Should lightning strike and Hillary Clinton forgoes a presidential run, Democrats have a nominee in waiting. Elizabeth Warren’s shadow campaign is taking shape on Capitol Hill as Clinton moves closer to a decision that will highlight the divide in their party between Main Street and Wall Street.
Warren may never formally enter the race. She doesn’t want to be a spoiler, and Clinton’s commanding lead in surveys of Democrats (66 percent) suggests a better way to influence the debate and move Clinton as the nominee to a more populist left, is for Warren to use her power within the party as a freshman senator to inflame or blow up issues to advance her agenda.Warren never shrinks from a fight where she believes she’s on the side of the little guy. She’s been known to say, “I love throwing rocks,” sometimes even when she’s cautioned against repercussions. Her stand against the nomination of investment banker Antonio Weiss to a top position at the Treasury Department stalled the appointment and created bad blood with the White House, forcing President Obama to re-nominate him in the new Congress.“They believe in Weiss, and they don’t want to be pushed around on this,” says Matt Bennett, a co-founder of Third Way, a centrist Democratic group. Weiss is likely to get confirmed even as Warren and a handful of other progressive Democrats vote no. But Warren’s very public fight against the influence of Wall Street within the administration bloodied the White House, and key aides are less likely to cut her out of the loop again on key appointments, having just experienced how much grief she can cause for Obama with his Democratic base.The fight over Weiss teed up a nomination more to Warren’s liking when Obama announced on Tuesday that Allan Landon, the former CEO of Bank of Hawaii, would fill one of two vacancies on the Federal Reserve Board of Governors. Landon led a bank with under $10 billion assets, a far cry from the too-big-to-fail investment behemoths that populate Wall Street. Camden Fine, president and CEO of the Independent Community Banks of America, lauded the choice of Landon, noting that because of the backlash on Weiss, “The White House is worried enough on the Federal Reserve they’ve called me three times in the last few days vetting the nomination.”
Fine says his opposition to Weiss is nothing personal; it’s just that “community banks are pretty much fed up with every single senior post at the Treasury Department going to people right out of Wall Street.” Out of 16 assistant secretaries, 15 were former partners or senior executives of investment firms during the bailout years in 2008 and 2009. According to a Treasury spokesman, however, there are now no "prominent Wall Street figures currently serving at the Treasury Department. Treasury's senior staff represents a wide range of public and private sector experience, including those who have spent the vast majority of their careers in public service at places like the Federal Reserve, on Capitol Hill and in state financial regulation."It’s cultural, Fine says, a pattern that goes back to the Clinton era of Robert Rubin and Larry Summers, and it’s been the accepted practice since, with few voices challenging Wall Street orthodoxy. There are a lot more community banks, 6,500 in all. Their assets are small compared to the top 20 Wall Street firms, but they are everywhere, they are Main Street, and they didn’t leverage the debt that caused the global meltdown. The Big Five banks dubbed too big to fail, are 35 percent bigger than they were when the meltdown was triggered.An aide to Warren ticks off her objections to Weiss, whose appointment she made her cause célèbre, and that otherwise would have passed unnoticed. First, his credentials: He did international mergers and acquisitions at Lazard, a financial and asset management firm. It has nothing to do with the regulatory job he is nominated for. Weiss supporters note that he co-authored the tax reform plan for the liberal Center for American Progress, and point out that he’s the publisher of The Paris Review, “a non sequitur,” scoffs Warren’s aide.Second, Weiss played a key role in shaping Burger King’s attempt at inversion, which Illinois Senator Dick Durbin cited as his reason for opposing Weiss, the only Obama nomination he has ever opposed. Republican Senator Charles Grassley put out a press release calling the administration “hypocrites” for publicly lambasting the practice of inversions, a loophole to avoid U.S. taxes, while nominating one of its practitioners.
Third, the $20 million parachute Lazard is giving Weiss stuck in everyone’s craw. It’s to compensate him for the money he would otherwise receive if he remained at Lazard. The sum is not something ordinary Americans can fathom, and Warren sees her role as giving voice to the people who don’t have expensive lawyers and lobbyists, and don’t get rewarded with golden parachutes.“This is a proxy war about something bigger, which is Wall Street influence,” says Warren’s aide. “She has voted for a lot of people from Wall Street (including Treasury Secretary Jack Lew). It’s not a litmus test; it’s more like a balance issue. You put it all together and it’s just too much.”While Clinton and Warren share similar views on social justice and building the middle class, Clinton has a strong association with Wall Street. As a senator, she represented the money capital of the world, and as a partner in the Clinton Global Initiative, she’s accustomed to hobnobbing with the financial services elite and feeling their pain. Clinton hasn’t taken a position on the Weiss nomination, and the fight will be over and the issue in the rear view mirror by the time she announces, probably in the spring. “I don’t think it should shock the conscience that someone who is familiar with Wall Street is good for that job. He’s not someone you go to the mattresses over, he’s the wrong target,” says Third Way’s Bennett. “There’s enormous hunger in the party to hang on to the White House, particularly after losing Congress, and that tends to make people get pretty practical.”For Warren, she’s playing a long game. If there is another Democratic president, and it’s Clinton, she wants some say over who is the next Treasury Secretary, and who gets all those big policy-making jobs. It’s a movement for change that she’s leading, not necessarily a presidential campaign — unless lightning strikes.