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Common Dreams - February 23, 2020

"He {Biden} supported and often led the fight for legislation that further consolidated the financial industry, eliminated laws that had curbed Wall Street’s penchant for excessive speculation, and increased protections for banks while eroding protections for consumers. And he supported trade deals that benefitted Wall Street and other big corporations while eliminating 4 million U.S. jobs primarily held by union manufacturing workers. Conversely, he is culpable for the failure to pass legislation that would have helped strengthen unions and protect the rights of consumers."

He calls himself “Uncle Joe” and “Middle Class Joe.” He often talks about his almost archetypal U.S. political success story of rising from the middle class to become a U.S. Senator and Vice-President.

Now he is running for President. Biden contends that he will and has always represented the interests of the U.S. middle class.

In one campaign ad, Biden states, “Maybe the most important thing my mom and dad taught me was that everyone should be treated with dignity. Today too many middle class and working class people, they’re not able to look their kid in the eye and say, ‘Honey, it’s going to be okay,’ and mean it. That’s why I’m running.” In his first campaign speech delivered to a largely union crowd in Pittsburgh, Biden stated “Let me say this simply and clearly, and I mean this: The country wasn’t built by Wall Street bankers, CEOs and hedge fund managers. It was built by you. It was built by the great American middle class.” In an interview, Biden stated, “It’s high time we helped Main Street.”

At a rally in Iowa, Biden summed up his main campaign theme, “I think the moral obligation of our time is to rebuild the middle class…That’s my north star and the reason for that is when the middle class does well, everybody does well.”

Throughout his political career, Biden has portrayed himself as siding with the millions of middle-class workers and small businesspersons who populate Main Street against the bankers, corporate executives and billionaires who inhabit Wall Street.

Is Biden’s self-portrayal accurate? In his long political career, has Biden been the champion of the middle class against the “Wall Street bankers, CEOs and hedge fund managers”?

In this and a number of future articles, I will examine specific presidential candidates not in terms of the liberal, moderate or conservative labels but in terms of their relationship to the U.S. power structure: who supports and funds them, whose power is increased or decreased from the policies they espouse, and whose interests they have in the past and will in the future actually represent.

In a previous article, I analyzed Pete Buttigieg in terms of his relationship to the interests of Wall Street and the corporate elite. In this article, I will examine Joe Biden not in terms of his “social” or “cultural” policies but in terms of whether Biden serves the interests of Wall Street or Main Street. This analysis will be based on identifying Biden’s main contributors, the legislation and policies he supported as senator and vice president, and his statements and policy proposals.

As a Presidential Candidate, Biden Literally Promised Wall Street and Billionaires: “I Won’t Let You Down, I Promise You.” Biden has gone to great lengths to reassure Wall Street of his fidelity. For example, in June 2019, Joe Biden addressed more than 100 wealthy donors at the Carlyle Hotel in Manhattan.

The crowd included Robert Rubin (former Co-Chair of Goldman Sachs and Treasury Secretary under Clinton) and Robert Altman (former co-head of investment banking at Lehman Brothers; Assistant Secretary of the Treasury under Carter and Clinton; and former Vice-Chairman of the Blackstone Group). Obviously, the attendees represented not just the mega-rich but also some of the most powerful members of the Wall Street political elite.

Biden not only pledged his fealty to their interests but also differentiated himself from the progressive wing of the Democratic Party. Biden stated “The truth of the matter is, you all, you all know, you all know in your gut what has to be done. We can disagree in the margins but the truth of the matter is it’s all within our wheelhouse and nobody has to be punished. No one’s standard of living will change, nothing would fundamentally change…I need you very badly. I hope if I win this nomination, I won’t let you down. I promise you.”

Follow the Money: Biden Has Always Relied on Contributions from Wall Street. Biden has been beholden to Wall Street and billionaire donors throughout his entire career.

