MYRTLE BEACH, S.C. — At the South Carolina Tea Party Coalition convention, the name “Barack Obama” drew immediate grimaces and groans. Only two other words came close to matching that reaction.
“If we go someplace and order dinner for $15, and we don’t pay, we get a criminal record,” said Sarah Pawlikowski, a tea party activist from Columbia. “Why is Wall Street treated any different?”
“I think a lot of people should have gone to jail,” said Cooper Wellons, a local land developer. “If I’d have done some of the things they did on Wall Street, I’d have gone to jail.”
Eight years after the start of the Great Recession, and seven years since the Troubled Asset Relief Program was implemented, the anger at major financial institutions has only grown — in both parties.
On the left, Democratic front-runner Hillary Clinton is fending off the surprisingly potent populism of Sen. Bernie Sanders of Vermont and the accusation that she is Wall Street’s candidate. On the right, Sen. Ted Cruz (R-Tex.) and New York developer Donald Trump have come to dominate the Republican field, and both have ties to Wall Street. Both are running as fast as their legs can carry them from the Wall Street brand.
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The polling on views of Wall Street suggests that Sanders, Cruz and Trump have the right strategy. In 2013, a Reuters-Ipsos poll of more than 1,400 Americans found that just 22 percent approved of TARP — years after the banks had been stabilized. Last year, when Lake Research Partners polled on behalf of the progressive Americans for Financial Reform, it found 70 percent agreeing with the statement that “most people on Wall Street would be willing to break the law if they believed they could make a lot of money and get away with it.”
That’s how pop culture has remembered the crisis. “The Big Short,” the new Oscar-nominated film adaptation of Michael Lewis’s book, features scene after scene of hedge-fund managers marveling at the corruption of the banks. When one character naively assumes that the Wall Streeters behind the housing bubble will be punished, their banks broken into pieces, a narrator played by Ryan Gosling interrupts the scene, offering a sort of epilogue.
“The banks took the money the American people gave them and used it to lobby the Congress to kill big reform,” he says. “And then, America blamed immigrants and poor people.”
That despondent history of the crisis has taken hold on the left. That troubles former congressman Barney Frank (D-Mass.), who as chairman of the House Financial Services Committee co-wrote the Wall Street Reform and Consumer Protection Act, often called Dodd-Frank. But he understands the anger.
“It’s because nobody went to jail,” he said. “The big banks are still more powerful than people would like.”
The fractured politics of Wall Street were on display in South Carolina last week, as both parties’ candidates descended for debates and campaign events. In Sunday evening’s NBC-hosted debate, Sanders repeatedly warned that Clinton was too compromised to police the financial industry.
“Who is satisfied that millions of people have police records for possessing marijuana when the CEOs of Wall Street companies who destroyed our economy have no police records?” he asked. “Can you really reform Wall Street when they are spending millions and millions of dollars on campaign contributions and when they are providing speaker fees to individuals?”
Clinton responded to that — including the direct reference to her paid speeches — by defending the Obama administration’s record on financial reform. “I’m going to defend President Obama for taking on Wall Street,” she said. Sanders has “criticized President Obama for taking donations from Wall Street, and President Obama has led our country out of the Great Recession.”
That argument has not quieted the Democratic Party’s resurgent left. The run-up to 2016 produced plenty of articles about Wall Street’s hopes for a Clinton restoration, and her past campaign donations from Goldman Sachs chief executive Lloyd Blankfein have achieved mythic status. On the day of the debate, at a rally for Sanders, a retired Charleston paralegal named Michele Phillips explained that honest people could have seen the crisis coming. Sanders’s tenacity on Wall Street reform was among the reasons she’d been drawn to him.
“He’s like a dog with a bone,” she said. “He’s not going to let the issue go.”
Sanders, who opposed both TARP and the 1999 Financial Services Act that deregulated the banks, has a record neither Clinton nor Republicans can mirror. But since the inception of the tea party in late 2008 and early 2009, the financial crisis has been blamed less on banks than a government that encouraged cronyism and rent-seeking.
“Conservatives have told themselves a story about the financial crisis in which Wall Street is either an accomplice or a stooge of ACORN and the government,” said Mike Konczal, a fellow at the progressive Roosevelt Institute. “It overlaps a little with what you’ll hear from liberals, because part of their theory is that regulators were asleep at the wheel.”
As Cruz stumped across South Carolina, he found his audiences receptive to a story about how Washington colluded with Wall Street. At a town hall meeting in Columbia, the state’s Republican attorney general, Alan Wilson, introduced Cruz by insisting that “Dodd-Frank is to the financial industry what Obamacare is to the health-care industry,” a popular conservative framing.
“It’s centralizing power in the federal government to unelected bureaucrats,” Wilson said. “It’s causing small banks to struggle against the Too Big to Fail banks.”
Republicans have argued for dismantling Dodd-Frank on that basis, though studies have found the argument wanting. Last month, a Government Accountability Office report requested by the party found that “residential mortgage loans as a fraction of assets have generally grown for banks of all sizes and for some smaller credit unions but have decreased for larger credit unions.”
But there’s a gulf between what a report may say and what voters may feel. In his speech to the tea party convention, Cruz ran right through it.
“You can’t be tea party and at the same time have supported TARP,” Cruz said. “You can’t be tea party and support corporate welfare and cronyism. So, if you really want to know what kind of president someone is going to be, you can ask yourself, where did they stand on TARP and the stimulus and cronyism?”
Cruz’s rivals, led by Trump, have not rebutted that by defending TARP. They have highlighted Cruz’s connection to Goldman Sachs. Two hours after Cruz left the stage, Trump reminded the crowd that Cruz had gotten a loan guarantee from Goldman during his 2012 Senate race. One day later, New Jersey Gov. Chris Christie (R) complemented Trump’s defense of “New York values” by saying that Cruz wanted to vacuum up Wall Street cash without any of the consequences.
“Ted Cruz has no problem with New York values when he’s collecting [money] from New York hedge funds,” Christie said. “Then New York values are just great. Those people have great values, I’m sure, when they are writing him seven- and eight-figure checks. If he really has a problem with New York values, then he should return that money.”
Neither man pointed out that Cruz’s wife, Heidi, worked for Goldman Sachs until her husband’s campaign began. They hardly needed to.
“Go back and look at where all the five or six last treasury secretaries worked. They were all at Goldman Sachs,” said William Bowers, a tea party activist from Columbia. “That just jumps out and slaps you in the face on Christmas morning.”
That was not true, but it indicated just how much anger remained at the major financial institutions, even as they funded political campaigns. According to a late 2015 analysis from the Center for Responsive Politics, $5.9 million of Wall Street money made it into Clinton’s campaign or super PAC. Cruz had received $12.5 million; the fading campaign of former Florida governor Jeb Bush, more than double that.
But there is no upside in claiming support from Wall Street and nothing but upside in attacking it. Over the weekend, the conservative powerhouse American Crossroads debuted a new ad, aimed at Iowa Democrats, that warned them not to embrace Wall Street by supporting Clinton.
“Hillary Clinton’s gotten 54 times more money from Wall Street interests than from all of Iowa,” intoned a narrator, over images of Manhattan and falling dollar bills. “Hillary rewarded Wall Street with the $700 billion bailout. Then, Wall Street made her a multimillionaire.”
It sounded like a blast of economic populism. To Frank, it also sounded transparently ridiculous.
“They are as eager to see Sanders nominated as I am to see Trump,” he said.
John Wagner in Charleston, S.C., contributed to this report.