Back in December, Senator Elizabeth Warren, a Democrat, said that the big Wall Street banks should be broken up. Here are her remarks in the Senate:
Instead of passing laws that create new bailout opportunities for too-big-to-fail banks … let’s pass something — anything — that would help break up these giant banks. … Teddy Roosevelt said ‘we should break them up because they have too much political power.’ Teddy Roosevelt said ‘break them up because all that concentrated power threatens the very foundations of our democratic system.’
Proving her point exquisitely, Wall Street banks including Citigroup, JPMorgan, Goldman Sachs, and Bank of America are apparently considering withdrawing their campaign contributions to Senate Democrats as a form of protest. According to Reuters, the banks are also getting together to “discuss ways to urge Democrats … to soften their party’s tone toward Wall Street.”
That’s petulant, but understandable. If you think Senate Democrats are threatening your existence, of course you would stop supporting them. But the money isn’t even the main thing. Reuters says it is just $15,000 per bank. That means fewer pizzas for volunteers, fewer lawn signs, fewer campaign flyers — but it is hardly the end of the world, especially if Democrats can use the news to generate more donations from individual voters. That’s exactly what Warren is already trying to do.
More concerning is what else the banks might be able to do. By “urge Democrats to soften their party’s tone,” I’m pretty sure the banks mean “lots of string-pulling and arm-twisting” behind the scenes. Start Warren’s remarks at the beginning to see what that could mean. Former Wall Street bankers occupy many influential positions in the executive branch. They are even paid big bonuses when they leave Wall Street to work in Washington. Wall Street is effectively self-regulated, since bankers in Washington are well-paid to be there, and they need to keep Wall Street happy in order to keep the revolving door revolving for them.
That adds up to a lot of strings to pull and arms to twist. When all those bankers in Washington start doing what they can, it will probably do a lot more than withdrawing $15,000 in campaign contributions.