Democratic presidential front-runner Hillary Rodham Clinton’s populist anti-Wall Street pitch is wearing thin with liberal activists who say her financial reform proposals are too weak and her record is too tainted by millions of dollars in campaign contributions from the financial sector.
After collecting $17 million in donations from big banks over the years, Mrs. Clinton is at risk of being seen as too cozy with Wall Street — an image Sen. Bernard Sanders, her chief competitor for the Democratic nomination, is hoping to capitalize on.
He’s running ads in Iowa and New Hampshire, home of the first caucuses and primaries, warning voters: “The truth is, you can’t change a corrupt system by taking its money.”
Mrs. Clinton was indignant at the charges at the last Democratic debate, citing the 9/11 terrorist attacks in saying Mr. Sanders impugned her integrity by suggesting her financial reforms were weak because of her campaign donations.
But activists said Mr. Sanders was onto something.
“First of all, Bernie Sanders did not impugn her integrity by pointing out her action. Her own actions impugn her integrity,” Debbie Lusignan, a liberal activist, said on her YouTube show “Sane Progressive,” after the debate.
“When you take tens of millions of dollars from Wall Street, the big banks when you get that money and then you help to create the Trans-Pacific Partnership, which enormously benefits Wall Street through backdoor deregulations you impugn your own integrity through those actions,” she said.
The chief battleground is Glass-Steagall, a Depression-era law that prohibited commercial banks from engaging in the investment business. Glass-Steagall was repealed by President Bill Clinton, and many analysts argue that paved the way for the 2008 financial crisis.
Mr. Sanders and former Maryland Gov. Martin O’Malley, the other major Democratic candidate, have called for reinstating Glass-Steagall rules. But Mrs. Clinton says that’s not needed, and instead has called for more limited reforms that experts say would leave Wall Street’s structure largely intact.
Her proposals, announced in October, include enabling regulators to break up banks “if they need to be broken up,” imposing risk fees and calling for fines and potential criminal prosecutions for industry executives accused of wrongdoing.
Banking analysts praised her approach.
“We continue to believe Clinton would be one of the better candidates for financial firms, as she is pushing concrete reforms where one can understand the downside risk rather than more radical overhauls,” Jaret Seiberg, a Guggenheim Partners analyst, said in a note to clients analyzing Mrs. Clinton’s plan.
But some progressive activists said Mrs. Clinton only introduced her reforms to try to fend off attacks from Mr. Sanders, and questioned her commitment to any Wall Street changes.
“People’s beliefs are deeply influenced by their financial rewards and their needs, and she’s been a leading recipient of Wall Street’s money personally, in terms of speech fees and politically all through her career,” said Robert Borosage, the president of Campaign for America’s Future, a liberal advocacy group. “It’s not an accident she gets a lot of money from Wall Street. They have trust she will not do reforms that will dramatically change their situation.”
So far this election cycle, Mrs. Clinton’s campaign has collected $5.5 million from the banking sector, the most of any presidential candidate, Republican or Democrat.
In addition, records show Mrs. Clinton has raised $3.2 million from registered lobbyists, almost four times more than the entire Republican field combined. Those lobbyists represent the interests of big banks and the oil and pharmaceutical industries.
But her Wall Street ties go much further back. Citigroup was the top campaign contributor to her 2000 Senate run, and by the time that race had concluded, Mrs. Clinton had received more Wall Street support than any of her fellow 99 senators had received for their respective elections.
And since 2001, she and her husband, former President Bill Clinton, have collected at least $35 million for 164 paid speeches to financial services, real estate and insurance companies, according to an Associated Press analysis of public disclosure forms and records released by her campaign.
As a senator she voted for the banking lobby’s top priority, the Bankruptcy Reform Act of 2001. The legislation made it more difficult for individuals to erase their personal debts through bankruptcy.
That bill died in Congress, but a later version in 2005 became law. Mrs. Clinton missed that vote, and although she said she would have opposed it, her absence drew the criticism of Sen. Elizabeth Warren, a Massachusetts Democrat who has become a leading liberal voice.
