Wall Street's anxiety grows after a report suggested Warren could mount a presidential bid. | REUTERS Wall Street's nightmare: Warren

NEW YORK — There are three words that strike terror in the hearts of Wall Street bankers and corporate executives across the land: President Elizabeth Warren.

Anxiety over Warren grew Monday after a magazine report suggested the bank-bashing Democratic senator from Massachusetts could mount a presidential bid in 2016 and not necessarily defer to Hillary Clinton — who is viewed as far more business friendly — for the party’s nomination.


And the fear is not only that Warren, who channels an increasingly popular strain of Occupy Wall Street-style anti-corporatism, might win. That is viewed by many political analysts as a slim possibility. The fear is also that a Warren candidacy, or even the threat of one, would push Clinton to the left in the primaries and revive arguments about breaking up the nation’s largest banks, raising taxes on the wealthy and otherwise stoke populist anger that is likely to also play a big role in the Republican primaries.

( Also on POLITICO: Report fuels prospect of 2016 Elizabeth Warren run)

“The nightmare scenario for banks is to hear these arguments from a candidate on the far left and on the far right,” said Jaret Seiberg, a financial services industry analyst at Guggenheim Partners. “Suddenly, you have Elizabeth Warren screaming about ‘too big to fail’ on one side and Rand Paul screaming about it on the other side, and then candidates in the middle are forced to weigh in.”

Warren’s press secretary, Lacey Rose, said in an email Tuesday afternoon that as “Senator Warren has said many times, she is not running for president.” People close to Warren note that she signed a letter from female Democratic senators, urging Clinton to run in 2016. And Warren associates, mindful of any appearance of creating the narrative of a Warren-for-president campaign, have corresponded with Clinton associates to stress that they didn’t fuel the New Republic story by Noam Scheiber.

Yet the stakes for Wall Street and corporate America of a Warren campaign — and possible victory — are hard to overstate.

She almost certainly would bring fresh scrutiny to Wall Street scandals by arguing that even giant settlements — like the $13 billion JPMorgan Chase is expected to pay to end probes into its mortgage practices — are nowhere near enough to make up for the damage done during the financial crisis.

(QUIZ: Do you know Elizabeth Warren?)

Warren in the Senate has pushed regulators hard both to go after individual bankers and to demand guilty pleas as part of any settlement deals with institutions. She also probably would talk about other bread-and-butter issues that make large amounts of money for banks but outrage average citizens, including interest on student loans, credit card fees and ATM charges.

And she most likely would hammer away at the gap between executive pay and average wages and make the case for higher taxes on investment income enjoyed by the wealthiest Americans.

The fear of a Warren candidacy is likely to drive even more Wall Street money to Clinton’s potential campaign and attendant super PAC, “Ready for Hillary,” which would help the former secretary of state and New York senator build a massive war chest to beat back any possible challenge from the left.

But the very creation of that war chest — and Hillary Clinton’s many well-paid speeches to Goldman Sachs and other financial firms — could also play directly into an argument by Warren, or another candidate on the left, that Clinton is beholden to Wall Street and not well-suited to address issues of wealth concentration and financial regulation.

( Also on POLITICO: Liberals take on Wall Street Democrats — and win)

“A Warren candidacy would bring a fresh level of scrutiny to both Hillary and Bill Clinton’s relationships with Wall Street, and they will have to deal with that,” said a progressive Democrat sympathetic to Warren, and who declined to be identified by name for fear of angering the powerful Clintons. “There is a clear tension between what the Clintons say and what lines their pockets. They have become fabulously, unimaginably wealthy,” in part through speeches to banking groups.

Clinton insiders have taken note of the energy that Warren represents. They don’t exhibit the same level of dismissiveness that once existed in her orbit around then-Sen. Barack Obama. But most familiar with Clinton’s world interpreted it as Warren getting attention for issues without advancing the likelihood of a campaign.

Even people who admire Warren were clear-eyed about where things stand now.

