What Clinton said to Goldman Sachs

WHAT HILLARY CLINTON SAID TO GOLDMAN SACHS — POLITICO’s Ben White: “When Hillary Clinton spoke to Goldman Sachs executives and technology titans at a summit in Arizona in October of 2013, she spoke glowingly of the work the bank was doing raising capital and helping create jobs, according to people who saw her remarks. Clinton, who received $225,000 for her appearance, praised the diversity of Goldman’s workforce and the prominent roles played by women at the blue chip investment bank and other tech firms present at the event. She spent no time criticizing Goldman or Wall Street more broadly for its role in the 2008 financial crisis.

“‘It was pretty glowing about us,’ one person who watched the event said. ‘It’s so far from what she sounds like as a candidate now. It was like a rah-rah speech. She sounded more like a Goldman Sachs managing director.’ … At another speech to Goldman and its big asset management clients in New York in 2013, Clinton spoke about how it wasn’t just the banks that caused the financial crisis and said that it was worth looking at the landmark 2010 Dodd-Frank financial reform law to see what was working and what wasn’t. … ‘It was mostly basic stuff, small talk, chit chat,’ one person who attended that speech said. ‘But in this environment, it could be made to look really bad.’


NOW WAY OUT — “[T]he descriptions of Clinton’s remarks highlight the trap in which the Democratic presidential front-runner now finds herself. In a previous election cycle, no one would much care about the former secretary of state’s comments to Goldman. They represent the kind of boilerplate, happy talk that highly-paid speakers generally offer to their hosts. Nobody pays nearly a quarter of a million dollars to have someone criticize their alleged misdeeds. But 2016 is different.

“Clinton is under relentless attack from Vermont Democratic socialist Bernie Sanders for her ties to Wall Street, including paid speeches and campaign fundraising events. And she is now under intense pressure from the media and some on the left to release transcripts of her remarks to Goldman and other banks. The problem is, if Clinton releases the transcripts, Sanders and other progressive candidates could take even seemingly innocuous comments and make them sound like Clinton is in the tank for Wall Street. And if she doesn’t, it makes her look like she has something very damaging to hide” http://politico.pro/1Q6rPnb

CLINTON TREASURY SECRETARY RUMOR MILL — Lots of responses to M.M.’s request for possible Treasury secretaries in a Hillary Clinton administration. Here’s a sampling.

Former Treasury official: “What about Sylvia Mathews Burwell? [Current HHS secretary.] Republicans like her, Democrats like her. Possible problems among Dems: She was Robert Rubin’s chief of staff at Treasury and was at the Walmart Foundation.”

Plugged in Wall Streeter: “When I read about Larry [Fink]’s note on ‘long-termism’ as the world’s biggest investor — my first thought was it positioned him very well to be Hill’s Treasury Secy. God knows he wants it and since he is on the buy side — he is not really toxic in the same way a bank CEO would be.”

Former Hill staffer: “Sheryl Sandberg … Family situation after the loss of her husband may preclude but I bet she gets consideration for a number of significant spots.”

Other names mentioned by emailers: Steve Rattner, Gary Gensler, Marc Lasry, Tom Nides, Mohamed A. El-Erian, Kevin Warsh (an R but who knows!), Stanley Fischer.

DARK HORSE — One former administration official: “I wouldn't be surprised if she asked Jack [Lew] to stay for awhile. She trusts him, he was her deputy at State, the progressives like him and he's a steady hand and wouldn’t require confirmation … .!”

ROAD BLOCKS ON THE ROAD TO WASHINGTON — NYT's Andrew Ross Sorkin: "Speculation has long been rampant that a small group of Wall Street executives, including Hamilton E. James of Blackstone Group, Laurence D. Fink of BlackRock and Roger C. Altman of Evercore, would love the top Treasury post if Hillary Clinton won the election. Warren E. Buffett once suggested that Jamie Dimon of JPMorgan Chase should be Treasury secretary. … But this little parlor game has a big problem: No matter who wins the presidency this fall, chances are slim that anyone connected to Wall Street has a prayer of securing a top post in the administration." http://nyti.ms/1LcUbEO

MORE ON CLINTON-LAND — From the same smart Dem who called the Attack of Bill on Sanders: “Bill is on the warpath. He's like a retired winning Super Bowl quarterback watching his old team making rookie mistakes and he's frustrated beyond belief. Intellectually he knows that he can't go too far, but his instincts often overwhelm his intellect. Watch him closely when he stands behind Hillary at these events. He is almost jumping out of his skin. He's aware that his personal approval ratings are plummeting the more he campaigns for her.

