Don't Expect Hillary Clinton to Stand Up to Wall Street

On March 24, the Progressive Change Campaign Committee (PCCC) joined with progressive leaders in Iowa and New Hampshire to launch “Ready for Boldness,” a campaign to encourage presidential candidates to adopt populist economic ideas.

“‘Ready For Boldness’ isn’t about any one candidate—it’s about shifting the political environment and ensuring the Democratic Party stands for big, bold, popular ideas,” PCCC’s co-founder Adam Green said in a written statement.

But let's be honest: The main target of the campaign is Hillary Clinton.

Clinton reportedly will make her candidacy official this weekend. With Senator Elizabeth Warren showing no signs of running, Clinton likely won't have a formidable challenger for the Democratic nomination (few are bullish on Martin O'Malley's ability to put up a fight). But that doesn’t mean she won’t face pressure over the next 12 months. Progressives groups like the PCCC are deeply suspicious of her on a number of issues, most notably on financial regulation and Wall Street. “The big unchecked box when it comes to Hillary Clinton is where she stands on issues related to corporate power and economic populism,” Green told me recently. “Is she willing to really challenge powerful interests when that is needed to help the whole country?”

If her comments over the past year are any guide, then the answer to that question is no.

Yet, it's impossible to predict what Clinton's position will be on financial regulation and Wall Street. She has made few comments on the subject over the past few years, perhaps the strongest one coming in a tweet in January:

Needless to say, that tweet didn't ameliorate progressive concerns, which exist for two reasons. First, progressives blame former President Bill Clinton’s deregulatory policies in the 1990s for the financial crisis. Led by then-Treasury Secretary Robert Rubin, Clinton’s economic team overruled Brooksley Born, then the chair of the Commodity Futures Trading Commission (CFTC), in her pursuit to regulate a risky investment instrument called a derivative—the exact instrument that became central to the financial crisis. In 1999, Clinton also signed the repeal of the Glass-Steagall Act, which was passed after the Great Depression to separate commercial and investment banking. Many liberals point to that legislation as a key cause of the Great Recession. That argument is largely overstated, but it, along with the Clinton Administration’s refusal to regulate the derivatives market, undoubtedly made the crisis worse.

Second, Clinton has long cultivated close ties to Wall Street. In the 2008 presidential election, she received more than $7 million in donations from the “Securities and Investment” industry, according to the Center for Responsible Politics. That included nearly $450,000 from JPMorgan Chase and around $400,000 each from Goldman Sachs and Citigroup. Only EMILY’s List and DLA Piper, a law firm, gave more to Clinton. Other banks like Lehman Brothers and Merrill Lynch also gave her sizeable donations.

The money didn’t stop flowing over the past few years either. Since Clinton left the State Department, she has earned millions of dollars in speaking fees at events across the country, including ones sponsored by Wall Street. In October 2013, for instance, Clinton gave two speeches at Goldman Sachs, which, if Goldman paid her customary speaking fee, netted her a cool $400,000.

Clinton surely knows how she's perceived by the left, and over the past year she has made a concerted effort to strike a populist tone in public speeches. As Noam Scheiber pointed out in The New Republic in September, Clinton actually borrowed the title of Warren’s book, A Fighting Chance, in a speech. “I want every one of our children to feel that they are inheriting the best of America ... that this country is on your side,” Clinton said at the Democratic National Committee, “that this country will give you the fighting chance, the fair shot you deserve." The message also pervaded a heavily touted speech she gave to the New America Foundation in May 2014. “Instead of getting ahead, they’re finding it harder than ever to get their footing in our changing economy,” she said. “The dream of upward mobility that made this country a model for the world feels further and further out of reach, and many Americans understandably feel frustrated, even angry.”

There are hints that upward mobility will become a central part of Clinton's campaign. At the Center for American Progress in March, she cited the work of Harvard economist Raj Chetty on economic mobility. "How do we promote success and upward mobility?" she said. "It’s not only about average income, as important as that is. You can look at cities that on average have similar affluence, but people are trapped and not able to move up in one city, and are moving up in another." This is her way of reaching out to progressives without infuriating Wall Street donors.

But it probably won't work. The left doesn’t want their candidate to focus exclusively on mobility. They want one to focus on stagnant wages and breaking up the big banks. “Small pieces of progress are nice but what’s really needed is bold, systemic change so that the ‘Too Big to Fail’ banks that crashed the economy the first time can’t do it a second time,” Green said. For him and other progressives, that means Clinton needs to break away from the traditional Democratic position on the financial industry. “On Wall Street issues, one of the biggest things that matters is who she surrounds herself with. Does she hire a bunch of Wall Street executives and Robert Rubin types to advise and write her economic policy?” Green said. “Or does she have cutting edge, progressive thinkers who have been right all along, like Dean Baker or Robert Reich or Joseph Stiglitz?

“I would say there’s a special burden,” he added, “for Hillary Clinton to break out of that traditional orbit.”

So far, though, Clinton's emphasis on social mobility over higher taxes on the rich suggests that she doesn't intend to do so. There's no sign that she's willing to call for breaking up the largest banks, for instance. It's hard to even imagine her calling for the reinstatement of Glass-Steagall.

None of this is certain, of course. Clinton's campaign is just beginning, and she could shock the U.S. political world by swinging to the left. But that's exactly what it would be—a shock.