Liberals aligned with Sens. Elizabeth Warren and Bernie Sanders are staking out opposition to Hillary Clinton appointing Wall Street-friendly regulators if she wins the presidency and are preparing to mount resistance to her nominations if necessary.
The advance work to push Clinton’s administration to the left is part of a continuation of Sanders’ primary challenge, as well as of the Democratic insurgency over financial regulation that Warren has led in recent years against the Obama administration.
It is rooted in liberal bitterness with the centrism of the Bill Clinton administration and with the policies implemented by some of Obama’s regulators, including former Treasury Secretary Tim Geithner and current Securities and Exchange Commission Chairwoman Mary Jo White.
If Clinton nominates candidates for top positions who liberals fear would fall short on regulation and enforcement, outside groups expect an intra-party clash.
“Progressives are doing everything they can to avoid a nomination fight, but I also wouldn’t want to test them,” said Tyler Gellasch, a former Senate aide and Democratic consultant.
Such an effort could be led by senators who are now campaigning for Clinton to beat Donald Trump, but who could push back against her nominees next year.
“We need a secretary of treasury who is prepared to take on the greed and illegal behavior of Wall Street, not someone who comes from Wall Street or will leave office to go to Wall Street,” Sanders wrote in an op-ed published Friday in the Boston Globe.
Congressional Democrats clashing with a Democratic White House on financial regulatory personnel would be nothing new. In winter 2014, Warren successfully rallied liberals to oppose Obama’s nomination of Antonio Weiss, an investment banker for Lazard, for a high-level position at the Treasury. In 2013, when it was reported that Obama favored Larry Summers as the next chairman of the Federal Reserve, liberal Democrats rallied to sway Obama to pick someone else. The effort was led by Warren and other noted Wall Street critics, Ohio’s Sen. Sherrod Brown and Oregon’s Sen. Jeff Merkley, but also drew in Jon Tester, a Montana senator regarded as a moderate.
Several outside groups are preparing by making lists of favored and disfavored candidates, with an eye toward pre-emptively checking regulators who would be insufficiently aggressive in enforcing the new post-crisis banking rules and in aiming to shrink the size and political influence of big banks. “Our influence is often sharpest with criticism,” said Bartlett Naylor, a financial policy advocate at Public Citizen, a left-leaning consumer advocacy group.
Part of the effort, Naylor said, is to avoid nominees whose view of Wall Street could be colored by potential conflicts of interest. As an example of the criteria they look for, he referred to provisions of a bill introduced by Wisconsin Democratic Sen. Tammy Baldwin, the Financial Services Conflict of Interest Act, which would tighten restrictions on former officials lobbying for private firms and implement other guardrails.
Jeff Hauser, executive director of the Revolving Door Project, said he was focused on “getting individuals into positions of regulatory power who are skeptical of the corporate claims they are going to encounter.”
In part, that means opposing officials who have worked in the financial industry, such as White, who came to the SEC from a white-shoe law firm that worked for the financial industry, or current Treasury Secretary Jack Lew, who went from government service to Citigroup and then back into the government.
But for liberals, associations with banks are not necessarily a deal-breaker. For example, some want the next treasury secretary to be Gary Gensler, the Clinton campaign’s chief financial officer. Gensler earned a reputation as a tough regulator while serving as chairman of the Commodity Futures Trading Commission, even though he previously had been a banker with Goldman Sachs.
“This is bigger than the revolving door; it’s about how nominees and advisers view the world,” Gellasch said.
The viewpoint that Wall Street critics fear is associated with Robert Rubin, the Treasury secretary under President Bill Clinton who worked for Goldman Sachs before serving in Clinton’s Cabinet and for Citigroup afterward. Many liberal critics of Wall Street see themselves as in a battle with the “Rubin wing” for influence within the Democratic Party.
That perception leads them to be skeptical, for instance, of rumors that Facebook Chief Operating Officer Sheryl Sandberg is under consideration to be the next Treasury secretary.
While Sandberg doesn’t come from Wall Street, she would face suspicions relating to Facebook practices that some on the Left would like to see the Treasury clamp down on, including high executive compensation and aggressive tax avoidance using offshore entities.
Should a Sandberg nomination come along, liberals would expect pushback — not just from Warren, but from Merkley and Brown, as well as others not as deeply involved in banking issues, such as Sen. Debbie Stabenow of Michigan and Sen. Maria Cantwell of Washington.
Nevertheless, for now there is no concrete evidence that such a conflict is likely.
Clinton is reaching out and talking to the proper people and groups about regulators, Hauser said. “I feel optimistic,” he added, “but optimism is not a plan.”
