Tag Archives: Wall Street

Digging Deeper Into Democratic Donors

After I argued that labor unions should endorse Bernie Sanders about a month ago, a Hillary Clinton supporter complained on Twitter about this section of my article:

The following meme, describing cumulative donations the candidates have received over the past thirty years, is illustrative:

She voiced two criticisms of the displayed meme. First, she noted that it portrays cumulative donations over the candidates’ political careers instead of the donations they’ve received in 2016.  While this point is true, it’s not very meaningful; in fact, one could easily argue that a cumulative look at donations received over several years provides more useful information about donors than a present-day snapshot.  Either way, my piece stated upfront that the meme displayed cumulative donations.

Second, she complained that the meme doesn’t actually display donations made by the companies listed – instead, it displays combined donations from the organizations’ political action committees (PACs) and from individual employees that are on record with the Federal Elections Commission (individual donations constitute the majority of the totals listed). Though this point is a fine one to make, it also doesn’t mean much – donations from individuals are only declared if the contribution is $200 or more and the Center for Responsive Politics, which compiles the data, has consistently reported it this way.  As I’ve noted before and the organization explains:

Our research over more than 20 years shows a correlation between individuals’ contributions and their employers’ political interests and we have also observed that the donors we know about, and especially those who contribute at the maximum levels, are more commonly top executives in their companies, not lower-level employees.

The meme paints an accurate picture of the fact that Clinton raises a lot of campaign cash from big-money, corporate-affiliated donors.  Sanders, on the other hand, doesn’t.  Those who contend otherwise are wrong.

In the interest of fairness and complete information, though, and because we now have data from the most recent filing period from the Center for Responsive Politics, let’s examine the candidates’ fundraising operations for their 2016 presidential bids more closely.

The first figure below shows the share of money each candidate has raised from small donations (donations of less than $200).  A greater share of small donations indicates more grassroots support for the campaign, while a smaller share of small donations suggests that a candidate is more heavily reliant upon big-money interests.  Over $30 million out of a little more than $41 million total raised by the Sanders campaign comes from small donors, while only about $13 million out of a little more than $77 million total raised by the Clinton campaign can claim the same origin.

Small Contributions

The next figure, like the criticized meme, depicts the larger donations the candidates have received.  Unlike the meme, it focuses solely on contributions to the candidates’ 2016 presidential campaigns.  The fact that corporate donors make Sanders’ list underscores the one legitimate critique of the meme – $200+ donations from individuals at a given company don’t necessarily mean the company has thrown its support behind a candidate.  Yet combined with the first figure, the story here is very similar to that the meme presents: Clinton raises most of her money from Wall Street and other rich donors, while Sanders raises most of his campaign cash from regular people.  Consider, for instance, that Clinton’s campaign has received a total of nearly $2 million in large contributions from individuals associated with the Securities & Investment industry.  That industry barely cracks the top 20 in industry-affiliated donations to Sanders – Wall Street traders appear to prefer Clinton to Sanders by a 40-to-1 margin.

Top 10 Donors

Finally, the figure below (adapted from an earlier post) depicts the amount of money raised on each candidate’s behalf by affiliated Super PACs and Carey Committees, which may be technically separate from the campaign but are in reality closely linked to it.  Clinton has three – Ready PAC (formerly known as Ready for Hillary), Priorities USA Action, and Correct the Record, the last of which has already engaged in dishonest attacks against Sanders.  Sanders has zero.

Super PACs

Sanders does have a much more benign Leadership PAC, Progressive Voters of America, which he founded several years ago to help “elect progressive candidates at the federal, state and local level.”  It has raised slightly more than $16,000.  Two Super PACs have also sprung up to try and support him, but they are unwelcome in Sanders’ campaign, which sent one of them, Billionaires for Bernie, a cease and desist letter.  Clinton, unlike Sanders, has not discouraged unaffiliated Super PACs from supporting her presidential bid.  In other words, while Clinton has tirelessly continued to court the wealthy, Sanders has kept his promise and refused to accept Super PAC support.

I’ve captured the highlights of this more current information in a new meme below.  It clearly has the same punchline as the old one, and may even show a starker contrast between the two candidates’ fundraising operations.

