March 16, 2016
The Clintons’ $93 Million Romance with Wall Street: a Catastrophe for Working Families, African-Americans, and Latinos
For 24 years Bill and Hillary Clinton have courted Wall Street money with notable success. During that time the New York banks contributed:
* $11.17 million to Bill Clinton’s presidential campaign in 1992.
*$28.37 million for his re-election in 1996.
*$2.13 million to Hillary Clinton’s senatorial campaign in 2002.
*$6.02 million for her re-election in 2006.
*$14.61 million to Hillary Clinton’s presidential campaign in 2008.
*$21.42 million to her 2016 campaign.
The total here is $83.72 million for the six campaigns,i ii disbursed from eleven congenial banks: Goldman Sachs, Citigroup, UBS, Bank of America/Merrill Lynch, Wells Fargo, Barclay’s, JP Morgan Chase, CIBC, Credit Suisse, Deutsche Bank, and Morgan Stanley.iii iv
Then there were the speeches. Sixteen days after leaving the White House in 2001, Mr. Clinton delivered a speech to Morgan Stanley, for which he was paid $125,000. That was the first of many speeches to the New York banks. Over the next fourteen years, Mr. Clinton’s Wall Street speaking engagements earned him a total of $5,910,000:v
*$1,550,000 from Goldman Sachs.
*$1,690,000 from UBS.
*$1,075,000 from Bank of America/Merrill Lynch.
*$770,000 from Deutsche Bank.
*$700,000 from Citigroup
After she resigned as Secretary of State in 2012 Hillary Clinton took to the lecture circuit as well. Some of her income has come to light during the current presidential campaign—the infamous $675,000 she was paid for three speeches to Goldman Sachs. That disclosure, however, belittles her financial achievement and the scope of her audiences. She also addressed the Bank of America/Merrill Lynch, Morgan Stanley, Deutsche Bank, UBS, Ameriprise, Apollo Management Holdings, CIBC, Fidelity Investments, and Golden Tree Asset Management. In doing so she earned another $2,265,000.vi
No other political couple in modern history has enjoyed so much money flowing to them from Wall Street for such a long time—$92.57 million over a quarter century.
During a CNN forum on February 3, Anderson Cooper wondered if Goldman Sachs’ $675,000 might impact her prospective presidential decisions. Defending her integrity with undisguised indignation, she described her independence from the banks:
Anybody who knows me, who thinks that they can influence me, name anything they’ve influenced me on. Just name one thing. I’m out here every day saying I’m going to shut them down, I’m going after them. I’m going to jail them if they should be jailed. I’m going to break them up.vii
Her campaign website confirms her fierce determination to oversee the banks and hold them strictly to account. “Wall Street must work for Main Street,” the website claims, outlining her program for “Wall Street Reform:”
Veto Republican efforts to repeal or weaken Dodd-Frank
Tackle dangerous risks in the big banks and elsewhere in the financial system.
Hold both individuals and corporations accountable when they break the law.viii
$675,000 might be insufficient to elicit Ms. Clinton’s sympathetic ear, but a quarter century of accepting tens of millions of dollars is not so easily dismissed. It would likely have some impact on the Clintons’ sense of gratitude and certainly on their social, cultural, and political environments.
Over that period of time, while one of them or the other held public office almost continuously, the couple accumulated a net worth of $125 million.ix x Measured by family wealth, this inserted the couple into the top 1% of American families by a factor of 16 ($7.88 million is the threshold).
The Clintons found that stratum of society agreeable. In New York, their home upon leaving the White House, they moved easily among other multimillionaires, the celebrated, wealthy, and accomplished people of the city. Lloyd Blankfein, Robert Rubin, and Henry Paulson are examples, CEOs of the benefactor Wall Street banks. The couple could scarcely avoid adopting the mindset, language, values, and political perspectives of the people who now constituted their peer group.
Breaking up banks, jailing the lawless executives, forcing Wall Street to work for Main Street: Hillary Clinton’s stern proclamations of impartial law enforcement and strict regulation are difficult to take seriously.