  • As Senator, Biden relied on Wall Street money. Biden’s cozy relationship with Wall Street reflects the role of that industry in Delaware – the state Biden represented as Senator from January 1973 to January 2009. Delaware is the chosen home for large corporations and many financial services firms. Delaware has more businesses incorporated in the state (1.4 million) than there are residents (967,000 in 2018). More than 50% of all publicly traded companies and more than 67% of the Fortune 500 are incorporated in Delaware. One leading business professor stated, “Delaware is an outlier in the way it does business … what it offers is an opportunity to game the system and do it legally.” There are three major reasons for Delaware’s popularity among big corporations: it is a tax haven that allows corporations to declare certain types of revenue in Delaware rather than in higher tax states; Delaware makes it easy to incorporate, avoid liability and retain privacy without providing much documentation; and the Delaware courts allow companies to resolve disputes quickly with a judge rather than a jury. Financial services dominate the Delaware economy.  According to the U.S. Bureau of Economic Analysis, the traditional measure of the entire financial sector (Finance, Insurance and Real Estate) accounts for 44% of the entire state economy and almost 50% of the private sector. Finance and Insurance alone account for 30% of the entire state economy.

Thus, it is no surprise that the interests of the financial services sector and Biden are intertwined. According to the Center for Responsive Politics the entire finance capital sector (Finance, Insurance and Real Estate) has been the largest business sector contributor to Biden’s various senatorial and his 1988 and 2008 presidential campaigns.  Between 1990-2007, this sector invested $6.87 million in Biden. The second largest individual business contributor to Biden’s campaigns over this period was MBNA that invested $265,350 into Biden’s campaigns before he ran for Vice-President on the Obama ticket. MBNA was the largest independent credit card company in the U.S. and the largest private sector employer in Delaware. In 2007, MBNA was acquired by Bank of America and in 2017 by Lloyds Banking Group of the UK.

  • As Presidential candidate, Biden continues to rely on Wall Street money. Data from the Center for Responsive Politics also reveals that the Finance, Insurance, and Real Estate (FIRE) sector has invested $6.32 million in Biden’s current presidential campaign – this not only is the largest source of Biden’s campaign funds among businesses, but it is FIRE’s largest investment in any Democratic candidate and second only to Trump overall. This figure includes a $3.04 million investment by the finance and insurance sector of Wall Street. The Blackstone Group (a major multi-national private equity firm) and Morgan Stanley are among Biden’s largest contributors. Biden also has received $3.28 million in contributions from the real estate industry – second only to its investment in President Trump.

According to a Forbes article in December 2019, forty-four billionaires have given to Biden’s campaign. Twenty-five or almost 60% come from the Finance, Insurance, and Real Estate sector including 17 from “Finance and Investments” and 8 from Real Estate. The article states, “Biden’s billionaire backers may come in handy down the line. In October, a pro-Biden super PAC called Unite The Country sprang to life. Super PACs, which can end up buying ads to support or oppose particular candidates, are not controlled directly by campaigns.” According to the Center for Responsive Politics, Unite the Country spent $5.5 million as of February 2020. The finance/insurance/real estate sector accounted for $2.4 million.

Wealthy individuals also act as bundlers who aggregate the contributions of multiple donors. The minimum contribution to qualify as a bundler is $25,000.  Biden lists 262 individuals as bundlers on his campaign site. According to a report from the Center for Economic and Policy Research, 40% of his total bundlers were tied to the FIRE sector including 23% from the “financial industry” and 17% from real estate. At a minimum, the FIRE sector has bundled $2.625 million. The report also shows that while Biden likes to tout his support from rural and suburban voters, 106 of his big money bundlers reside in the big urban centers of from New York, Chicago, California and Washington DC.

An investigative reporter, Lee Fang, published an article in The Intercept examining Biden’s ongoing ties to Wall Street and other major corporate funders during his 2020 campaign. The title of the article tells the story: “Joe Biden’s Super PAC Is Being Organized by Corporate Lobbyists for the Health Care Industry, Weapons Makers, Finance.”

Biden Has Consistently Chosen Wall Street over Main Street. Biden has served his Wall Street investors well. The following list provides some of the highlights of Biden’s service to Wall Street over his career – to the detriment of Main Street.

  • Supported banking industry consolidation and Too Big to Fail Banks. Biden helped banks and insurance companies consolidate and become too big to fail. In 1994, Biden backed the Riegle-Neal Interstate Banking and Branching Efficiency Act that eliminated any remaining barriers to inter-state banking. This opened the floodgates to a new era of corporate consolidation of the banking industry.
  • Supported the elimination of protections that limited Wall Street speculation. Biden helped to eliminate protections against financial industry speculation thereby creating conditions that exacerbated the Great Recession of 2008. In 1999, Biden voted for the Financial Services Modernization Act, which repealed the Depression-era Glass-Steagall law barring banks from owning securities and insurance businesses. One of Biden’s largest contributors MBNA lobbied for the repeal of Glass Steagall and he delivered. Glass-Steagall created a wall between commercial banks and investment banks. Workers and small businesses use commercial banks to deposit their money in federally guaranteed checking and savings accounts. Glass Steagall prevented banks from transferring these federally guaranteed deposits to their investment banking operations that focused on high risk and speculative investments.