Bernie Hillary Meme

So if you’re not worried about the influence of money in politics or are an affluent donor yourself, Hillary Clinton might be an acceptable Democratic nominee.  But if you want a politician more beholden to the people than to a wealthy few, Bernie Sanders is probably the better choice.

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Filed under 2016 Presidential Election, US Political System

What It Means to be Tough on Wall Street

I nearly spit out the hard apple cider I was drinking when I heard the following exchange during the first Democratic presidential debate:

Anderson Cooper: Senator Sanders wants to break up the big Wall Street banks. You don’t. You say charge the banks more, continue to monitor them. Why is your plan better?

Hillary Clinton: Well, my plan is more comprehensive. And frankly, it’s tougher…

Sure, Clinton’s plan has, as financial systems expert Mike Konczal notes, significantly more “footnotes and wonky details.”  If that’s what “more comprehensive” means, so be it.  But tougher?  More “characterized by severity or uncompromising determination,” as Merriam-Webster’s puts it?

To me, the best, most concise summary of the two candidates’ plans for Wall Street banks thus far comes from former US Labor Secretary and current Berkeley professor Rob Reich:

Bernie Sanders says break them up and resurrect the Glass-Steagall Act that once separated investment from commercial banking.

Hillary Clinton says charge them a bit more and oversee them more carefully.

Which of those options sounds tougher to you?

Konczal also highlights that Sanders, unlike Clinton, “wants to take on the power of the big banks.”  In addition, the two candidates’ approaches to curbing high-frequency trading “is a clear difference, with Sanders taking a more aggressive approach.”

Clinton didn’t possibly expect anyone to believe that she’d be tougher on Wall Street than Sanders, did she?

Imagine my surprise upon opening up a recent Paul Krugman article – expecting the excellent economic and political analysis he so often provides – and seeing that, in the candidates’ dispute “about whose plan was tougher,” he thought “Mrs. Clinton had the better case.”

Krugman points out, as does Konczal, that while Clinton has already laid out details on how she plans to conduct oversight of the “shadow” banking sector, Sanders hasn’t.  Krugman sees a specific plan in this area as more important than a commitment to break up the big banks.  This argument is fine to make, though it’s worth noting that Reich disagrees.

But the more important topic, Krugman argues, is tough-on-Wall-Street credibility.  And what’s baffling to me about his analysis is that he seems to think Clinton has it, a position completely at odds with the campaign finance data and Clinton’s record.

The crux of Krugman’s argument is that, while “there was a time when Wall Street and Democrats got on just fine…with the securities industry splitting its donations more or less evenly between the parties,” that time has passed.  He writes:

[I]f Wall Street’s attitude and its political giving are any indication, financiers themselves believe that any Democrat, Mrs. Clinton very much included, would be serious about policing their industry’s excesses. And that’s why they’re doing all they can to elect a Republican…

Financial tycoons loom large among the tiny group of wealthy families that is dominating campaign finance this election cycle — a group that overwhelmingly supports Republicans. Hedge funds used to give the majority of their contributions to Democrats, but since 2010 they have flipped almost totally to the G.O.P.

As I said, this lopsided giving is an indication that Wall Street insiders take Democratic pledges to crack down on bankers’ excesses seriously. And it also means that a victorious Democrat wouldn’t owe much to the financial industry…

Krugman is right about the overall trends.  A tiny group of wealthy families is contributing millions of dollars to 2016 presidential campaigns, most of it to Republicans, and the balance of hedge fund donations between the two parties has definitely shifted.  But those overall trends mask one crucial exception to the rule: Hillary Clinton.

The Center for Responsive Politics collects data on donations campaigns receive from individuals who work in the “Securities & Investment” industry, which is shown below.  While the organization recognizes that “not every contribution is made with the donor’s economic or professional interests in mind[, there is] a correlation between individuals’ contributions and their employers’ political interests.”  In addition, the “donors [they] know about, and especially those who contribute at the maximum levels, are more commonly top executives in their companies, not lower-level employees.”

Securities & Investment Chart - Updated

As the chart shows, Clinton actually leads all Republican candidates in contributions from this industry.  She has received over 40 times more money than Sanders has from individuals associated with Wall Street.  That’s lopsided giving all right, but it’s lopsided in a much different way than Krugman suggests.