Wall Street doesn’t. One bank executive assured his clients, “We continue to believe Clinton would be one of the better candidates for financial firms.” He was quoted in a CNN Money article, “Wall Street Isn’t Worried about Hillary Clinton’s Plan,” which stated,
Hillary Clinton unveiled her big plan to curb the worst of Wall Street’s excesses….The reaction from the banking community was a shrug, if not relief.xi
There is good reason for the banks’ sanguine view. Over the 24 years of the romance, the Clintons first reoriented their political party, gave it a new name, the New Democratic Party, and put it at Wall Street’s service. Then they engineered financial opportunities for the New York banks of immense value—running into the hundreds of billions. And through the years as President, Senator, and Secretary of State the Clintons supported Wall Street’s interests at every necessary turn and without fail.
In the early 1990s, chairing the Democratic Leadership Council, Bill Clinton ushered in the centrist, triangulating New Democratic Party, explicitly to be more business-friendly—and to attract the financial support of corporate America. Wall Street supported his 1992 campaign handsomely, and Bill Clinton became the first president under the new banner. Hillary Clinton was at his side, a de facto minister-without-portfolio.
When he appointed Robert Rubin of Goldman Sachs as Secretary of the Treasury Department, Clinton established a precedent. For the next 24 years every Administration would find Wall Street executives to serve in the position. The New York banks became the primal clients of the New Democratic Party.
But the working families of America and the African-American and Hispanic communities—the party’s historic constituencies—were betrayed and abandoned, deprived of effective representation in Washington. The Clintons’ political campaigns over the next decades became monumental hypocrisies, Bill donning sunglasses to play his saxophone for Arsenio Hall, Hillary visiting black churches to hug the parishioners. They speak warmly to the traditional constituencies with carefully scripted political rhetoric, currying their favor, depending on them for electoral victory, but effectively obscuring the truth of their betrayal.
The traditional constituencies were not only betrayed, but targeted. On taking office Mr. Clinton announced, “The era of big government is over.” On that cue he co-opted two issues long
used by Republicans to mask their party’s racism: “welfare” and “crime.” To address the issues two laws were passed in Clinton’s first term that savaged the betrayed constituencies.
The first was The Personal Responsibility and Work Opportunity Reconciliation Act. It fulfilled Clinton’s promise to “end welfare as we know it,” and the punishing effects it set in motion have yet to abate. Since the end of the Clinton Administration, poverty in the U.S. has nearly doubled: “…the number of Americans living in high-poverty areas rose to 13.8 million in 2013 from 7.2 million in 2000, with African-Americans and Latinos driving most of the gains.”xii
To show how tough on crime he could be, Clinton next guided The Violent Crime Control and Law Enforcement Act of 1994 through Congress. A flurry of prison construction quickly followed, an industry of private for-profit prisons took hold and flourished, and a skyrocketing population mostly of young black males soon filled them, most frequently charged with drug offenses, non-violent and victim-free.
Sixteen years later the effects of the law were described in a searing book: The New Jim Crow: Mass Incarceration in the Age of Colorblindness.
The author of the book is a distinguished legal scholar and human rights activist, Michelle Alexander.
Ms. Alexander well understands how the Clintons and their creation, the New Democratic Party, left working families and communities of color without a political voice. And no one addresses the tragedy more forcefully. Her latest work is an article, “Black Lives Shattered,” in the February 29, 2016 issue of The Nation. She details how the two Clinton laws have devastated African-American families and sent millions—particularly those young black males—to prison. In the article’s caption, she asks, The Clinton’s legacy has been the impoverishment of black America—so why are we still voting for them?
The online version of her article carries a different title, Why Hillary Clinton Doesn’t Deserve the Black Vote . Her compelling case is abbreviated in the subtitle:
From the crime bill to welfare reform, policies Bill Clinton enacted—and Hillary Clinton supported—decimated black America.
When pressed, and with limited enthusiasm Hillary Clinton now apologizes for the laws, suggesting they are no longer quite so appropriate. But she has not, cannot, and unquestionably will not mention two other laws passed at the bidding of President Clinton’s Treasury Secretary, Robert Rubin. These laws enriched the Wall Street banks by hundreds of billions of dollars, but they too devastated working families, African-Americans, and Latinos.