“The fundraising conundrum is particularly vexing to him. Like Bush, it wasn't supposed to be this way. Without the fundraising advantage, much of Hillary's game plan going forward will need to be tweaked significantly. Keep your eye on the campaign emails for increasing signs of stress and pressure. Despite her outward calm, like the proverbial ducks paddling furiously beneath the surface, her campaign team is double and triple checking their supposed ‘firewall.’”

RUBIO BOTS AGAIN — POLITICO’s Hanna Trudo: “Whoops, he did it again. Speaking at Nashua Community College in New Hampshire on Monday, Florida Sen. Marco Rubio repeated two nearly identical phrases about family values and raising kids in modern times. ‘We are taking our message to families that are struggling to raise their children in the 21st century, because as you saw, Jeanette and I are raising our four children in the 21st century,’ he said without taking a breath. ‘And we know how hard it is to install our values in our kids, instead of the values they try to ram down our throats," he added. Rubio then said more or less the same thing again” http://politi.co/1K8PCjV

ASIA TANKS AGAIN — Reuters: “Asian share markets were scorched on Tuesday as stability concerns put a torch to European bank stocks and sent investors stampeding to only the safest of safe haven assets. As fear overwhelmed greed, yields on longer-term Japanese bonds hit zero for the first time ever, the yen surged to a 15-month peak and gold reached its most precious since June. … Japanese Finance Minister Taro Aso felt moved enough to warn the yen's rise was ‘rough’, something of an understatement as the Nikkei nosedived 4.9 percent.” http://reut.rs/1omMSW7

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES — Colin Wilhelm on the chances of Puerto Rican bankruptcy — and to get Morning Money every day before 6 a.m. — please contact Pro Services at (703) 341-4600 [email protected]

QUESTIONS FOR YELLEN — Mohamed A. El-Erian in a piece up on Bloomberg this a.m.: “How is international weakness influencing U.S. economic prospects? The jobs report for January released on Friday suggested that the economy is in relatively good (though not great) shape, despite mounting worries about the global outlook. There will be lots of interest in Yellen’s forward-looking assessment of U.S. economic resilience …

“Is the recent acceleration in wage growth sustainable? Although the U.S. has been one of the world's most powerful engines of job creation in recent years, the recovery of the labor market has not been accompanied by solid increases in wages as yet. Data in the January employment report — particularly the increase in both hourly earnings and hours worked — have led to predictions of more robust wage growth ahead. Employees and investors will be eager for Yellen’s assessment of how this likely to play out.”

GOOD TUESDAY MORNING — Email me on [email protected] and follow me on Twitter @ morningmoneyben.

DRIVING THE DAY — New Hampshire votes! Based on every poll, Trump should win relatively handily. If he does not, well, never trust a poll again. The real race is for second between Kasich, Bush, Rubio and Cruz with the rest pulling up the rear. Very good chance the results will settle absolutely nothing and leave the “establishment lane” very much up for grabs following Rubio’s debate meltdown … President Obama’s final budget goes live at 11:00 a.m.. Will be interesting from an Democratic agenda-setting perspective but has no legislative future … JOLTS report at 10:00 a.m. expected to show little change in openings at 5,450K …

CLINTON E-MAIL PROBE ONGOING — POLITICO’s Josh Gerstein: “The FBI's investigation into Hillary Clinton's email server remained ‘ongoing’ as of earlier this month, a top FBI official said in a letter filed in federal court Monday. In the new letter, made public hours before a key test in Clinton's bid for the Democratic presidential nomination, FBI General Counsel James Baker was tight-lipped about the inquiry but told a senior State Department official that divulging details about the probe could undermine it.” http://politi.co/1ScisCn

CAMPAIGN SHAKE-UP? — POLITICO's Glenn Thrush and Annie Karni on Hill and Bill engineering a staff shakeup: POLITICO http://politi.co/1Q5poRG

SUBTWEET DU JOUR — Obama guru David Axelrod: “When the exact same problems crop up in separate campaigns, with different staff, at what point do the principals say, 'Hey, maybe it's US?”