Candidates receive considerably more financial support from Super PACs than from individual donations, but Clinton ranks among the Republicans in this category, too.  Jeb Bush, Ted Cruz, and Marco Rubio outpace her (Bush by a considerable margin), but her $20.3 million in Super PAC money is exactly $20.3 million more than Sanders has received.  While it’s not clear how much of any candidate’s Super PAC money comes from Wall Street, and while I suspect that Clinton Super PAC donors George Soros and S. Donald Sussman are more amenable to basic regulations than their fellow billionaire hedge fund managers who donate to Republicans, it seems plausible that a “victorious Democrat” – if that Democrat were Hillary Clinton – might, in fact, “owe much to the financial industry.”  And that’s before even considering donations to the Clinton foundation.

Super PAC Donations

Those donation profiles suggest that Sanders, despite not having a specific proposal on “shadow” banking yet, is far more likely than Clinton to fight for smart recommendations from folks like Konczal.

I find it especially hard to understand Krugman’s argument in the context of what Clinton touted as a tough-on-Wall-Street credential during the debate:

I represented Wall Street, as a senator from New York, and I went to Wall Street in December of 2007 — before the big crash that we had — and I basically said, “cut it out! Quit foreclosing on homes! Quit engaging in these kinds of speculative behaviors.”

I don’t know about you, but I don’t typically think representing a group of rich people and giving them a nonbinding but stern talking to qualifies as particularly tough.  History backs me up on this one – Clinton’s Wall Street lecture doesn’t seem to have worked out so well.

Paul Krugman is a great economist, I love his column, and I understand the point he’s trying to make: he thinks a Democrat in the White House – any Democrat – would be a hell of a lot better than any Republican.

But even if you agree on that point, don’t buy the idea that the practical difference between Clinton and Sanders is trivial.  It’s very large when it comes to Wall Street, where Sanders is tougher by any reasonable definition of the word.

Note (10/22/15): I updated this post with new data from the Center for Responsive Politics; the old graph, which appeared in the original version of this post, is shown below.  At that time (as the original version of the post noted), Sanders had “received so little from the Securities & Investment industry that the Center for Responsive Politics [didn’t] even report it.”

Securities & Investment Donations

Update (5/12/16): The Wall Street Journal reports that “Hillary Clinton is consolidating her support among Wall Street donors and other businesses ahead of a general-election battle with Donald Trump, winning more campaign contributions from financial-services executives in the most recent fundraising period than all other candidates combined.”  In addition, “some Wall Street donors have shifted their financial support from Republican candidates who dropped out of the race, such as former Florida Gov. Jeb Bush and Florida Sen. Marco Rubio, to Mrs. Clinton in recent months.”  The most recent data from the Center for Responsive Politics, shown below, includes both donations made directly to the campaigns and those made to candidates’ Super PACs.

Wall Street Donations 4-21-16.png

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Candidates Routinely Threaten Wall Street, Follow Through with Little More than a Stern Scolding

In this post, Part 2 in a series on Democratic presidential candidate Hillary Clinton, Emilio da Costa documents some of the actions that President Barack Obama has taken in the interests of the very wealthy. Emilio, who holds a master’s degree in City and Regional Planning from Berkeley and a bachelor’s degree in Urban Studies from Stanford, argues that Clinton is likely to follow suit – she has much deeper ties to Wall Street than to those whose votes she will be seeking on the campaign trail.

 Part 1 of the series, which focused on Obama’s political appointments, can be found here.

Emilio da Costa

Emilio da Costa

As was required at the time, Obama made promises during his campaign to rein in Wall Street and introduce regulatory reforms to the financial industry. All of the grumbling about Obama’s tax policy being socialist makes it hard to believe the extent to which he supported legislation that so disproportionately benefited the very wealthy. Obama not only extended the Bush tax cuts that he said he would repeal, but in the case of the estate tax, supported the even more regressive policy of lowering the rate and raising the exemption limit in 2010’s $858 billion tax-cut legislation. Although Democrats claim they were forced to compromise on a 35% rate with a $5 million per-person exemption to prevent a worse outcome in the future, if no law were to have passed that year, a 55% rate with a $1 million exemption would have taken effect. When introduced, the exemption limit of $5 million meant that only 0.2 percent of all estates would be eligible to owe any tax, the smallest percentage since 1934 – except for 2010, which Bush’s 2001 tax-cut legislation mandated would be totally estate-tax-free. Days after Obama signed the 2010 legislation, while interviewing Chris Hedges for Democracy Now, Amy Goodman summarized the impacts more generally: “At least a quarter of the tax savings under the deal will go to the wealthiest one percent of the population. The only group that will see its taxes increase are the nation’s lowest-paid workers.” During this interview Hedges argues that “one of the most pernicious things that Obama did in this tax bill was reduce contributions to Social Security, because of course that’s next on the target.” With Obama’s 2013 budget plan having cut Social Security and Medicare by much more than the GOP alternative, it appears Hedges’s predictions were well-founded.