In this way, Glass-Steagall served to limit the ability of banks from using no-risk federal guaranteed deposits for high-risk speculative investments. The 1999 act repealed these protections. Not surprisingly, this allowed Wall Street to create a new era of rampant speculation – which adversely affected small businesses and workers.

  • Supported Wall Street banks while hurting Main Street small business and middle-class borrowers. The Bankruptcy Act of 2005 presented Biden with a stark choice between Wall Street and Main Street. Biden not only chose Wall Street, but he championed Wall Street’s interests. This bill made it much more difficult for financially distressed families to receive the protections that accompany a bankruptcy filing. Conversely, it aided the banking industry by making it easier to collect that debt.

Bankruptcy was designed to help individuals and businesses eliminate all or part of their debt or help them repay a portion of what they owe. It often involves a bankruptcy court and negotiating a repayment plan. However, the Act basically removed bankruptcy as an option for millions of families.  Many consumer groups and unions opposed the bill.

However, it was proposed and energetically supported by the finance industry. The credit card industry spent $100 million lobbying for the bill over an eight-year period. MBNA, one of Biden’s leading donors, lobbied hard for its passage. Only Biden and 3 other Democratic Senators joined with a solid bloc of Republicans to defeat every attempt to moderate the bill.

An article in The Guardian provides an assessment of Biden’s role by Melissa Jacoby, a law professor at the University of North Carolina at Chapel Hill specializing in bankruptcy, “Biden was one of the most powerful people who could have said no [to the Bankruptcy Act], who could have changed this. Instead he used his leadership role to limit the ability of other Democrats who had concerns and who wanted the bill softened…. I don’t know how else to explain his stance on bankruptcy policy for financially distressed families other than his relationship with the consumer credit industry. There really isn’t another plausible explanation.”

Elizabeth Warren, then a Harvard law school professor, adamantly opposed the bill in its various forms. She even wrote an entire paper criticizing Biden’s role in an earlier version of the bill. Bernie Sanders, then a Congressman from Vermont, voted against the bill. In the final vote, Biden and 17 other Democrats voted for the bill.

A Mother Jones article by Tim Murphy provides a detailed account of how Biden assisted his investors (especially MBNA and the entire banking sector) by supporting and helping to craft this pro-Wall Street legislation that was ironically named the Abuse Prevention and Consumer Protection Act.  Between 1980 and 1997, the number of Americans filing for personal bankruptcy jumped more than 300 percent, affecting 1.3 million households annually. Borrowers were being hit with significant increases in medical bills, student loans, credit card fees, and mortgages while experiencing a long period of stagnant incomes.

The rise in personal bankruptcies was very troubling to the banks and credit card companies. The banking industry crafted a bill that did not focus on the needs of debtors and did not address the reasons why personal bankruptcies were increasing. Instead, the banking industry and its political allies focused on making it harder for people to declare bankruptcy and easier for banks and credit card companies to collect. The Bankruptcy Act made personal bankruptcy more expensive, complex, bureaucratic, burdensome and less effective and, thus, more difficult for families to get out of crushing debt. But it did protect the assets and interests of the banks holding the debt. The number of personal bankruptcy filings has fallen by half since the Act became law.

  • Helped create the student debt crisis – this is not hyperbole. Biden’s role in the creation of the student debt crisis is especially illustrative of his choice of Wall Street over Main Street. Biden was part of a multi-decade banking strategy to make it easier for students to acquire debt while making it much more difficult for them to declare bankruptcy.

Obviously, this benefitted the banks who expanded their loans to students and their power to collect the debt. Currently, 45 million Americans owe nearly $1.6 trillion in student loan debt. More than 1 million people default on their student loans every year. An investigative report in the Intercept concludes that “Joe Biden played a central role in the creation of the student debt crisis that he and other candidates are now promising to fix, according to a close look at the legislative history around the spiraling phenomenon.” ...
Read full report at Common Dreams