Wall Street Readies Assault on Elizabeth Warren

By Robin Bravender and Josh Boak, Politico

03 October 11

all Street is quietly watching Elizabeth Warren, getting ready to pounce.

The Democratic primary in Massachusetts is still almost a year away, but the expected race between the architect of the Consumer Financial Protection Bureau and Republican Sen. Scott Brown is already a hot topic in the financial services universe.

"The potential Brown-Warren matchup is on everyone's radar," said Scott Talbot, chief lobbyist for the Financial Services Roundtable.

On the Washington cocktail circuit, banking lobbyists are chattering about how to take Warren on. They fear that a massive, public money assault might be more of a gift than a challenge for the Harvard Law School professor who built her reputation taking on big banks.

The powerful lobby is in wait-and-see mode, weighing its options as it plots a strategy designed to hit hard, but smart.

"You don't want to make her sympathetic by landing on her with both feet," said a financial services industry insider and former GOP Senate aide.

All of this could be welcome news for Brown. Even though he's the fourth-largest recipient of banking, insurance and real estate industry donations in Congress, not everyone in the banking world is enamored with him, since he cast votes to reduce debit card swipe fees and approve financial reforms.

"Better a friend with whom you sometimes disagree but can always talk to, than an antagonist who is always coming at you, guns blazing," said the former Hill aide.

And the industry seems willing to forgive Brown.

"Although many people associated with the financial industry disagreed with his vote on Dodd Frank, most feel that Sen. Brown's involvement in the bill was balanced, thoughtful and driven by policy considerations rather than politics," said Sam Geduldig, a financial services lobbyist at Clark, Lytle & Geduldig. "I believe the same people view Professor Warren's contribution to the debate to be less so."

Support for Brown also comes with a grudging respect for Warren's ability to electrify the left, making her a threat to the GOP's grander plans to take the Senate next year.

Warren's backers see the race as a blueprint for Democrats campaigning against moneyed interests. Trouble in the Bay State could spell trouble countrywide.

"A Warren victory in Massachusetts would say that a candidate can talk boldly about holding Wall Street accountable and the rich paying their fair share," said Adam Green, co-founder of the Progressive Change Campaign Committee. "That will have ripple effects across the nation in showing Democrats how to talk about Wall Street and still have political success."

Warren is showing she can appeal to the grass roots out of the gate, picking up $376,848 in donations so far by more than 18,000 people through the Progressive Change Campaign Committee's website, which the group said is a record level of support for a Senate race more than a year away. She hasn't had to file her campaign's full fundraising numbers to the Federal Election Commission, yet.

Democratic strategists are prepared to use Brown's ties to the industry against him, particularly after he was dubbed one of "Wall Street's Favorite Congressmen" last year by Forbes. Whether or not he raises another dime from Wall Street is "sort of irrelevant," said a Democratic campaign strategist. "The die has been cast."

When asked about Wall Street's role in the contest, campaign spokesman Kyle Sullivan said Warren "is working hard to build a strong grass-roots campaign."

Banking industry observers are concerned about protecting their image, regardless of who wins the contest next year.

"You have to be careful. She has powerful friends in this administration. She was almost part of this administration," said a financial services lobbyist. If President Barack Obama wins reelection - and even if he doesn't - the industry must still deal with a new bureaucracy that she helped create and is full of her friends, the lobbyist added.

Obama consigliore David Axelrod essentially offered a tacit endorsement for Warren, even though five other Democrats are competing against her in the primary.

"Elizabeth Warren, who I expect will be the nominee, [is] someone I know well, and there probably isn't a person in America who's fought harder for the embattled middle class in this country than she has," Axelrod recently told the Boston Herald.

With Warren's momentum, bank lobbyists are overcoming their unease about Brown, who has straddled a fine line between appealing to populists and his donor base after winning a long-shot race last year to succeed the late Ted Kennedy.

So far in the 2012 election cycle, Brown has received $776,672 from the insurance and real estate industries, according to data from the Center for Responsive Politics. Brown trails only Sens. Kirsten Gillibrand (D-N.Y.), Bob Corker (R-Tenn.), and House Speaker John Boehner.

Among Brown's top 20 donors so far this cycle: PACs and employees associated with Boston-based FMR Corp., Goldman Sachs, Bank of New York Mellon, Bain Capital, Morgan Stanley, Bank of America and the hedge fund Paulson & Co., according to the Center for Responsive Politics.

Thanks in large part to the deep pockets of his backers, the Massachusetts Republican had an imposing $9.6 million in cash-on-hand as of the June 30 filing deadline.

But the Brown campaign seized on his Dodd-Frank and swipe fee votes as evidence that he shouldn't be identified with Wall Street interests.

"His independent voting record proves that he is a bipartisan problem solver who decides issues on the merits," said spokesman Colin Reed.

Banks could also target their money to outside political groups.

"My guess is that if they want to play in that way, they will do it through another party," like the super PACs American Crossroads or Americans for Prosperity, said Jennifer Duffy, a senior editor at The Cook Political Report. "There won't be a financial services campaign fund to defeat Elizabeth Warren; it'll be much more subtle than that."

The financial services lobby has a series of competing and conflicting interests on Capitol Hill, such that support for Brown wavers among the different interests. Brown disappointed some last year by casting a decisive "yea" for the Dodd-Frank Wall Street Reform and Consumer Protection Act, yet his backing was contingent on creating exemptions so that banks can still engage in a degree of proprietary trading.

Industry lobbyists are still reeling after the swipe fee vote this summer, and say that while they're still attending fundraisers for the Massachusetts Republican, their trust in him has faltered.

"Scott Brown dealt us a tough, huge disappointment, a blow on this interchange vote," said the financial services industry lobbyist. "That was not something that small or large financial institutions will readily forget."

One financial services industry executive said that propelling the GOP to the Senate majority would be the pivotal justification for donating to Brown. Contributions to Brown might depend on outreach from Senate Minority Leader Mitch McConnell (R-Ky.)

"There are other candidates we'll support in other states; that's where the first dollars are going to go," the executive said. "I think the last dollars will be going to Massachusetts."