Similarly, Clinton has been diligently working to pander to the masses as a candidate with a tough stance on white-collar crime while at the same time assuring her most devoted backers that they have nothing to worry about. In response to this delicate balancing act she has embarked upon, within days of Clinton announcing her entry into the presidential race, Matt Taibbi wrote a piece for Rolling Stone entitled “Campaign 2016: Hillary Clinton’s Fake Populism Is a Hit.” Few journalists are better suited to the task of exposing a fraud than Matt Taibbi. In typically hilarious fashion (the subtitle of the piece reads: “Pundits say her idealist porridge is not too hot, not too cold, but just fake enough”), Taibbi focuses primarily on Clinton’s position on the carried interest tax break to reveal the way that she, like so many high-ranking politicians, twists her words to manipulate the lower-income and middle-class masses while remaining faithful to the wealthy, high-powered constituency that she actually represents:

“There’s something wrong,” she told a crowd of Iowans, “when hedge fund man­agers pay lower taxes than nurses or the truckers I saw on I-80 when I was driving here over the last two days.”

Oh, right, that. The infamous carried interest tax break, the one that allows private equity vampires like Mitt Romney and Stephen Schwartzman to pay a top tax rate of 15 percent while all of the rest of us (including the truckers Hillary “saw” – note she didn’t say “hung out with Bill and me over chilled shrimp at the Water Club”) pay income taxes.

The carried interest loophole is an absurd, completely unjustifiable handout to the not merely well-off but filthy rich, and it’s been law in this country for about three decades.

Raise your hand if you really think that Hillary Clinton is going to repeal the carried interest tax break.

Whether or not the crowd of Iowans was convinced that Clinton legitimately planned to repeal the carried interest tax break, major media outlets published headlines that took the language from her campaign announcement as evidence that Hillary is a concerned populist dedicated to helping out struggling middle-class American families, until, as Taibbi documents, editorials with a conflicting message began popping up:

“Hillary Clinton’s Wall Street Backers: We Get It,” announced Politico, which polled Democrat-leaning Wall Streeters about the anti-wealthy rhetoric and reassured us that none of them took her seriously.

It’s “just politics,” said one major Democratic donor on Wall Street, explaining that some of her Wall Street supporters doubt she would push hard for closing the carried interest loophole as president, a policy she promoted when she last ran in 2008. [emphasis his]

Failing to follow through on campaign promises is no deviation from convention, and considering her convivial relationship with Wall Street, it’s no shocker that no one is worried that she would actually take any actions to her donors’ detriment. In particular, when it comes to the carried interest tax break, Taibbi demonstrates that there has been a distinctly noticeable pattern forming among Democratic candidates:

Yes, back to that, the carried interest issue. Promising, and then failing, to repeal the carried interest tax break is fast becoming a Democratic tradition, so much so that I’m beginning to wonder if not fixing this problem is an intentional move, designed to ensure that Democrats always have something to run on in election seasons.

In both the 2008 and 2012 election cycles, Barack Obama either decried the tax “trick” or overtly promised to close the loophole.

Obama’s remarks about carried interest pretty much always sound exactly like Hillary’s remarks this week. He gave a Rose Garden speech in 2011, in advance of his race against Romney, in which he rejected ‘the notion that asking a hedge fund manager to pay the same tax rate as a plumber or teacher is class warfare.’”

Taibbi then remarks on how, instead of holding politicians to their campaign vows or referring to them flat-out as disingenuous manipulation, media outlets tend to give such promises the designation of idealism. That makes the media complicit in politicians’ immunity from accountability:

Editorialists like to talk about the two things, ideals and reality, as totally separate and distinct. Idealism, the stuff of campaign promises, is usually pooh-poohed as “purity politics,” while the cold transactional politics of Beltway dealmaking and incremental change are usually applauded as “pragmatism.”

