Wall Street in 2016 crosshairs

Wall Street in 2016 crosshairs
© Greg Nash

The right and left increasingly have one thing in common: neither wants to be seen as friendly to Wall Street. 

Eight years since the financial crisis, big bank bashing remains very much en vogue in Washington.

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On both the legislative and political front this week, the two parties battled over who is tougher on the financial sector. 

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) reignited the debate over regulating Wall Street Tuesday when he unveiled his vision for how Republicans should replace the 2010 Dodd-Frank financial reform law.

Hensarling argued that the law has been a disaster for the economy, restricting access to credit for business while burying banks under an avalanche of new rules. 

“Simply put, Dodd-Frank has failed. It’s time for a new legislative paradigm in banking and capital markets,” he said in New York.

Democrats were quick to pounce, blasting the bill as a Wall Street wish list. 

Rep. Maxine Waters (D-Calif.), the top Democrat on Hensarling’s panel, said the proposal would amount to “giving banks the tools to game the system once again.”

Sen. Elizabeth WarrenElizabeth Ann WarrenBipartisan group of lawmakers aim to reform US sugar program Schumer: Dems want DACA fix in government spending bill The Hill interview — DNC chief: I came here to win elections MORE (D-Mass.) dubbed the bill a “wet kiss to Wall Street.”

Hensarling’s bill would allow large financial institutions to escape some of the new rules imposed by Dodd-Frank. But to do so, they would be required to significantly beef up their capital reserves as a cushion against losses. He estimated big banks would need to set aside “hundreds of billions” more to receive that relief.

And in pushing back against the Democratic attacks, Hensarling’s office argued that big banks actually dislike the bill, emphasizing instead the relief for community banks it contains.

Hensarling’s office said Democrats were pushing “stale talking points” in linking his bill, dubbed the Financial CHOICE Act, to Wall Street interests. 

“Fact: The Big Banks on Wall Street oppose the Financial CHOICE Act,” his office noted. 

Many industry groups representing larger financial institutions did offer tempered praise for the bill. They said Dodd-Frank misses the mark in some areas, and vowed to work with Hensarling without outright backing his proposal.

“We look forward to working with Chairman Hensarling and others in Congress to modernize our regulatory system and improve government transparency without harming the ability of regulators to keep consumers safe,” said Tim Pawlenty, the head of the Financial Services Roundtable, which represents some of the industry’s biggest banks. 

Meanwhile, the Independent Community Bankers of America heaped praise on the package, which included significant regulatory relief for smaller banks.

“ICBA thanks Chairman Hensarling for his bold and forward-thinking approach to regulatory reform,” said Camden Fine, the group’s chief.

Hensarling’s bill does also impose significant restrictions on financial regulators, as well as repeal certain portions of Dodd-Frank aimed at policing activities at the nation’s biggest banks.

Amid the rollout, the potency of an anti-bank message was on full display on the campaign trail. 

Sen. Bernie SandersBernard (Bernie) SandersWorld leaders reach agreement on trade deal without United States: report Sanders on Brazile revelations: DNC needs ‘far more transparency’ Sen. Warren sold out the DNC MORE (I-Vt.) built an improbable run for the Democratic presidential nomination in large part on criticizing Wall Street. And even now that his campaign is winding down, another, perhaps even stauncher critic of Wall Street is stepping into the spotlight: Elizabeth Warren.

The one-term senator from Massachusetts had dipped a toe into the 2016 foray earlier this year, when she drew attention for her fierce Twitter attacks on presumptive Republican nominee Donald TrumpDonald John TrumpDems win from coast to coast Falwell after Gillespie loss: 'DC should annex' Northern Virginia Dems see gains in Virginia's House of Delegates MORE. But after Hillary ClintonHillary Diane Rodham ClintonGOP rushes to cut ties to Moore Papadopoulos was in regular contact with Stephen Miller, helped edit Trump speech: report Bannon jokes Clinton got her ‘ass kicked’ in 2016 election MORE clinched the Democratic nomination, Warren’s name shot to the front of the list of potential vice presidential picks.

Warren threw her support to Clinton shortly after President Obama, lending Clinton a backer with huge liberal support.

The two traded praise for each other in interviews Thursday, and met privately on Friday, fueling speculation that Warren could join Clinton on the campaign, putting a bona fide big bank basher on the Democratic ticket.

The Republican response to Warren’s endorsement of Clinton further underlined the potency of Wall Street criticism.

In a statement, the Republican National Committee didn’t blast Warren as an out-of-touch liberal that wants to push policies to curtail the private sector and punish private industry. Instead, the RNC did exactly the opposite, arguing Warren abandoned those beliefs in backing Clinton.

“By endorsing Hillary Clinton, Elizabeth Warren has shown herself to be a sellout,” said Lindsay Walters, an RNC spokesperson. “Whether it’s the Wall Street speech transcripts she refuses to release, her ties to the fossil fuel industry, or coziness with big banks, Hillary Clinton represents everything Elizabeth Warren supposedly stands against.”

For his part, Trump has said he wants to largely dismantle Dodd-Frank, and promised to release his own economic plan in the near future. But he has also left room for scorn for hedge funds and the like, saying they ere getting away with "murder" via the tax code.