Delamaide: Bank threat to Democrats backfires

Darrell Delamaide | Special for USA TODAY

WASHINGTON — If Citigroup, JPMorgan Chase and other big banks wanted to send a message to congressional Democrats with a "symbolic" withholding of donations, they can rest assured it was heard — but not in the way they intended.

The gesture by the banks to each withhold $15,000 in donations to the Democratic Senatorial Campaign Committee until lawmakers like Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio softened their tone on Wall Street was first reported last week by Reuters.

Warren immediately seized on the report, using it in a defiant fundraising appeal for her network of supporters nationwide to make up the amount in contributions to the Senate campaign fund.

"The big banks have thrown around money for years," she wrote in an e-mail posted on her blog. "But they are moving out of the shadows. They have reached a new level of brazenness, demanding that Senate Democrats grovel before them."

The timing of this symbolic message seems tied to the announcement by Senate minority leader Harry Reid of Nevada that he will retire next year, setting off a shuffle of the Democratic leadership in the Senate and perhaps opening the door for Warren to play a bigger role.

In the wake of the Democrats' electoral debacle last year, Senate lawmakers created a new position for Warren that gave her a seat at the table for the weekly leadership meetings. The concern in Wall Street appears to be that she could now move into a role with more clout.

The amount of contributions in question, perhaps no more than $30,000, is, as Warren notes, "a drop in the bucket" for the banks or for the Senate campaigns. But it seems to be a shot across the bow that more serious consequences could be in store if this message is not heeded.

"That kind of swagger is a warning shot," Warren wrote to her supporters. "They want a showy way to tell Democrats across the country to be scared of speaking out, to be timid about standing up, and to stay away from fighting for what's right."

While much of the focus in the press in recent months has been on whether Warren will challenge Hillary Clinton for the Democratic nomination for president, her role in the Senate in defending the Dodd-Frank financial reform and continuing the assault on Wall Street malfeasance is the clear and present danger for the banks.

Reid has endorsed Chuck Schumer of New York to take his place as Democratic leader in the Senate. Schumer, who spent 18 years in the House before joining the Senate in 1999, traditionally has been a strong supporter of Wall Street, which is part of his constituency and a major source of campaign funds, but he has been more circumspect in the wake of the financial crisis.

If Warren were to ascend to a top leadership position, she would have even more influence to keep Schumer and other Democrats in line on the question of financial reform.

If the goal of the banks was to intimidate the Democrats, it appears to have backfired.

"Let's send the biggest banks on Wall Street our own message," Warren said in her fundraising appeal last week. "We're going to keep fighting, and your swagger and your threats won't stop us."

Speaking in New York on Monday, Warren drove home the point again in the lions' den.

"You bet I believe it's a serious threat," Warren said of the banks' effort to sway the debate. "I got news for them: Bring it on."

She told the audience in the Barnes & Noble store on Union Square that she has two objectives in her crusade for financial reform: that banks shouldn't be able to cheat people, and no financial institution should pose a risk of destroying the economy because it's too big to fail.

Warren was at the bookstore promoting the release this week of the paperback edition of her political memoir, A Fighting Chance.

In a new afterword to the book, Warren recounts a visit to her office by JPMorgan chief executive Jamie Dimon early in 2013, after she had just taken office.

The two argued, according to her account, about financial regulation, Dodd-Frank and the new Consumer Finance Protection Bureau she had masterminded.

Finally Warren said straight out that she thought JPMorgan and other banks were breaking the law. Her description of Dimon's reaction: "Suddenly Dimon got quiet. He leaned back and slowly smiled. 'So hit me with a fine. We can afford it.'"

As The Huffington Post noted in reporting the incident, JPMorgan did get hit with $20 billion in fines in 2014, but Dimon got a raise.

So the fight continues. Warren said in her fundraising e-mail last week: "I'm not going to stop talking about the settlement agreements that JPMorgan makes with our Justice Department that are so weak, the bank celebrates by giving their executives a raise."

Roger that.

Business columnist Darrell Delamaide has reported on business and economics from New York, Paris, Berlin and Washington for Dow Jones news service, Barron's, Institutional Investor and Bloomberg News service, among others.