The Media’s Given Wall Street a Free Pass in the 2020 Primary

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In the spin room following the Democratic presidential debates in Miami, June 2019

Sitting in the media room midway through the sixth Democratic presidential debate in Los Angeles, I heard somebody complain aloud by shouting the word “SnoozeHour!” It was a reference to debate co-sponsor PBS NewsHour, and the abject horror that the moderators saw fit to focus on substantive policy issues rather than convening political food fights.

But even for the SnoozeHour, one subject remained too obscure or boring to handle: Wall Street. There has not been a single question about financial policy in the first six debates this year. Wall Street has been mentioned only glancingly, in brief moments. Bernie Sanders and Elizabeth Warren have occasionally sought the opportunity to vow to take on Big Finance; Sanders has mentioned his financial transactions tax to pay for tuition-free college; Wall Street executives have been name-checked as a reason not to hold high-dollar fundraisers. But actually seeking insight on how the candidates would handle Wall Street speculation, bank size, risk management, or the financialization of our economy? No debate moderator has yet tried.

Tech titans and healthcare executives have surpassed banksters as the chief corporate villains for Democratic audiences. But any inference that Wall Street no longer plays a role in our unequal economy would be a perilous miscalculation. Financial engineering still dominates even the non-financial business world, creeping into sector after sector. The Wall Street blackout in the primary does a disservice to those candidates with the most appealing views on financial regulation. It also courts disaster by giving cover to the most important broken piece of our economic machinery. Worst of all, it shows how establishment and media bias really works.

AS RECENTLY as 2016, Wall Street was one of the two main issues at the heart of the primary debate (the other was healthcare). Sanders and Hillary Clinton diverged on the issue, making it useful for debate presenters to draw contrasts. But for those who claim that this has been the most policy-heavy presidential primary in memory, the one before this one featured detailed disquisitions about reducing volatility in the shadow banking sector, separating investment and commercial banking with a firewall, placing risk fees on the largest institutions, and other allegedly arcane subjects. Financial reform was more prominent in the 2016 primary than in 2008, which is interesting given how the world was melting down at the time. But even then, candidates needed to spell out some facsimile of a Wall Street policy.

What’s doubly frustrating about the silence on Wall Street in 2020, relative to the cacophony in 2016, is that the financial sector has grown more dangerous in the intervening four years, thanks to Trump and his allies.

An ill-advised bipartisan deregulation law has reduced supervisory rules on large regional banks, and triggered a chain reaction of bank consolidation that is crushing the community banks the measure was intended to help. Regulators have employed the deregulation law to roll back capital and liquidity requirements for all but the very biggest banks, and reduce the frequency of stress tests and living wills, the roadmaps banks are supposed to update routinely to explain how they could be unwound in a crisis.

The Consumer Financial Protection Bureau has been idled under new leadership, putting millions at risk of being cheated by financial operators without a watchdog looking out for them. The SEC has also effectively stopped enforcing the law, with significant drops in penalties and enforcement actions. Meanwhile, the agency will soon allow financiers to swindle more smalltime investors with private offerings of shares in risky start-ups. An overhaul of the Volcker rule enables investment banks to trade once more on their own accounts; an overhaul of the Community Reinvestment Act enables commercial banks to ignore low- and middle- income communities, and even to classify the financing of downtown sports stadiums as assisting the poor.

In short, every single corner of the financial industry, from derivatives traders to payday lenders, from financial advisors to fintech firms, has seen major boosts to their bottom lines from Trump-era deregulation. And that translates into more risk for financial consumers, ordinary depositors, and the broader economy.

It also bleeds into so many prominent issues in the nomination race. Financial stability is deeply threatened by climate change. Access to financing keeps private prison operators alive. Private equity firms have started to buy up hospitals and close them for the real estate. The racial wealth gap has much to do with the obliteration of families of color’s home equity during the housing bubble collapse. The owner of the infamous wine cave was a real estate tycoon bailed out by the government on his failed savings and loan.

The financial industry may have been overshadowed by Big Tech in recent years but remains at the heart of the question of whom the economy works for. You would assume this would merit the attention of the candidates vying to replace Trump as president.

IT HAS, at least for some. Elizabeth Warren, godmother of the Consumer Financial Protection Bureau, has introduced plans, several of them before announcing her candidacy, that would restore the Glass-Steagall Act, which separated investment and commercial banking; enforce white-collar fraud laws and hold individuals accountable for wrongdoing, and upend the predatory private equity industry. It’s part of Warren’s larger preoccupation of reorienting the Democratic Party’s philosophy and advisors away from Wall Street and toward the public interest.  And Sanders has a pre-existing set of Wall Street reform priorities from his 2016 campaign, including a public option for simple bank accounts at the post office and a 15 percent usury cap on all consumer loans.

These plans deserve to be debated. The public should understand whether, for example, private equity could get around rules putting them on the hook for the debts of the companies they purchase, or whether postal banks should offer loans in addition to savings accounts. There’s a mediagenic fight to be had on this issue, between Warren and Sanders on one end, and Joe Biden, a guardian of the banking industry when serving in the Senate, on the other. You even have a built-in point of conflict, with Warren and Biden’s long-standing battle on bankruptcy laws. And it would be good to know the views of former hedge fund manager Tom Steyer, billionaire financial executive Mike Bloomberg, and recipients of Wall Street cash like Pete Buttigieg (and to a lesser extent Cory Booker).

So far, however, the media remains mute. Maybe they’ve moved on from the financial crisis; maybe they don’t want to research the issues. Whatever the reason, their decision to avoid Wall Street issues neglects an entire field of presidential policymaking that, as Graham Steele correctly argued in the Prospect, could be put into place without any new laws.

This blackout isn’t fair to candidates with developed viewpoints, and a free gift to those with unpopular or unformed ones. When Julián Castro, who progressives have generally praised throughout the primary, took a question at a candidate forum from a laid-off Toys “R” Us worker about the private equity barons who destroyed her employer, he literally had no understanding of the issue. It was embarrassing and disqualifying, and we should know who else in the field fails to fundamentally grasp the rise of private equity, its systemic extraction of resources from the corporations it controls, and the economic devastation it inflicts millions of workers.

If a rare moment of mass media attention to policy leaves out something as crucial as the role of the financial sector, there’s no hope that the broader public will learn anything about how our economy actually works. This subsequently serves as a shield for financial malfeasance, an allowance for predators to spend the next couple years robbing people without scrutiny. If Wall Street isn’t present in a presidential primary, it simply won’t be present in the media at all, which risks a replay of the crash.

The easiest way to ensure that nothing will fundamentally change, as Joe Biden famously told donors in June, is to narrow the presentation for the voting public of what’s even possible. When we hear about media bias, it’s usually about one outlet favoring one poll over another, or forgetting to add one candidate’s name in a story. But leaving finance out of the picture reflects the deepest and most dangerous bias. It frees Wall Street-friendly Democrats like Biden from having to answer for their actions. It muddles the choice for voters.

For an entire presidential primary, the greatest driver of inequality and economic risk has remained invisible to voters. The establishment thanks the media for their service.