Populism is running high in the Democratic Party primary, and Wall Street is bearing the brunt of the criticism.
Other than frontrunner Hillary Clinton, the candidates have indulged in criticism of the financial industry fiercer than anything seen since the depths of the financial crisis, calling for big banks to be broken up and for executives to be jailed.
Partly, the rhetoric reflects that banks are still unpopular seven years after the subprime mortgage crisis. But it also represents an attempt by underdogs to draw a contrast between themselves, Clinton and Jeb Bush, a leading contender for the Republican presidential nomination.
In his campaign kick-off speech, former Maryland Gov. Martin O’Malley tied Clinton and Bush to Wall Street by referring to a report that the CEO of Goldman Sachs had indicated that either candidate would be acceptable to the company. “I have got news for the bullies of Wall Street. The presidency is not a crown to be passed back and forth by you between two royal families,” O’Malley said.
In his speech, O’Malley called for restoring the Depression-era Glass-Steagall law that separated commercial and investment banks and expressed support for prosecuting “cheats” at banks.
Similarly, Vermont Sen. Bernie Sanders, another challenger for the Democratic nomination, has called for restrictions on Wall Street far beyond those being implemented as part of the 2010 reform law signed by President Obama.
“Many of these banks are bigger today than they were before we bailed them out,” Sanders said last week in an appearance on Yahoo News. “Enough is enough. Yes, we should break them up.”
“I’m not quite clear what Hillary Clinton’s position is on that issue,” the self-identified socialist senator said.
It would be difficult for Clinton to embrace the kind of anti-Wall Street populism that progressives have agitated for in Obama’s second term.
Many Democrats perceive Clinton as close to Wall Street. Throughout her political career, megabanks such as Goldman Sachs, JPMorgan Chase and Citigroup have been her biggest political donors. Since leaving office as secretary of state, she has reportedly received hundreds of thousands of dollars from banks for speeches, and the Clinton Foundation has received millions more from big banks, according to Nonprofit Quarterly.
Furthermore, many liberals fault Clinton’s husband for deregulation during his presidency, including the repeal of Glass-Steagall, that they often argue led to the financial crisis of 2008 — a narrative of the financial crisis Sanders invoked in his interview last Monday.
Nevertheless, progressive activists have expressed hope that Clinton might be pulled along in the Democratic Party’s leftward drift on financial issues, and that the influence wielded by the other candidates and the activism of Sen. Elizabeth Warren, D-Mass., might commit her to tougher policy regarding Wall Street.
“O’Malley and Sanders are facilitating a race to the top on the Democratic side when it comes to Wall Street reform and accountability,” said Adam Green, the co-founder of the Progressive Change Campaign Committee, a liberal activist group. “And there’s still an unchecked box when it comes to Hillary Clinton’s position on these issues.”
In fact, Clinton at times has tried to appropriate the kind of rhetoric used by Warren and others, most recently saying that a “toppling” of the top 1 percent of earners was necessary, according to a New York Times profile.
Nevertheless, she has stopped short of calling for breaking up banks or increasing prosecution of executives, both of which are priorities for the Warren wing of the party.
Green argued that embracing such an agenda is a winning political stance.
“Looking at it politically, we’re living in an economically populist moment, and even voters in red states don’t want Wall Street and the big guys getting away with murder,” he said.
He referred to rhetoric from Republicans such as Sen. Mike Lee of Utah, who has decried “crony capitalism,” as evidence of rising populism.
Some Republican candidates also have tiptoed up to the kind of language that worries bank lobbyists.
“We cannot be the party of fat cats, rich people and Wall Street,” Sen. Rand Paul, R-Ky., said last year at an event hosted by conservative groups.
Wall Street’s reputation is still suffering from the 2008 crisis, said Karlyn Bowman, a public opinion analyst at the American Enterprise Institute. But banks have been creeping up in favorability in recent opinion polls.
Gallup, for instance, found last year that banks had returned to a net positive approval rating for the first time since 2008.
Running against banks is probably a winning strategy for Democratic challengers. “You use what arrows you have in your quiver to differentiate candidates,” Bowman said.
Whether it will help the nominee gain the presidency is a different question. “I don’t think that throwing bankers in jail is going to work in the general,” Bowman cautioned.
