Clinton victory could hand whip to Wall Street scourge

If Hillary Clinton is elected president, the person who will most shape the future of financial services in the U.S. is unlikely to be the nation’s commander-in-chief, or even one of her cabinet members. Instead, that critical role may be filled by Massachusetts Sen. Elizabeth Warren, arguably the nation’s fiercest critic of Wall Street.

“Anybody in their right mind doesn’t want to get on the wrong side of Sen. Warren,” said Dennis Kelleher, CEO of Better Markets, a financial reform advocacy group in Washington, D.C. “She has a national following and a platform and a megaphone that no candidate in their right mind would want to be on the wrong side of.”

Warren cranked up the volume on that megaphone last month in a Senate Banking Committee hearing when she accused former Wells Fargo (WFC) CEO John Stumpf of “gutless leadership” following the bank’s sham accounts scandal, saying he should face criminal prosecution. Within weeks, the more than 30-year veteran of Wells had resigned

That blunt confrontation, hailed by progressives and widely circulated online and on social media, underlined that among lawmakers Warren may have no equal in using the bully pulpit to achieve her ends.

No surprise, then, that Clinton would recognize the political benefits of allying with Warren, whose appearances on the campaign trail in recent months have featured her signature critique of banks as engines of greed that destabilize the financial system. 

Beyond their shared preference for colorful pantsuits, Clinton and Warren have each pledged to reform Wall Street, although just how much their agendas overlap at the nitty gritty policy level remains to be seen. Yet even without taking an official position in a Clinton regime, Warren could capitalize on the political currency she has amassed stumping for the Democratic nominee and other party members to drive her agenda. 

Among the items on that list: tightening regulations on large banks; halting the revolving door between large financial firms and government; restoring a legal barrier between commercial banking and securities trading; and defending the Consumer Financial Protection Bureau from hostile lawmakers.

The latest display of the Clinton-Warren alliance came earlier this week at a campaign rally in New Hampshire, with Clinton applauding Warren’s track record of standing up to Wall Street and refusing to let them “off the hook” for their role in the Great Recession. And at a Colorado rally in mid-October, the appearance of both Warren and Vermont Senator Bernie Sanders, whose grassroots movement brought national attention to Wall Street “greed,” underlined that message.

“I think that people on Wall Street who think they’re going to get ‘kid-gloves’ treatment are in for an incredibly rude awakening if Secretary Clinton becomes president,” Kelleher said.

A tougher stance on Wall Street?

Throughout the primary season, Sanders hammered Clinton for her connections to Wall Street, particularly the hundreds of thousands of dollars she raked in for delivering speeches to Goldman Sachs (GS). And at first glance, Clinton’s past may appear to be conflict with Warren’s avowed goal of reining in the nation’s biggest banks, whose peddling of dodgy mortgage securities and reckless trading fueled the housing crash. 

Certainly, the Clintons’ links to Wall Street are well-documented, perhaps most dramatically symbolized by President Bill Clinton choosing former Goldman Sachs executive Robert Rubin -- among the most prominent and influential bankers of his time -- as his Treasury Secretary in 1995.

Yet Kelleher believes Clinton’s economic views have evolved since she served as First Lady, senator from New York and Secretary of State under President Obama. 

“I think what you’re seeing with Sen. Warren campaigning so much with Sec. Clinton, as well as [with] other senate candidates, is that the country’s mood, the country’s view of economic issues, ties up quite strongly with the economic agenda that Sen. Warren has been talking about the last few years and that Sec. Clinton is now talking about as well,” he said.

Whatever Warren’s and Clinton’s respective goals in shoring up the country’s banking system, much depends, as ever, on which party controls Congress. Polls suggest the Senate race remains close. That means Democrats can’t afford to lose a single vote if they want to win a congressional majority, according to Jaret Seiberg, a managing director at investment management firm Cowen Group. 

“Warren represents an important and powerful constituency within the Democratic party, and so Clinton will work with her,” Seiberg said.

Adam Green, co-founder of the liberal Progressive Change Campaign Committee, thinks Clinton’s partnership with Warren isn’t just good politics, but rather represents a genuine embrace by the Clinton campaign of populist positions on issues ranging from financial reform and trade to education and Social Security.

Clinton has already laid out what her supporters say is an ambitious program of financial reform. That includes imposing a risk fee on big banks, taxing high-frequency trading, and closing loopholes that allow companies to use hedge funds to engage in risky trading activities with taxpayer money.

Position of influence  

An important gauge of Warren’s influence on a Clinton administration would be who the new president appoints to lead key agencies such as the Treasury and Justice departments, as well as her choice of economic advisers. The Massachusetts lawmaker likes to say that “personnel is policy,” as highlighted in an email stolen from the personal account of John Podesta, Clinton’s campaign chair, and recently disclosed by Wikileaks. Wrote Clinton speechwriter Dan Schwerin to campaign staffers in January of last year:

“I spent about an hour and twenty minutes this afternoon with Dan Geldon, a longtime advisor to [Warren]. He was intently focused on personnel issues, laid out a detailed case against the Bob Rubin school of Democratic policy makers, was very critical of the Obama administration’s choices…We spent less time on specific policies...He spoke repeatedly about the need to have in place people with ambition and urgency who recognize how much the middle class is hurting and are willing to challenge the financial industry.”

Among the people reportedly on the list for a possible role serving under Clinton: former North Dakota Sen. Byron Dorgan, who has long warned about the risks of deregulating big banks; Maryland Rep. Donna Edwards; Gary Gensler, ex-chairman of the Commodity Futures Exchange Commission; former Delaware Sen. Ted Kaufman, another noted Wall Street critic who is known for taking Vice President Joe Biden’s seat in 2009; Heather McGhee, president of left-leaning public policy group Demos; and Joseph Stiglitz, a leading progressive economist.

Of course, the outcome of the election remains uncertain in what has been a tumultuous and unpredictable campaign. Yet some experts think a Clinton victory at the polls in November would only deepen the relationship with Warren, despite the latter’s past willingness to criticize the former Secretary of State.

“If the Democrats become the majority in the United States Senate and Clinton wins the White House, I think you’re going to see a very bold progressive economic agenda that President Clinton will lead, and Sen. Warren will be a partner in seeing it get through the Senate,” Kelleher said.

  • Julia Boccagno

    Julia Boccagno is a news associate for CBS News.