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“What do you mean, ‘if she doesn’t run’? She’s not running,” said Daily Kos founder Markos Moulitsas, when asked who could fill the Warren space if she herself doesn’t. “If Hillary runs, she’s the nominee. We barely got Warren to run for Senate. Running for president is an even crazier endeavor.”

If anything, Clinton’s world appears very aware that income inequality is an issue that matches the prevailing mood of the Democratic base — witness incoming New York City Mayor Bill de Blasio, who was Hillary Clinton’s 2000 campaign manager. A Clinton ally, John Podesta, is launching a new think tank aimed at evaluating income inequality; it will be a subsidiary of the larger Center for American Progress, run by longtime Hillary Clinton adviser Neera Tanden.

While Clinton has given speeches to banks, it’s not exactly clear what her messaging would be once she begins a likely campaign — it’s entirely possible that, seeing the current terrain among Democrats, Clinton would make a strong progressive economics argument. Her economic policy stances over the years generally have not been those of a centrist. She’s embraced, as The Washington Post’s Ezra Klein noted Monday, many of the same policies aimed at lifting the middle class as Warren has.

“The issue terrain, the demographic terrain and the geographic terrain are all far more important at this stage than the choice of candidate,” said one Democratic strategist in an email. “Trying to build a cult of personality three years out is a fool’s errand.”

Big Democratic donors in New York backing a Hillary Clinton candidacy are aware that their support could be a problem and so are reluctant to speak about it publicly.

But privately, they yearn for Clinton to get the nomination much in the way many Republican financiers want to see New Jersey Gov. Chris Christie — or someone like him — lock down the GOP nomination instead of tea party favorites such as Paul or Texas Sen. Ted Cruz.

Another Wall Street backer, noting Clinton’s speeches to Goldman Sachs and elsewhere, argued that people close to the former first lady apparently have decided that the threat of a successful challenge from the left is remote and not likely to be any more successful than former Vermont Gov. Howard Dean’s populist 2004 effort.

“I don’t see who the person is who could beat her from the left, and they have obviously made the calculated bet that there is no such person,” the financier said.

But as the New Republic article on Warren noted, if you went into a lab to design a candidate who might successfully take on Clinton, that candidate would probably look a lot like Elizabeth Warren: female, wildly popular on the left and capable of taking the often chaotic populist messages from groups like Occupy Wall Street and Anonymous and turning them into a clear narrative of average folks fighting powerful entrenched interests.

A read of Warren’s recent remarks offers a taste for what her stump speeches in New Hampshire and Iowa might sound like.

“I’ve been in the Senate for nearly a year and believe as strongly as ever that the system is rigged for powerful interests and against working families,” Warren thundered in recent remarks to the National Consumer Law Center. “We could talk about a lot of ways the system is rigged — lobbyists, campaign finance, the court system. But I want to raise a very specific issue that we need to spotlight: how much powerful interests benefit from a system that is complicated and opaque.”

In fact, if Warren, 64, wants to mount a presidential bid, her message of taking on entrenched interests would very likely only work in 2016 when she will have been part of the Washington system for only four years, less than a full Senate term. If she were to wait, Warren could risk missing her window.

That same calculus — forget people who say it’s too soon — led Obama to take on Clinton in 2008. And there is no question Warren could raise ample money to fund a presidential bid, even with Clinton locking down all the Wall Street cash. Warren raised $42 million for her Massachusetts Senate bid and has a powerful grass-roots appeal capable of bringing in big cash in small amounts online.

Polls repeatedly suggest that public support, especially among Democrats, for Wall Street and Big Business is dropping, and people are growing increasingly concerned about income disparity. That could leave a wide-open field for a Warren candidacy that would make the executive class deeply uncomfortable, even if Warren loses.

“The really terrifying thing for the banks is somebody asking pointed questions and expecting a real answer instead of accepting all the spin and baloney,” said Dennis Kelleher, head of the financial reform group Better Markets. “That’s what Warren could do.”