fee” on the largest fi­nan­cial firms and tighten up rules which al­low banks to cir­cum­vent bans on pro­pri­etary trad­ing by in­vest­ing in hedge funds. Like Trump, she has pro­posed to end the tax break that pri­vate eq­uity in­vestors en­joy, termed “car­ried in­ter­est”. —Reuters

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