That same year the Senate Banking Committee voted out comprehensive legislation to tighten the regulation of mortgage giants Fannie Mae and Freddie Mac. At the time the institutions were ramping up their buying of subprime mortgages, giving fuel to the financial bubble. Mrs. Clinton joined a filibuster, and the bill never got a vote in the Senate.
Mrs. Clinton took in $2.1 million from the securities and investment industry in her 2006 re-election campaign — more than the top three Republicans combined.
She voted for bailouts of the housing market, AIG and Fannie Mae, and also supported the Troubled Asset Relief Program, or TARP.
“Go back and look at the history,” said Arthur Wilmarth, a professor of law at George Washington University, outlining Mrs. Clinton’s and her husband’s record of financial regulation. It all started with President Clinton’s repeal of Glass-Steagall, which saved Citigroup at the time, he said.
Brian Fallon, a spokesman for the Clinton presidential campaign, told AP that his boss had been a frequent Wall Street critic.
“Any honest look at Hillary Clinton’s record shows she spoke out early and often against Wall Street’s excesses in the runup to the financial crisis,” Mr. Fallon said. “It’s clear they believe she will take action as president to crack down on the industry’s abuses.”
A year before the Gramm-Leach-Bliley Act (GLBA) was passed in 1998, which repealed parts of Glass-Steagall, Citicorp was a commercial bank that merged with insurance company Travelers Group to form Citigroup, which was a violation of Glass-Steagall, combining banking, securities and insurances services under one house. GLBA made the merger legal, which then led to broader consolidation in the banking industry.
Citigroup became the top campaign contributor in Mrs. Clinton’s senatorial career, followed by Goldman Sachs, with JPMorgan Chase & Co. fourth and Morgan Stanley fifth, according to the Center for Responsive Politics. Lobbying giant DLA Piper was third.
Mr. Wilmarth said the Clintons’ longtime relationships with Wall Street executives like Robert E. Rubin of Goldman Sachs, who later became Mr. Clinton’s treasury secretary, and Larry Summers, who succeeded him in that role, have significantly influenced the way Mrs. Clinton views the industry.
“Bob Rubin and Larry Summers have steadily opposed any fundamental reform of the system, and during her time in the Senate, she allowed many of the bills Wall Street favored to go through,” said Mr. Wilmarth. “She’s been a longtime friend to them [Wall Street], and they’ve been longtime supporters of her, and she hasn’t indicated in this presidential campaign she doesn’t want their support anymore.”
On the campaign trail Mrs. Clinton says repealing Glass-Steagall wouldn’t go far enough to curb risks pushed by a shadow banking system.
“I have nothing against the passion my two friends have here for reinstating Glass-Steagall,” she said at the debate, referring to Mr. Sanders and Mr. O’Malley. “I just don’t think it gets the job done.”
The “shadow banking” system refers to money-market funds, hedge funds and private-equity funds — the products of which are complicated and risky and went largely unregulated before the financial crisis.
However, critics say these institutions were enabled by the big banks, and going after only them merely fine-tunes the industry but does not reform it.
“In a world where the giant Wall Street banks didn’t have huge political power, [Mrs. Clinton’s] measures might be quite enough,” wrote Robert Reich, an economist and former secretary of labor under Mr. Clinton in an op-ed reviewing Mrs. Clinton’s financial proposals.
“The only way to contain the Street’s excesses is with reforms so big, bold and public they can’t be watered down. That means busting up the biggest banks and resurrecting Glass-Steagall,” he said.
Mrs. Clinton maintains she is independent from the influence of Wall Street, and points to the number of small-dollar donations she’s received in this campaign. She also deflected criticism during the last debate by pointing out 60 percent of her donors were women.
But her other defense — invoking the Sept. 11, 2001, attacks as a reason Wall Street has been such a generous contributor to her, even though their support for her significantly predated the attacks — fueled an overall tone of defensiveness on the issue that her critics took note of.
“Her responses show there’s sensitivity to it,” said Mr. Borosage. “It’s a problem if you’re going to raise all of this money from Wall Street. Nobody thinks the big banks are altruistic. They were seen by many [as] causing our financial crisis and then being bailed out, while taxpayers and homeowners were left to flounder. And Hillary Clinton is seen as their favorite Democrat.”