Wall Street Spared in Democratic Debate as Crisis's Impact Fades

Wall Street Spared in Democratic Debate as Crisis's Impact Fades

(Bloomberg) -- Wall Street emerged almost entirely unscathed from the first Democratic presidential debate, with no questions to candidates and few comments on an industry that has long been a favorite target of liberals.

Once a ubiquitous talking point in Democratic politics, the words “Wall Street” were mentioned fewer than half a dozen times over the two nights of debate in Miami. Even Senators Elizabeth Warren and Bernie Sanders -- two progressives famed for going after the financial system -- made little mention of big banks from their positions at center stage.

Instead, the 20 candidates and moderators turned their attention to health care, climate change, immigration and economic inequality. More than a decade after the 2008 financial meltdown, the silent treatment toward the industry pointed to the waning power of post-crisis angst in U.S. politics.

“On a scale of one to 10 on importance, financial services and regulation are not in that 10,” said Robert Wolf, former head of UBS Group AG’s Americas Unit and founder of the strategy and investment firm 32 Advisors. “We’re very different from where we were five and 10 years ago.”

With the 2010 Dodd-Frank Act now almost fully implemented, there’s the perception among some that the major regulation of Wall Street has already been done. “Wholesale changes for the most part have taken place,” said Wolf, who has donated to multiple Democrats running for the 2020 nomination.

The most prominent mention of Wall Street came Thursday night from the Democratic front-runner, former Vice President Joe Biden, who said in his opening remarks that “Donald Trump thinks Wall Street built America. Ordinary, middle-class Americans built America.”

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Under the regulators appointed by President Donald Trump, the banking industry has benefited from a slow but steady process to ease rules put in place after the crisis. Lenders have been performing well, with the six biggest U.S. lenders posting a record profit last year exceeding $120 billion.

“It’s a very tired argument to beat up on banks this many years after the crisis,” said Charles Myers, who was vice chairman of Evercore Inc. before he started Signum Global Advisors, which does policy research for finance firms.

Big tech and the pharmaceutical industry have become the new regulatory targets for Democrats, Myers said. And with the U.S. economy running relatively strong, and unemployment at 3.6%, railing against Wall Street banks may not be as effective for Democrats as it was when unemployment touched 10% in the depths of the crisis.

Still, Democrats remain known as the anti-Wall Street party, and that legacy carries over in the platforms of the candidates. Sanders has proposed a securities transaction tax as a way to pay for his plan to eliminate student debt, one of the few Wall Street-related proposals to get air time during the debate. Senator Kamala Harris of California has introduced a bill to step up the powers that state regulators wield over national banks.

“Just because they’re not the latest flavor of the month, it doesn’t mean that financial services doesn’t have a target on its back,” said Stephen Myrow, managing partner of Beacon Policy Advisors in Washington. “The hot button issues right now are things like health care, big tech and immigration. That doesn’t mean that if a Democrat was to become president that financial services wouldn’t get attacked.”

©2019 Bloomberg L.P.

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