When Illinois Sen. Barack Obama outlined his approach on Thursday to addressing the nationwide housing crisis and economic downturn, just as his rivals had earlier in the week, his speech unintentionally revealed how deeply the three presidential candidates are involved with Wall Street.
Obama went further than New York Sen. Hillary Clinton or Arizona Sen. John McCain in assigning blame for the collapse of the subprime mortgage market, as well as for other recent financial woes. He put much of the responsibility not on Wall Street but in Washington, saying that Democrats and Republicans alike "let the special interests put their thumbs on the economic scales."
Sounding a familiar theme from his campaign, he added: "The future cannot be shaped by the best-connected lobbyists with the best record of raising money for campaigns. This thinking is wrong for the financial sector, and it's wrong for our country."
But Obama is now the most successful presidential candidate in raising money from the securities and investment industry, according to Sheila Krumholz, executive director of the Center for Responsive Politics. The center, which analyzes campaign finance data, reports that Obama has raised $6.7 million from individual donors and political action committees in the industry, which includes investment banks, private equity firms, hedge funds and venture capitalists.
Clinton is a close second at $6.6 million. McCain trails, with just under $3 million raised from the financial sector.
This could explain why none of the candidates — most notably Obama or Clinton — has pounded the drum for punishing investment firms, or their executives, for their roles in creating the financial crisis.
The Democratic Party once had a fine tradition of bashing Wall Street.
In 1936, when Democrats met at Madison Square Garden and nominated President Franklin Roosevelt for a second term, he accepted with a combative speech, listing an array of "enemies of peace" that included "business and financial monopoly, speculation [and] reckless banking."
Roosevelt thundered, "They are unanimous in their hate for me, and I welcome their hatred." The crowd roared.
Today, 72 years later, Democratic presidential candidates who give speeches like that do not survive the early primaries.
Earlier this week, Clinton offered her solutions for the housing crisis. Speaking in measured tones, she urged that Washington help homeowners just as much as it has already helped Wall Street. "We've seen unprecedented action to maintain confidence in our credit markets and head off a crisis for Wall Street banks," she said. "It's now time for equally aggressive action to help families avoid foreclosure."
Republican McCain weighed in on Tuesday, saying, "No assistance should be given to speculators." But he was talking about homebuyers, not those who sold them the mortgages. For the industry, McCain said, government aid should be based only on heading off major systemic risks in the future.
Krumholz says that in recent history, Wall Street has been careful to go with the winner. Financiers favored congressional Republicans in the late 1990s, when they held the majority in both chambers, and backed President Bush in 2000 and 2004. In 2006, Wall Street money swung toward the Democrats, who proceeded to take control of Congress.
Now, Krumholz says, "The securities and investment industry and, specifically, the more aggressive players — the hedge funds and the private equity funds — are leaning more to the left than they have in the past. And the hedge funds and private equity, the more aggressive players, are leaning more to the left than the industry as a whole."
Democrats appear happy to receive the support. Just after his speech on Thursday, Obama had a fundraising lunch at the Manhattan offices of Credit Suisse, the multinational investment bank. Seats cost $1,000 to $2,300. The lunch has long been sold out.