Hillary Clinton has vowed to get tough on Wall Street, but her relationship with the powerful in the financial sector is both complicated and nuanced.
The Democratic presidential candidate’s record and her family ties suggest a healthy working relationship with Wall Street, if not a cozy one.
Here are five ways Clinton is inexorably linked to Wall Street.
Daughter Chelsea graduated in 2001 from Stanford University, with a history degree, which she followed up with a master’s and doctorate in international relations from England’s prestigious Oxford University. In 2006, with seemingly little background in high-stakes finance, she went to work for a $12 billion hedge fund called Avenue Capital Group. At the time, Wall Street powerhouse Morgan Stanley held a stake in the hedge fund, which specialized in distressed stocks and bonds. Avenue Capital was run by Marc Lasry, a wealthy Clinton financial backer. Through June 30, 2015, Avenue Capital employees had donated $22,950 to Clinton’s campaign.
Fast forward to 2010. Chelsea married Marc Mezvinsky, who had been working at Wall Street’s most iconic company, Goldman Sachs. Mezvinsky in 2011 became a co-founder of Eaglevale Partners, a hedge fund that government records show has invested in Greek debt. One of its big investors is Lasry. A New York Times story earlier this year cited unidentified sources as saying friends of the Clintons invested in Mezvinsky’s fund. Government regulations do not require hedge funds, which pool investments from the very rich, to publicly disclose their investors.
2. Speaking fees
Hillary Clinton’s most eye-popping Wall Street relationship involves her and her husband’s acceptance of speaking fees. Of the $150 million in speaking fees that have flowed to the Clintons since 2001, Wall Street ponied up over $8 million in speaking fees. In 2013, the year she left office as secretary of state, Hillary Clinton earned $1.575 million from big banks, including $225,000 from Charlotte-based Bank of America. Among her husband’s fees were $900,000 from Bank of America.
In 2014, as the campaign season approached, she kept a $280,000 Deutsche Bank check, donating between $750,000 and $1.5 million in fees from other banks to the family’s global charity, the Clinton Foundation.
Fees drawing special scrutiny came from Switzerland’s largest bank, UBS.
The Wall Street Journal reported this summer that after taking the helm at the State Department in 2009, Clinton was instrumental in a settlement between UBS and the Internal Revenue Service over the disclosure of the identities of U.S. tax evaders. In the ensuing years, Bill Clinton earned $1.675 million for at least 10 appearances before UBS’ American wealth management clients. Hillary Clinton earned $225,000 from UBS for a speech in 2013.
3. Campaign donations
Between her 2000 Senate run and June 30, Clinton’s political campaigns have raised $3.6 million from six major banks, four of which were among her top five donors, according to the Washington-based Center for Responsive Politics. Citigroup’s employees and its political action committee accounted for $824,000, while Goldman Sachs’ employees and its PAC gave $760,000, the group found. The fourth and fifth most donations from one enterprise have come from employees of and PACs for JPMorgan Chase ($696,000) and Morgan Stanley ($636,000).
Total donations from these and other banks still amounted to less than 1 percent of the total of nearly $800 million in contributions Clinton amassed for her Senate run and two presidential campaigns. Through June 30, the $290,000 donated to her presidential campaign by six major banks, topped by $88,000 from Morgan Stanley, amounts to a small fraction of the $47.5 million raised. Wells Fargo’s employees and PAC contributed $47,048 through June 30, while Bank of America’s PAC and employees donated $18,942.
New York is the global financial capital, and Hillary Clinton represented Wall Street as a U.S. senator from New York from 2001 until January 2009. During the first Democratic presidential debate this week, she said she told Wall Street bankers to “cut it out” in 2007, suggesting she warned of the coming near-collapse of the financial system. She was not seen then or now as a voice of early warning.
Unlike the state’s senior senator, Democrat Chuck Schumer, Clinton never served on banking or finance committees. But given that Wall Street companies were among her constituents, it’s not surprising she was a less harsh critic of the financial sector.
Clinton has taken a softer tone than her opponents when it came to re-regulating large banks. Two of her Democratic rivals, Vermont independent Sen. Bernie Sanders and former Maryland Gov. Martin O'Malley, vowed to re-impose past restrictions and break up the biggest banks. While Sanders criticizes Wall Street’s corrupting influence on Washington, O'Malley pointedly assailed Clinton for being too cozy with Wall Street.
For Clinton to do the same would mean a repudiation of her husband’s policies and those of her current campaign finance chief, former Goldman Sachs partner Gary Gensler. In 1999, under President Bill Clinton with Gensler at the Treasury Department, Congress repealed the Glass-Steagall Act, a Depression-era law that built a firewall between commercial banking and risky investment activities. Some critics view this repeal as a factor in 2008 crash. Others say banking regulators had chipped away at the act since the 1980s anyway.
Hillary Clinton favors a fee to discourage risky investments and full implementation of Congress’ 2010 revamp of financial regulation before further changes are adopted. She recently proposed curbs on high-speed traders, reflecting input from Gensler, who headed the Commodity Futures Trading Commission from 2009 to 2014.