We keep hearing about various presidential candidates, particularly Hillary Clinton, and their connections to Wall Street but few of us are aware just how significant a role in actual dollars that the securities and investment industry plays in Washington. A recent analysis by the Center for Responsive Politics quantifies that role for us.
While most of us think of the big name companies on Wall Street that made the headlines during the 2008 economic crisis, in fact, there is a new frontier when it comes to influence-peddling from the finance world; private investment firms and hedge funds, the new playgrounds for America's one percent. Here is a graphic showing the top contributors from the "new" securities and investment sector thus far in the 2016 cycle:
Here is a bar graph showing the how campaign contributions from the securities and investment sector have grown since 1990 and in particular, since 2008:
In total, the securities and investment sector has contributed $1.469 trillion to both parties with $948 billion coming from individuals (no doubt wealthy individuals) and $115.8 billion coming from PACs. Total donations peaked at $137.6 billion in the 2012 presidential election cycle with 69 percent of the total going to the Republicans. During the 2012 cycle, the securities and investment sector was the second largest contributor among all sectors and over the period from 1990 to 2016, it holds third place overall. In this cycle and the 2014 mid-term cycle, the securities and investment sector has taken first place as the largest contributing sector to American political theatre.
Here is a bar graph showing the contribution split between the Democrats and the Republicans:
For the most part, the Republicans have been the majority beneficiary of the funds sourced from the securities and investment sector as you can see on this table:
Of the total $1.469 trillion donated since the 1990 cycle by the securities and investment sector, the Republicans have received $650.4 billion or 55 percent of the total compared to $533.1 billion or 45 percent of the total for the Democrats.
As I noted above, gone are the days of stock brokerages and banks dominating political contributions made by the securities and investment sector. In the "new economy" of the post-Great Recession era, hedge funds and private investment firms are "top dog", in fact, Goldman Sachs is the top contributor among what are considered traditional Wall Street firms and its total donations of $2.317 million put it in 10th place, well behind first place Renaissance Technologies with total donations of $13.8 million.
Let's look at the top two contributors:
1.) Renaissance Technologies: Renaissance Technologies is based in East Setauket, New York and is "...an investment management company dedicated to producing superior returns for its clients and employees by adhering to mathematical and statistical methods." As of September 30, 2015, its funds were valued at $43.6 billion. It was founded in 1982 by Jim Simons, a mathematician. He is widely considered to be one of the best money managers in the world. Current Renaissance co-CEO, Robert Mercer, is the top individual when it comes to funding outside spending groups, having donated a total of $12.505 million to conservative candidates in the 2016 cycle as you can see here:
2.) Soros Fund Management: Soros Fund Management is a privately held investment management company that was founded in 1969 by George Soros. It is based in Manhattan, NY and is currently chaired by founder George Soros with his son, Robert Soros, being Deputy Chair and President. It is considered to be one of the most profitable hedge fund firms. George Soros is a big backer of Democratic presidential candidate Hillary Clinton as shown here:
His $7 million donation to the Hillary Clinton-backing Priorities USA Action Super PAC is, by a wide margin, the largest donation to Priorities USA by an individual or entity.
While Hillary Clinton and the GOP candidates may claim that political donations don't impact how they vote, it stretches the bounds of credibility to believe that wealthy donors who are willing to pony up millions of dollars to their preferred candidate don't at least expect to get the ear of the president should their candidate win the White House. The current iteration of Wall Street is no different than any other sector of the economy. Washington is for sale and they know what (and who) they want to buy.