Credit Photograph by Andrew Harnik / AP
This week, both Donald Trump and Hillary Clinton are poised to give big economic speeches, both in Detroit, and their views in that realm could not look more different. Trump’s is a grim message of declining fortunes and middle-class despair, one sure to be further elaborated today before the Detroit Economic Club. Clinton, meanwhile, has been travelling around the handful of states that will likely determine the outcome of the election, smiling and sunnily talking about her “100-Day Jobs Plan,” usually with a rainbow of people of different creeds and ethnicities scattered around her, a pointed show of diversity.
Despite their fundamental disagreements, one perspective both Trump and Clinton seemed to share was that banks and bankers are not to be trusted and that banks should possibly even be broken up. In the past few days, however, Trump has made one of his trademark sharp turns, suggesting ahead of his speech today that he might institute a moratorium on new financial regulation. He also announced a list of economic advisers on Friday—thirteen men, heavily populated with billionaire business figures, such as the hedge-fund manager John Paulson and Stephen Feinberg, of Cerberus Capital, and many of whom are Trump political donors, according to Politico. The list suggests that he won’t be seeking the policy expertise of academic economists and, combined with the ban on regulation, might be seen as an effort to inch back into the good graces of Wall Street.
It might be too late for that. Clinton, at the moment, has emerged as the financial industry’s favorite candidate. It’s a fascinating and awkward development for Clinton, who took intense criticism from Bernie Sanders and others for making six-figure speeches to the bankers of Goldman Sachs. On August 2nd, the Clinton camp announced that she had had her “best fundraising month of the campaign,” with a total of ninety million dollars raised in July. According to the Center for Responsive Politics, hedge funds and private-equity funds donated $27.6 million to Clinton and pro-Clinton groups during this election cycle, while the Wall Street Journal, conducting its own, broader calculation, came to an even larger number, $47.6 million. Both analyses found that Trump had received nineteen thousand dollars so far from the hedge-fund and private-equity industries, although his campaign announced this week that he was making leaps in fund-raising over all, and bringing hedge-fund giants onto his team may change the composition of those donations.
Still, in the past ten days, Clinton has campaigned with the billionaires Warren Buffett and Mark Cuban, the latter of whom called Trump a “jagoff” at an event in Pittsburgh, according to the New York Times. Meg Whitman, the Hewlett-Packard C.E.O. and a high-powered Republican fund-raiser, has also aligned with Clinton, in spite of her strong anti-finance rhetoric. “I don’t agree with her on very many issues,” Whitman told the Times, “but she would be a much better president than Donald Trump.”
“I think what’s driving people towards her is that she’s the adult in the room,” Thomas Nides, a former Deputy Secretary of State under Clinton and vice-chairman at Morgan Stanley who has been serving as something of a conduit between the candidate and Wall Street, told me. “If she’s going to do anything, she’s going to do it with knowledge of the industry, and of the players in the industry. People in the industry may not like it, but it will be done based upon at least a modicum of intelligence.”
It used to be that the Republican Party was the party of Wall Street, or at least of a certain urban-professional, socially moderate, economically conservative banker type. Republicans could be relied on to offer policy ideas that the financial sector loved: free trade, tax cuts, and loosened regulation were the predictable trifecta, with a little budget austerity sprinkled in. The alignment between wealthy political donors from major banks and corporate executive suites and candidates like Mitt Romney, the Republican nominee for President in 2012, made logical sense, as predictable as the sun setting in the West.
An ominous-sounding line (to a banker, at least) from Clinton, “I believe Wall Street can never, ever be allowed to wreck Main Street again,” was followed up at the Democratic National Convention with a vague but chilling promise: “Wall Street, corporations, and the super-rich are going to start paying their fair share of taxes.” She went on, “When more than ninety per cent of the gains have gone to the top one per cent, that’s where the money is, and we are going to follow the money!” It was an unformed thought, but, to a hedge-fund manager eager to protect the special tax loophole that allows him to pay a lower rate on most of the money he earns, it might have brought to mind flashes of angry mobs marauding through Greenwich.
Of course, this kind of talk is fairly standard coming from Democrats during a campaign. Clinton has also been fairly consistent in her views of policies that directly affect the financial industry. Although her relationships with banks have always been seen as benign, or even friendly, she was in favor of the Dodd-Frank financial regulation and has been saying the same thing about eliminating the carried-interest tax loophole—the one that helps hedge-fund managers—since 2008. But this year, with Sanders rallying voters with his populist and strongly anti-Wall Street message, the Democratic Party platform shows his influence. “Wall Street cannot be an island unto itself, gambling trillions in risky financial instruments and making huge profits, all the while thinking that taxpayers will be there to bail them out again,” read a draft of the policy positions posted on the D.N.C.’s Web site. It also called for an expansion of Dodd-Frank, and for an “updated and modernized version of Glass-Steagall and breaking up too big to fail financial institutions that pose a systemic risk to the stability of our economy.”
For all his inconsistency, Donald Trump has conducted a careful analysis of the market he’s selling to, which is overrepresented by white men who have seen their options narrow dramatically in the modern economy. Trump’s shifting views and plans as he attempts to try to draw those voters in have sent the business community on a roller-coaster ride: he first threatened to raise rich folks’ taxes, then offered to gut those taxes. Then, during the Republican National Convention, three weeks ago, Wall Street was stunned when the reinstatement of Glass-Steagall suddenly appeared in the Party platform, reportedly at his request.
The tilt in Clinton’s favor among financial-industry types may have less to do with their love of her than with a rejection of what Trump represents: instability. As Warren put it in an interview with Bloomberg Businessweek last week, “Nuclear war is bad for business.” Wall Street’s backing of Clinton is therefore less a vow of support than an attempt to stave off catastrophe.