Wall Street shifts campaign cash to Democrats
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Candidates' receipts reflect how money follows power to White House
3/21/2008 -
WASHINGTON — Hillary Rodham Clinton and Barack Obama, who have run 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. But some Democrats worry that the influx of money will make their candidates less willing to call for reforms to increase regulation of financial markets, which have been in turmoil following a wave of foreclosures on subprime mortgages.
These concerned Democrats argue that their candidates, and McCain, should be willing to push hard 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.
"I want to hear Clinton, Obama and McCain talk about a quid pro quo," says 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 being raised 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."
McCain got off to a slow start in fundraising. Having clinched the Republican nomination, he could gain momentum in attracting Wall Street money.
For now, though, Clinton is leading the way, bringing in at least $6.3 million from the securities and investment industry, compared to $6.03 million for Obama and $2.6 million for McCain, according to the Center for Responsive Politics. Those figures include donations from the investment companies' employees and political action committees.
By comparison, in 2000 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 Sen. John Kerry collected.
Democrats running for Congress, too, increasingly have benefited from Wall Street money.
Spokesmen for Obama and Clinton deny that their ideas on handling the economic crisis are being shaped by the donations they have accepted from Wall Street. McCain aides did not respond to inquiries about the issue.
But 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 the Democrats will retain control of Congress.
In part because she represents New York, Clinton is a top beneficiary of large Wall Street firms. And Clinton's ties to the financial services industry extend beyond donations: A senior economic adviser to her campaign is Robert Rubin, her husband's Treasury Secretary who is now a top official at Citigroup.
Also, Bill Clinton's administration oversaw significant steps 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 reform — one of the most important financial issues on which Congress passed legislation 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 a 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 freeze on rates on subprime adjustable rate mortgages and aid to states to avert foreclosures.
Obama voted against the 2005 bankruptcy bill. As an Illinois state senator in 2003, Obama 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 has sought to reduce "the influence of special interests over the legislative process." As a presidential candidate, the statement notes, he does not take donations from political action committees. He did, however, accept political action committee money from Citigroup and others for his past campaigns.
"In front of audiences on Wall Street and Main Street, Senator Obama has proposed an aggressive plan to mitigate the subprime 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," Obama's statement said.
Obama and Clinton have been talking for some time about addressing the mortgage crisis. But some Democrats complain they have been too timid to speak out about what they regard as the Bush administration's unwillingness to help homeowners even as 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.