The first was The Financial Services Modernization Act of 1999, repealing the Glass-Steagall legislation of 1933. Now it was legal once more for financial institutions to mix commercial and investment banking. Goldman Sachs et al. could now use depositor’s funds, insured by the Federal Deposit Insurance Corporation, to buy up “subprime” mortgages, the high-interest debt obligations of typically low-income, black, and Latino families.
The next law was The Commodity Futures Modernization Act. With it Goldman Sachs et al. could transform packages of those “subprime” mortgages into complicated derivatives called “mortgage-backed-obligations,” have them fraudulently rated as AAA investments, and sell them around the world, without limit, without restriction, without regulation, at immense profit.
For eight years the bubble inflated, and then it collapsed in the last year of George Bush’s Administration. Real estate values plummeted. The stock market was hammered. So was the U.S. economy. And so, tragically were many low-income, African-American, and Latino families. $13 trillion in household wealth vaporized. Nine million workers lost their jobs. Five million families were evicted from their homes.xiii
This is what the Clinton Administration, and the New Democratic Party, had wrought.
The banks were caught with hundreds of billions in mortgage-backed derivatives still in the pipeline, the market values of which were dropping like stones. Wall Street’s prospective losses were horrific; bankruptcies loomed. But George Bush’s Treasury Secretary was the obligatory Wall Streeter: Mr. Hank Paulson, recently CEO of Goldman Sachs. In a heartbeat Mr. Paulson rammed through Congress The Emergency Economic Stabilization Act of 2008. It was known as the “Troubled Asset Relief Program,” and it handed Mr. Paulson $700 billion of taxpayers’ money to buy the near-worthless securities from the banks.
Hillary Clinton, now the U.S. Senator from New York, voted for the bill, telling a New York radio station the next day, “I think the banks of New York..are probably the biggest winners in this.”xiv
Eagerly, Mr. Paulson started buying, typically paying the banks half again the market value of the “troubled assets.”xv But a presidential campaign was underway, and soon he would have to stop.
Barack Obama, overcoming Hillary Clinton in the primaries, was elected as the second president from the New Democratic Party. Mr. Obama’s campaign contributions from Wall Street:
*Goldman Sachs: $1,034,615
*JP Morgan Chase: $847,855
*Morgan Stanley: $528,182
The total here is $3.7 million.xvi (Hillary Clinton’s campaign, apparently thought more likely to succeed, was supported with $14.6 million from the banks.xvii)
President Obama’s choice of Wall Street bankers to head his Treasury Department was Mr. Timothy Geithner, lately the president of the Federal Reserve Bank of New York. Mr. Geithner wasted no time in resuming the “troubled asset” purchases, and his execution of the program was no less profitable for the banks than Mr. Paulson’s.xviii
Wall Street’s grip on the New Democratic Party however, and its influence in the Obama Administration, appeared in the Department of Justice as well. Mr. Eric Holder joined the Administration from the law firm of Covington Burling, which represents [in Washington] most of the Wall Street banks. Charged with prosecuting their criminal behavior, Mr. Holder found the banks “too big to fail.” Instead of criminal indictments and lawsuits, then, Mr. Holder negotiated with each of the banks a financial penalty to be paid from corporate funds. No corporate executives were jailed, no personal fines levied, no records of criminal conduct filed, no salaries reduced, no bonuses denied.
Today the Wall Street banks are larger and more powerful than ever, and Mr. Holder has returned to Covington Burling. President Obama, however—of the New Democratic Party—has provided no similar relief to the brutalized working families and communities of color. Their struggles continue, the crime and welfare laws have not been repealed, and the title of a recent study tells the tragic truth: During Obama’s Presidency Wealth Inequality has Increased and Poverty Levels are Higher.xix
Because of the Clintons’ romance with Wall Street and their corrupt New Democratic Party, the New York bankers and the Clintons are richer today. Others—betrayed, abandoned, savaged—are not.