JP Morgan, Goldman Sachs, Bank of America, and others have discussed withholding campaign contributions as punishment for populist rhetoric of progressive senator
What could she possibly be doing right?
According to exlusive reporting by Reuters on Friday, big Wall Street banks are so upset with Elizabeth Warren’s call to “un-rig” the economy and proposals for stronger financial regulations that discussions are underway about withholding campaign contributions to Senate Democrats as a form of “symbolic” protest against the freshman senator from Massachusetts.
Citing sources familiar with the situation, representatives of some of the nation’s largest banks—including Citigroup, JP Morgan, Goldman Sachs and Bank of America—have actively considered putting pressure on the Democratic establishment by making a coordinated threat to withold campaign contributions unless the populist rhetoric coming from Sen. Warren and her colleague from Ohio, Sen. Sherrod Brown, is toned down.
Bank officials said the idea of withholding donations was not discussed at a meeting of the four banks in Washington but it has been raised in one-on-one conversations between representatives of some of them. However, there was no agreement on coordinating any action, and each bank is making its own decision, they said.
The amount of money at stake, a maximum of $15,000 per bank, means the gesture is symbolic rather than material.
Despite that seemingly small figure, especially in major election cycles which now cost $1 billion or more, the political implications of the banks actively eschewing the Democrats because Warren or Brown’s outspoken criticism cannot be dismissed now that money has become the dominant feature of American democracy.
As recently as Thursday—as the Republicans moved to pass its new budget—Warren could be seen using social media to trumpet warnings about the ways in which Wall Street and the financial industry would benefit by the GOP proposals being put forth. On Twitter, she announced:
Meanwhile, Sen. Sherrod Brown has been Warren’s close ally in the Senate on such matters. Along with Sen. Bernie Sanders, Brown has been among the most outspoken proponents of breaking up the nation’s largest bank and re-instating the rules of the now defunct Glass-Steagall Act which—before it was repealed in the late 1990s under the Clinton administration—forced large financial insitutions to keep their investment arms and commercial banking divisions separate. Many critics blame the repeal of Glass Steagall as one of the key policy decisions that led to the 2008 financial disaster.
Though popular among progressives, the stances of Warren, Brown, and Sanders (who is an Independent but caucuses with the Democrats) have clearly ired Wall Street’s power brokers.
And, of course, the larger focus may ultimately fall on the presumed frontrunner for the Democratic presidential nomination for 2016: Hillary Clinton. Though many on the left have urged Warren to throw her hat in the ring to challenge for the nomination, Warren has repeatedly said she has no intention of entering the race.
Even though Clinton is well known as having a very comfortable relationship with Wall Street and the corporate world, Reuters reports that “political strategists say Clinton could struggle to raise money among Wall Street financiers who worry that Democrats are becoming less business friendly” because of the populist rhetoric of Warren.
According to the reporting:
Citi spokeswoman Molly Meiners declined to comment specifically on the Warren issue, saying the bank’s fund-raising political action committee (PAC) “contributes to candidates and parties across the political spectrum that share our desire for pro-business policies that promote economic growth.”
JPMorgan representatives have met Democratic Party officials to emphasize the connection between its annual contribution and the need for a friendlier attitude toward the banks, a source familiar with JPMorgan’s donations said. In past years, the bank has given its donation in one lump sum but this year has so far donated only a third of the amount, the source said.
Goldman, which already made its $15,000 donation for the year, took part in the Washington meeting between the four banks to talk about anti-big bank rhetoric of some Democratic lawmakers like Warren but has not had any discussions about withholding money, a source close to the bank said.