GEITHNER TO BORROW FROM JPM — Bloomberg’s Miles Weiss and Kiel Porter: “Former U.S. Treasury Secretary Timothy Geithner is preparing to borrow from JPMorgan Chase & Co. to help fund his new career in private equity. Geithner, 54, secured a credit line with JPMorgan, one of the largest banks he oversaw during the financial crisis, to finance personal investments in funds started by his current employer, Warburg Pincus, according to a filing with the New York Department of State. He is borrowing money to invest in a $12 billion private equity fund that the firm raised in November, its first main fund since he joined almost two years ago …

“Top private-equity managers are often expected to pony up many millions of dollars for their new funds, to show investors that their interests are aligned. Having worked for the government for most of his career, including as president of the Federal Reserve Bank of New York, Geithner entered that high-stakes world with the earnings history of a government employee, albeit a high ranking one. By borrowing money, investors can also amplify — or leverage — the returns on their own capital.” http://bloom.bg/1XeEsMx

BLOOMBERG EYES RUN — FT: Oliver Ralph in London, Demetri Sevastopulo in New Hampshire and Matthew Garrahan in New York: “Michael Bloomberg, the billionaire media owner and former New York mayor, has stated for the first time that he is considering a run for US president, a move that would dramatically reshape the 2016 race for the White House. Speaking to the Financial Times, the founder of the eponymous financial information group criticised the quality of the debate in the presidential race. He said that he was ‘looking at all the options’ when asked whether he was considering putting his name forward.

“‘I find the level of discourse and discussion distressingly banal and an outrage and an insult to the voters,’ Mr Bloomberg said in an interview … Mr Bloomberg told the FT that he would need to start putting his name on ballots across the US at the beginning of March. ‘I’m listening to what candidates are saying and what the primary voters appear to be doing,’ he said. … . Many experts believe that Mr Bloomberg would help the Republican nominee by drawing more support from Democrats over Republicans because of his liberal stance on issues such as gun control and the environment.” http://on.ft.com/1Q5SMY6

BUDGET PREVIEW — Reuters: “President Barack Obama's fiscal 2017 budget will call for an 11 percent increase in funding for the Securities and Exchange Commission and a 32 percent increase for the Commodity Futures Trading Commission, a White House official said on Monday. Obama will propose that the SEC be given $1.8 billion and the CFTC $330 million in the budget, economic adviser Jeffrey Zients said in a blog post on the White House website … The Republican-controlled Congress is likely to oppose these and many other proposals in Obama's budget.

“In addition to the proposed increases from the previous fiscal year, the budget will offer support again for user fees to fund the CFTC in a similar way to other financial regulators, Zients said … The budget would also take steps to reduce risk in the financial sector by assessing a fee against large financial institutions based on their liabilities" http://reut.rs/1T9tHf5

BANK STOCKS CRUSHED AGAIN — WSJ’s Mike Cherney, Justin Baer and Aaron Kuriloff: “Investors are dumping bank stocks amid worries that a protracted period of slowing global growth, plunging oil prices and rock-bottom interest rates will combine to inflict pain on the world’s largest financial institutions. Selling was intense Monday on both sides of the Atlantic, with bank shares leading the Dow Jones Industrial Average down 1.1 percent.

“U.S. markets staged a late-day bounce that narrowed the Dow industrials’ decline by more than half, but many of the largest U.S. banks closed lower by at least 4 percent, including Dow component Goldman Sachs Group Inc. Morgan Stanley dropped 6.9 percent, while Citigroup Inc. fell 5.1 percent. The retreat adds to a rout that has shaved tens of billions of dollars from the value of major U.S. banks’ shares this year. European lenders are also suffering. The Stoxx Europe 600 index fell 3.5 percent on Monday, with Germany’s Deutsche Bank AG sliding 9.5 percent. Adding to the jitters abroad, a small German lender, Maple Bank GmbH, defaulted on its debt Monday”

ALSO FOR YOUR RADAR

CLINTON ONCE HIT OBAMA WITH INNUENDO — IBT’s David Sirota and Andrew Perez: “In the closing stretch of the New Hampshire primary campaign, Hillary Clinton has slammed critics for pointing out that she backed public policies that helped her major campaign contributors in the financial industry … In her previous presidential campaign, though, Clinton launched an aggressive attack on then-Illinois Sen. Barack Obama over campaign finance issues. She explicitly alleged that Obama traded access and legislative deals for campaign cash in a set of public attacks, one of which was criticized as deeply dishonest” http://bit.ly/23TvVmI

CLINTON’S NEW MONEY MAN — Bloomberg’s Max Abelson: “Mickey Mouse figurines and photos of grinning politicians surrounded the 90-year-old investor Bernard Schwartz in his Manhattan office on Thursday. Four days earlier, new federal filings showed he gave $1 million to a super-PAC supporting presidential candidate Hillary Clinton, making him one of her top backers and part of the campaign-finance system that her rival Bernie Sanders calls undemocratic and corrupt. Shwartz … agrees. ‘PACs are a bad thing, it distorts the political process,’ said Schwartz, who now manages his money as chairman of BLS Investments. ‘Rich people have the opportunity to get access.’ http://bloom.bg/1T8ruAz

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