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Forget the Fed, this is Wall Street's big worry

You might think the timing of the Federal Reserve’s move to raise interest rates is the biggest concern on Wall Street these days. But maybe not. Maybe it’s Elizabeth Warren.

Reuters reports some of the biggest financial firms on the Street are so infuriated by Warren’s anti-bank crusade that they are considering withholding political donations to Democratic Senators in protest. Reuters says representatives of Citigroup (C), JPMorgan Chase (JPM), Goldman Sachs (GS) and Bank of America (BAC) have met to discuss how they might be able to get Democrats to tone down their rhetoric. And while there’s no coordinated plan to cut off funding, the idea has been raised in one-on-one conversations among banking officials.

This comes as no surprise to Yahoo Finance Editor in Chief Andy Serwer.

“She is their enemy, no question about it,” he says. “I was just at one of these large Wall Street banks, talking to a senior official, and unprompted he brought up Elizabeth Warren’s name. And he was really concerned that she really had drawing power because of the polarization of American politics.”

Warren has said she won’t run for President in 2016, although there is a draft effort by some in the liberal wing of the Democratic Party. But Yahoo Finance Senior Columnist Michel Santoli says the banks’ concern is not about Warren winning elections, it’s whether or not she can influence the country’s mindset about them.

“What the banks really fear is not that Elizabeth Warren has a grand, bigger future in politics, perhaps as President,” he argues. “I think it’s more about if her message is going to become sort of the party line. If it really does play with the public to say 'we hate banks,' we’re going to hem them in, we’re not going to let them get as big and profitable as they were before. That’s what they’re really worried about.”

Still, Santoli feels financial firms holding back money is unlikely to change the discourse, since campaign finance laws limit what they can give to $15,000 each.

“This gesture right here, not funding the Senate Democratic campaign, it’s really not a big deal,” he notes. “They couldn’t donate that much anyway.”

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Serwer says the banks realize that even though Democratic presidential front-runner Hillary Clinton is likely to be friendlier to their interests than Warren, she can’t give them a pass.

“They know that Hillary is going to beat them up and have to beat them up a little bit, kind of co-opting Warren’s message. Aafter all, it is the Democratic Party,” he notes. “But how much she beats up these banks may have to do with how much traction Warren’s message seems to get.”

But Santoli doesn’t think any “tough talk” from Clinton would not be taken too seriously on Wall Street.

“They’ll probably feel like, she’s going to beat us up, but she doesn’t mean it,” he laughs.

 

 

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