All of which is a roundabout way of saying that Hillary’s first official week as a presidential candidate went exactly as her handlers must have hoped.

At launch she talked a streak of anti-elitist rhetoric that was taken seriously for a few days, until the punditry took the temperature of her populism and declared to it be the right kind: the fake kind, the purely strategic kind.

In the same Politico article that Taibbi referenced above, Democratic strategist Chris Lehane, a veteran of Bill Clinton’s White House who now advises billionaire environmentalist hedge-fund manager and donor Tom Steyer, was quoted reiterating the notion that Hillary’s populist claims are totally hollow: “The fact is that any Democrat running for president would talk about this. It’s as surprising as the sun rising in the east.”

Considering Americans’ widespread disdain toward Wall Street banksters, Clinton is keenly aware of the importance of polishing over her strong ties to the financial industry. However, Matt Taibbi isn’t the only journalist that sees through her newfound appreciation for economic populism. Writing for the International Business Times, Andrew Perez and David Sirota looked through the publicly available data to follow the money beyond the baloney. They summarize how Clinton, in a recent speech, “call[ed] for Wall Street executives who engage in financial wrongdoing to be held accountable more than they have been under President Barack Obama.” But a quick look at the financial disclosure data for the Clinton Foundation suggests she would be unlikely to follow through:

Clinton’s outrage, though, did not stop her family’s foundation from raking in donations from many of the same banks that secured government fines rather than face full-scale prosecution. The Clinton Foundation has accepted $5 million worth of donations from at least nine financial institutions that avoided such prosecution — even as they admitted wrongdoing.

In that same speech, Clinton said, “HSBC allowing drug cartels to launder money, five major banks pleading guilty to felony charges for conspiring to manipulate currency exchange and interest rates. There can be no justification or tolerance for this kind of criminal behavior.” If Clinton believes that there can be “no tolerance for this kind of criminal behavior,” then it is a bit strange that, “in 2014, two years after HSBC admitted to major violations of U.S. laws, the firm was the top sponsor at a Clinton Global Initiative (CGI) event, paying at least $500,000 to the Clinton Foundation.” In fact, in addition to the CGI and the Clinton Foundation both having an illustrious record for accepting sponsorships and donations from criminal banks, both Clintons have accepted outrageous speaking fees from them, too.

The HSBC relationship — taking money from a bank after the firm admitted wrongdoing — was not unique. In 2009, UBS avoided prosecution by the Justice Department when it agreed to pay a $780 million fine and admitted to defrauding the United States by allowing American citizens to hide income from the IRS. The Swiss bank has since entered into two more agreements with the Justice Department — one for rigging the municipal bond market and the other for manipulating global interest rates. UBS has paid former President Bill Clinton more than $1.5 million for speeches since 2009, and the firm has given more than $550,000 to the family’s foundation.

In 2010, the British banking firm Barclays entered into a settlement agreement with the Justice Department, and admitted to violating U.S. sanctions by making transactions for customers in countries such as Libya, Sudan and Myanmar. Weeks later, Barclays was  sponsor at the annual CGI event. Barclays has remained a CGI sponsor in the years since, even after the bank paid more fines under a new agreement with the Justice Department for manipulating worldwide interest rates. Barclays has paid the Clinton family $650,000 for speeches since 2009. The firm has given at least $1.5 million to the Clinton Foundation.

Covering a speech Clinton gave on July 13thBen White for Politico reported on, among other things, her continued promise to repeal the carried interest tax break. She also “pledged to both defend existing financial reform and go even further, almost hinting at a need to break up the largest banks, something sure to go down poorly with some of Clinton’s biggest supporters on Wall Street.” However, financial reformers like Dennis Kelleher of Better Markets expect more: “The American people deserve a concrete, specific, comprehensive plan that really protects them from Wall Street recklessness and that she as president can be held accountable for once in office.” Others wonder whether she will “put in place a team of advisers who have a demonstrated history of supporting meaningful reform and tough enforcement, or chooses instead to surround herself with the same crowd of revolving door insiders.” Given the actions of the Clinton Foundation and Hillary’s personal ties to Wall Street, it is no wonder that financial reformers are skeptical she will follow through with policies that are as progressive as her vague pledges.

Click here to read Part 3 of the series.

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