Bernie Sanders Has Some Fans In Finance, Though Few Want to Talk
Bernie Sanders Has Some Fans In Finance, Though Few Want to Talk
(Bloomberg) -- There are few, if any, places in America where the candidate Bernie Sanders is more openly reviled than on Wall Street.
Almost everything about the social Democrat’s platform -- like his proposals to tax transactions, capital gains and “extreme wealth” -- is anathema to the creed of the well-heeled financial set. And yet it turns out that some of the capitalists he rails against quietly like him.
About $1.70 of every $100 he raised through last year came from the finance, insurance and real estate industries. What’s more, talk to these donors and they usually say the same thing: There are scores of other liberals in their ranks who secretly share a devotion to his cause. More now, they note, than in 2016, when the Vermont senator took his first run at the Democratic nomination.
They insist this is a sign that his once-fringe views are gaining acceptance in the broader populace, something they see in his surge in polls in states including Iowa, where the battle for delegates starts today.
Whether the ranks of Bernie acolytes are actually growing on Wall Street is, of course, very hard to determine. Most bankers and brokers who support him are hesitant to talk at all, and those who do usually ask not to be named.
And then there’s Wade Black, chief operating officer of New York broker-dealer Scarsdale Equities, who said he’s trying hard to temper his pro-Bernie enthusiasm to persuade others in a more measured way.
“The attitude has changed,” said Black, who has donated hundreds of dollars toward getting Sanders elected president. “Dyed-in-the-wool, pinstripe and monocle-wearing Wall Streeters have realized there is something fundamentally broken in the economy, particularly in health care, that can’t be fixed by the market.”
The ‘Pitchforks’
To be clear, the prospect that Sanders might pull ahead in Iowa’s caucus worries many -- if not most -- in the financial industry. He lashed out at JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon on Twitter and in a campaign ad last month after the banker criticized socialism in an op-ed.
Analysts have taken turns in recent weeks warning stocks may slide if the candidate gains momentum. Billionaire money manager Jeffrey Gundlach went even further, saying this year’s biggest risk to markets would be Sanders “becoming more believed-in.” Some in the financial world are concerned about the aggressive tone of some of his supporters.
What really worries the industry, according to the candidate, is that Americans will come together to fight for change. “They’re starting to think, ‘Could this really happen?’” Sanders told an audience of 1,100 last month in Sioux City, Iowa. “We are their worst nightmare.”
Just not quite for everyone.
“There’s another crowd of us on Wall Street who are far more understanding,” said Dan Alpert, founding managing partner at investment bank Westwood Capital in New York. The widening gap between rich and poor “is not commensurate with a free society and democracy, and eventually you’re going to have people with pitchforks.”
While Sanders has been gaining in polls in key states such as Iowa, New Hampshire and California -- in some cases building significant leads -- the national frontrunner appears to be Vice President Joe Biden. The most recent polling average from RealClearPolitics has Biden in first place with 27.2%, followed by Sanders at 23.5% and Massachusetts Senator Elizabeth Warren at 15%. Iowa’s results could soon shake that up.
Warren also has won surprising support from a small group of Democratic-leaning financiers. Some of them like the redistributive policy proposals she and Sanders have advanced and predict the measures would help -- not hurt -- the economy in the long term.
Of the $96 million raised for Sanders through last year, $1.6 million came from the finance, insurance and real estate industries, according to the Center for Responsive Politics. That compares with $4 million for President Donald Trump from the same sectors.
Cornell University law professor Robert Hockett said that after he gives media interviews in support of Sanders, he gets private messages of encouragement from finance-industry friends, agreeing that health-care access and income inequality need to be addressed.
“I’m not alone,” said Hockett, who previously worked at the Federal Reserve Bank of New York and International Monetary Fund and has done policy work with both campaigns. His contacts on Wall Street “have to be a little bit more careful because they might get fired or earn the hostility of their colleagues,” he said.
Calvin Tse, a senior currency strategist at Citigroup Inc., surveyed market participants last month and concluded they are underestimating the risk of a Sanders victory. “Sanders and Warren were equally expected to be the worst for the dollar,” he wrote in a note, urging clients to set up trades limiting losses in the event that a “left-wing Democrat” is elected.
Yet Black and others predict more members of their industry will come around if Sanders gains momentum.
“It’s something that Wall Street people can’t ignore,” Black said.
(Disclaimer: Michael Bloomberg is also seeking the Democratic presidential nomination. Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.)
--With assistance from Emma Kinery, Dan Reichl and Bill Allison.
To contact the reporter on this story: Lananh Nguyen in New York at lnguyen35@bloomberg.net
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, David Scheer, Alan Goldstein
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