Wall Street has come around on Biden. Does this undercut the idea that bankers only care about money?

Wall Street has come around on Biden. Does this undercut the idea that bankers only care about money?
Source: Reuters

According to a recent report from The New York Times, Wall Street donors are funneling money into Joe Biden’s campaign despite the record gains many investors have seen during the Trump era.

In May and June, the Biden Action Fund, a campaign fundraising arm, raked in some US$11.5 million, with a significant portion of that coming from Wall Street donors.

Included in that number is one donation worth US$717,000 from the co-chair of Bain capital and his wife.

Overall, Trump is trailing Biden in donations from the finance, insurance and real estate sectors by US$20 million. Out of the US$33.5 million the Trump campaign has raised from those sectors, just US$7.8 million came from securities and investments.

Given the support for Biden among Wall Street donors, some insiders claim that there is significant concern over the direction of the country under President Donald Trump despite the apparent health of the market.

“I’ve seen meaningful numbers of people put aside what would appear to be their short-term economic interest because they value being citizens in a democracy,” noted Seth Klarman, the founder of a hedge fund called Baupost.

Others, however, say Wall Street has mixed reactions to Biden’s candidacy despite its willingness to cut checks to his campaign.

“The market is starting to worry that Trump will not be re-elected,” said Lori Calvasina, head of US equity strategy at RBC Capital Markets. “Trump is consistently viewed as a positive for the stock market,” she added.

A part of the explanation for Wall Street’s backing of Biden could be due to a sense of momentum.

“Lobbyists are pragmatic about their interests and like to back a winner. And Biden, on current trends, looks like a winner-in-waiting,” wrote Newsweek’s Shane Croucher.

According to a recent survey by Citigroup, out of 140 hedge fund managers polled, 62% predict that Biden will win the presidency this November.

Trump’s Wall Street backers

Not all high-stakes donors are getting in bed with Biden. Under Trump, taxes have been slashed and regulations reduced – typically popular white collar policies. Despite the deep financial uncertainty wrought from COVID-19, Trump has nevertheless overseen significant economic growth during most of his term.

One particular issue that seems to be worrying some financiers is Biden’s proposed corporate tax rate increase from 21% to 28%. According to a report from the Center for Responsive Politics, a research group that tracks money in politics, the issue has led a majority of chief executive officers for S&P 500 companies to give donations to Trump.

“As Trump and other Republicans slide in the polls, the idea that taxes could go up under a Democratic administration and Congress has forced GOP donors off the sidelines,” wrote CNBC politics and finance reporter Brian Schwartz in late July.

According to the report, the CEOs of American companies such as Oracle, Aflac and Motorola have made donations to the Trump campaign in the second quarter.

What about progressives?

On a virtual call with potential Wall Street donors in June, Biden was reportedly up front with his proposal to roll back Trump’s business-friendly economic policies, admitting to the group that he plans on cutting back most of the Trump administration’s US$2 trillion tax cuts.

“And a lot of you may not like that,” Biden said during the meeting. As a part of the campaign’s joint task force with Bernie Sanders, Biden also pledged to reroute government money to clean energy, care work and infrastructure.

Regardless, some on the left are viewing Biden’s support from Wall Street with suspicion.

According to a report on a transcript from a Biden teleconference call with Wall Street donors in July, the democratic nominee for president told attendees that despite corporate America’s need for reform, he wasn’t proposing any specific legislation to change Wall Street’s behavior.

“It used to be that corporate America had a sense of responsibility beyond just CEO salaries and shareholders,” Biden said, adding that “corporate America has to change its ways [but] it’s not going to require legislation. I’m not proposing any.”

According to David Sirota, the editor-at-large with the socialist-leaning Jacobin magazine, there is a contradiction inherent in Biden’s remarks.

“At a time when private health insurance companies are making a jackpot off a pandemic, and when oil companies are creating a climate crisis that threatens the planet’s ecosystem, the presumptive Democratic nominee is … telling his donors that he is ‘not proposing any’ legislation to change corporate America,” Sirota wrote, suggesting that Biden needs to choose where his loyalties lie.

While Biden has been clear that he plans on supporting the middle class, there could be a balancing act at play when it comes to fundraising for the presidency.

As per analysis from Jennifer Epstein, a White House reporter with Bloomberg, Biden is looking to court large funding sources while also keeping his campaign focused on the issues that matter the most on Main Street.

“Biden is walking a tightrope. He desperately needs to raise money from Wall Street and other centers of wealth and power, and he’s promised donors that their standard of living won’t change if he is in the White House,” she wrote in April.

“But he also fears a repeat of 2016, when progressives felt ignored by nominee Hillary Clinton and stayed away on Election Day, which many say contributed to Donald Trump’s victory,” Epstein added.

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