Hillary Rodham Clinton and Barack Obama, who are running for president as economic populists, are benefiting handsomely from Wall Street donations, easily surpassing Republican John McCain in campaign contributions from the troubled financial services sector.
It is part of a broader fundraising shift toward Democrats, compared to past campaigns when Republicans were the favorites of Wall Street.
Some Democrats worry that the influx of money will make their candidates less willing to call for increased regulation of financial markets, which have been in turmoil after a wave of foreclosures on sub-prime mortgages.
These concerned Democrats argue that their candidates, and presumptive Republican nominee McCain, should be willing to push for financial institutions to accept more government regulation -- in exchange for likely future bailouts, such as the recent deal the Federal Reserve orchestrated for JPMorgan Chase & Co. to take over Bear Stearns Cos.
“I want to hear Clinton, Obama and McCain talk about a quid pro quo,” said Jared Bernstein, an economist with the Democratic-leaning Economic Policy Institute. “If we don’t hear it, especially from Democrats, it makes sense to ask why not and ask if they are inappropriately cozy with the financial services industry.”
The flow of campaign cash is a measure of how open-fisted banks and other financial institutions have been to politicians of both parties. Concern is rising that “no matter who the Democratic nominee is and who wins in November, Wall Street will have a friend in the White House,” said Massie Ritsch of the nonprofit Center for Responsive Politics, which tracks campaign donations. “The door will be open to these big banks.”
Sen. McCain of Arizona got off to a slow start in presidential campaign fundraising. Having clinched the Republican nomination, he could gain momentum in attracting Wall Street money.
For now, though, Sen. Clinton of New York is leading the way, bringing in at least $6.29 million from the securities and investment industry, compared with $6.03 million for Sen. Obama of Illinois and $2.59 million for McCain, according to the Center for Responsive Politics. Those figures include donations from the investment companies’ employees and political action committees.
In 2000, by comparison, Republican George W. Bush went on to win the White House after collecting nearly $4 million from the industry versus Democrat Al Gore’s $1.4 million. In 2004, Bush received $8.8 million, twice what Democratic Sen. John Kerry collected.
Spokesmen for Obama, Clinton and McCain deny that the candidates’ ideas on handling the economic crisis are being shaped by donations from Wall Street.
The candidates’ receipts reflect a broader trend that demonstrates how money follows power in Washington. It suggests that the nation’s money managers are betting heavily that either Clinton or Obama will capture the White House and that Democrats will retain control of Congress.
Lenders active in the sub-prime business, such as Ameriquest and Countrywide, were major political players in years past. But in the 2008 campaign, they are bit players, giving perhaps $120,000 to all presidential candidates.
The troubles in the financial markets, however, have spread from sub-prime lenders to some of the nation’s largest banking corporations and investment houses that traded in the mortgages, as Bear Stearns’ failure demonstrated. And PACs and employees of many of those businesses -- including Bear Stearns and its prospective new owner, JPMorgan -- have donated heavily to campaigns.
Citigroup, the nation’s largest banking company, also was among those enmeshed in the sub-prime mortgage debacle, leading to billions of dollars in losses last year and the resignation of its chief executive, Charles Prince.
Merrill Lynch too had multibillion-dollar losses last year, mostly involving soured mortgage-related investments. Merrill Chief Executive Stanley O’Neal, an Obama donor, also was forced out last year.
Overall, Citigroup and Merrill employees have given $519,000 to Clinton, $386,200 to McCain and $354,000 to Obama since January 2007.
Clinton is a top beneficiary of large Wall Street firms in part because she represents New York. And Clinton’s ties to the financial services industry extend beyond donations: A senior economic advisor to her campaign is Robert Rubin, Treasury secretary during her husband’s administration and now a top official at Citigroup. The consulting firm of Mark Penn, her chief campaign strategist, worked for Calabasas-based Countrywide.
Also, Bill Clinton’s administration oversaw significant changes sought by Wall Streeters, including the repeal of the Glass-Steagall Act to allow commercial and investment banks to consolidate.
Hillary Clinton’s position on bankruptcy code overhaul -- among the most important pieces of financial legislation passed by Congress over the last decade -- has been difficult to decipher.
As first lady, she encouraged her husband to veto a bill strongly supported by the credit card industry and opposed by consumer advocates to make it harder for people to discharge their debts by declaring bankruptcy.
Later, as a senator, she voted for one version of the measure in 2001 but did not vote on the bill that became law in 2005. (Her campaign said she did not participate because her husband had just undergone heart surgery.)
As a presidential candidate, Clinton has confronted financiers on the home mortgage crisis. “Wall Street helped create the foreclosure crisis, and Wall Street needs to help solve it,” she said.
She has advocated a 90-day moratorium on foreclosures, a five-year rate freeze on sub-prime adjustable-rate mortgages, and aid to states to avert foreclosures.
Obama voted against the 2005 bankruptcy bill. As an Illinois state senator in 2003, he carried a bill eventually signed into law that provided limited protection for borrowers against so-called predatory lending practices.
In a statement, the Obama campaign said the candidate had sought to reduce “the influence of special interests over the legislative process.” As a presidential candidate, the statement notes, Obama does not take donations from political action committees. He did, however, accept PAC money from Citigroup and others for his past campaigns.
“In front of audiences on Wall Street and Main Street, Sen. Obama has proposed an aggressive plan to mitigate the sub-prime mortgage crisis both to protect homeowners and to prevent the problems in the housing market from taking a toll on the economy as a whole,” the statement says.
Obama and Clinton have been talking for some time about addressing the mortgage crisis. But some Democrats complain that they have been too timid in speaking out about what they see as the Bush administration’s unwillingness to help homeowners even as the Federal Reserve moves to help major financial institutions.
“What that Wall Street money means is that few people in Washington, including the leading presidential candidates, say a thing when the government moves to bail out Wall Street before it helps homeowners,” said David Sirota, a liberal activist and former congressional aide.
Times researcher Maloy Moore contributed to this report.
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Following the money
The securities and investment industry is the third-largest source of campaign money for presidential candidates, after attorneys and retirees. So far in this campaign, its money has gone heavily to the two Democrats.
Sen. Hillary Clinton
Goldman Sachs : $426,000
Morgan Stanley : 368,670
Citigroup : 353,900
Lehman Brothers : 254,400
JPMorgan Chase : 231,200
Sen. Barack Obama
Total: $6.03 million
Goldman Sachs : $474,428
UBS Ag : 298,180
JPMorgan Chase : 282,387
Lehman Brothers : 274,147
Citigroup : 247,436
Sen. John McCain
Total: $2.59 million
Merrill Lynch : $203,500
Citigroup : 182,700
Goldman Sachs : 115,700
JPMorgan Chase : 95,350
Credit Suisse: 91,100
Notes: Donations are from individuals affiliated with the banks and investment houses. McCain’s figures are current as of the end of February, Obama’s and Clinton’s as of the end of January.
Sources: Center for Responsive
Politics, Opensecrets.org, Times research