With White House in their sights, Democrats challenge Wall Street

On the campaign trail and in Congress, Democrats are challenging the titans of Wall Street, proclaiming a “new day” as they seek to channel the anger of their party and voters that
has raged since the financial crisis.

CEOs of America’s biggest banks were summoned for the first time since the
2008 crisis by a congressional committee on Wednesday, raising their hands as
they swore their oaths ahead of their testimony.

It was a powerful image that underscored the recent change in control of
the House of Representatives, which came under Democratic control in January
after eight years of Republican rule.

“This is a new way and it’s a new day,” said Maxine Waters, the first
woman and first African American to chair the powerful House Financial
Services Committee.

Tim Sloan, the former CEO of Wells Fargo, testified at a previous hearing
in March.

This time, it was the turn of the heads of Citigroup, JP Morgan Chase &
Co, Morgan Stanley, Bank of America, State Street Corporation, BNY Mellon and
Goldman Sachs.

Waters had previously tangled with some of them at the peak of the crisis,
when the global financial system was imperiled.

The current round of cross-examinations has less to do with the
stabilization of the financial system and more the social impact of Wall
Street.

“You, captains of the universe, are smart enough and creative enough and
understand this business enough to see what you can do about these citizens,
these young people,” said Waters.

Some of the Democrats on the committee have focused on spotlighting the
gap between these executives, all male, white and fabulously wealthy, and the
rest of society — a tactic criticized by the panel’s ranking Republican as
headline-seeking.

In one probing exchange, Nydia Velazquez, a Democrat of New York, pressed
Citigroup Chief Executive Michael Corbat to justify his 2018 pay of $24.2
million, an estimated 486 times that of the average employee.

Corbat said his pay was set by the board of directors and that, if he were
an average employee who observed the yawning gap, “I would be hopeful that
there’s the opportunity to continue to advance.”

“This is why people who live in a bubble and in an ivory tower cannot
understand the anger out there, especially among millennials,” Velasquez shot
back.

– Counter-attack –

It is this groundswell of anger, despite sold growth figures and plentiful
employment, that Democrats are hoping to tap not only to keep their House
majority in 2020 but also to seize the Senate — and the White House.

Wall Street and its big bosses are already a key part the of the
presidential campaigns of several candidates vying for the Democratic
nomination, spearheaded by ultra-progressives Bernie Sanders and Elizabeth
Warren.

“Our campaign is about taking on the powerful special interests that
dominate our economic and political life,” vowed Sanders, a socialist.

The independent senator from Vermont — who votes with the Democrats —
introduced a bill in October “to break up the nation’s biggest banks.”

Ten years ago, Warren was deeply involved in the rescue and reforms that
took place after the financial crisis, making regulation of Wall Street her
defining issue.

She has already inked out detailed proposals for dismantling tech giants,
raising taxes on huge companies and tightening financial regulations.

Warren is already a powerful voice for these issues in the Senate, though
her party remains in opposition there.

But she is delighted to see her colleagues in the House on the offensive.

“The Republicans have been trying as hard as they can to reduce oversight
over the biggest banks and the Democrats are now fighting back,” she told
AFP.

“The too big to fail banks are bigger than ever and they are up to their
old ways of trying to hide risks on their balance sheets and at least some of
them have been caught repeatedly cheating their own customers.

“That’s how we got into a big mess in 2008 that nearly broke the worldwide
economy and that’s why they should be better regulated today.”