In the ongoing melodrama between Democrats and Wall Street, few characters are more compelling than Chuck Schumer. New York’s senior senator has a well-cultivated reputation as the financial world’s top wing man in Washington, at least among Democrats. But since he also hopes to lead his august chamber one day, he’s charted a more ecumenical path of late. That, of course, hasn’t exactly endeared him to the lords of finance, and so much pathos has ensued.
The latest example comes from a Politico piece on Schumer’s efforts to make nice with his patrons now that all that ugly “reform” business is behind us. As one such oligarch summed up Schumer’s recent goodwill tour: “He’s always been active in his outreach, but I would say he’s on much more of a listening — not talking — tour at the moment as he tries to mend fences.” Can’t wait to see what all that listenin’ means for the future of financial regulation!
But I digress. Because it turns out people have long memories on the Upper East Side, and all is most certainly not forgotten, much less forgiven. The nub of the matter? Well, take it away, Politico:
“He pushed, bullied people really, into giving him money for so long telling us, ‘I’m in the rooms you want me to be in, I can help,’” said a Wall Street executive and one-time Schumer donor who refuses to give any more cash to the senator. “We understand that he wants to be [Democratic] leader and as he’s moved up the ranks, he can’t publicly be too much of a cheerleader for Wall Street. But he wasn’t even cheerleading behind closed doors, which is what he promised he would do.”
Which made me wonder: What, exactly, was all this non-cheerleading Schumer is supposedly guilty of?
The Politico piece offers three specific data points: 1. He favors higher taxes on millionaires. 2. He supports closing the so-called carried interest loophole that taxes private-equity honchos at the bargain-basement capital gains rate. 3. His low-key role in the fight over the Durbin amendment, which capped the fees banks charge retailers for swiping debit cards.
Alas, if this is the extent of Schumer’s anti-Wall Street rap sheet, then count me as extremely skeptical. In case anyone hasn’t noticed, the millionaires tax and the plugging of the carried interest loophole haven’t, you know, become law. They're not even remotely close. Meanwhile, Schumer was basically on the banks’ side during the Durbin fight, he just didn’t advertise it. As Politico explains, “Schumer didn’t make a speech on the Senate floor on behalf of the financial community, even though he backed their effort to delay the rules.”
Unless I’m missing something, this is precisely what Schumer was promising his Wall Street backers. He was publicly supporting legislation they hated but which had almost no chance of passing, while privately beating back legislation they hated when it had a very real chance of passing.
And that, moreover, was his posture throughout the entire financial reform fight. If you look at the two Dodd-Frank provisions the banks considered most anathema—derivatives regulation and the Volcker Rule, which limited their risky bets—these turned out to be case studies in Schumer’s geographically selective approach to cheerleading. To outsiders, he talked tough about the need for reform. In the sanctum of the congressional back-room, it was an entirely different story. On derivatives, the Times reports, he “called on regulators to tread lightly while planning an overhaul of the derivatives industry.” (His own former aide—a woman named Kate Childress—headed up the industry’s derivatives counteroffensive from her perch at JP Morgan.) On the Volcker Rule, meanwhile, Matt Taibbi has the goods:
In the final hours of negotiations, a congressional delegation from New York, led by Sen. Chuck Schumer, decided to take one last run at gutting the Volcker rule. … [T]he Schumer coalition suddenly decided that the de minimis exemption for banks simply wasn't big enough. … In real terms, banks could now put up to 40 percent more into high-risk investments. "It was almost double what Geithner was talking about the night before," says [Senator Jeff] Merkley. … Schumer himself entered the change in the Senate version of the bill – and then asked the House to sign off on it 15 minutes later.
If this isn’t cheerleading behind closed doors, I’m at a loss to say what would qualify. Was Schumer literally supposed to wear bloomers?
Look, did Schumer end up supporting, or at least not blocking, provisions Wall Street opposed? Of course. But the idea that he signed onto anything more aggressive than what was minimally necessary politically defies any reasonable reading of the evidence. In the end, Wall Streeters aren’t upset so much because Schumer abandoned them when the laws were being written. He took care of them as well as they could have hoped. They’re pissed off that Schumer, like Obama, withheld the reverence they thought they deserved even after the worst financial crisis in 80 years. And because many have next-to no understanding of how politics is actually practiced. It’s just pathetic.
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