WASHINGTON ― A confirmation vote on President Donald Trump’s nominee to chair the Securities and Exchange Commission is quickly developing into a proxy vote signaling whether moderate Democrats will collaborate with the administration’s efforts to roll back the 2010 Dodd-Frank financial reform law.
Trump nominated attorney Jay Clayton for the top SEC post in January. A partner at the elite corporate law firm Sullivan & Cromwell, Clayton is one of the top lawyers on Wall Street. Goldman Sachs and other firms hired him during the financial crisis.
Multiple Trump appointees have close ties to Goldman Sachs. Treasury Secretary Steve Mnuchin, National Economic Council Director Gary Cohn, Chief White House Strategist Steve Bannon, Deputy Treasury Secretary nominee James Donovan and Trump adviser Dina Powell all built careers at the banking titan. But financial reform advocates see Clayton’s work on Goldman’s behalf as perhaps their best opportunity to highlight Trump’s failure to live up to his populist campaign promises.
“[Clayton is] not just a former Wall Street lawyer, he’s not just a former Goldman Sachs attorney ― he was Goldman’s bailout lawyer. And now he wants to oversee all of Wall Street,” notes Kurt Walters, campaign director with the liberal advocacy group Demand Progress.
Democrats can’t derail Clayton on their own. Even if every Democrat on the Senate Banking Committee votes against him, a Republican would have to join them in order to prevent his nomination from reaching the Senate floor, where a united Democratic front would need three Republican defections to force Trump to tap another nominee.
The vote will instead serve a more symbolic purpose. If moderate Democrats can’t vote against Goldman’s bailout attorney, what Wall Street-friendly vote would they oppose?
“Clayton’s nomination to be Wall Street’s top cop represents an important test for Senators,” said Karl Frisch, executive director of Allied Progress, a liberal group that advocates for tougher rules on banks and payday lenders. “Will they stand up for hard-working Americans who have been fleeced by Clayton’s Wall Street buddies, or will they sell out their constituents and help Trump begin rolling back important safeguards designed to protect Americans from corporations and big banks like Goldman Sachs?”
Senate Minority Leader Chuck Schumer (D-N.Y.) has also taken note. “Sen. Schumer is deeply skeptical of the Clayton nomination and intends to share his views with his colleagues,” an aide to Schumer told The Huffington Post.
Financial watchdogs are closely monitoring four moderate Democrats on the Banking Committee, each of whom has a checkered record on Wall Street accountability: Sens. Mark Warner (D-Va.), Jon Tester (D-Mont.), Heidi Heitkamp (D-N.D.) and Joe Donnelly (D-Ind.). The Banking Committee will field most Trump legislation dealing with Wall Street.
Tester, Heitkamp and Donnelly declined to comment for this article.
“Senator Warner is reviewing Mr. Clayton’s record and will pay close attention to his answers before the Banking Committee before deciding whether to vote to move his nomination forward,” a Warner spokesperson told HuffPost.
Clayton has a history of making campaign donations to conservative Republicans and Democrats with bank-friendly reputations. He’s contributed to Sens. Ted Cruz (R-Texas) and Mike Lee (R-Utah), along with Sens. Cory Booker (D-N.J.), Schumer and Warner, according to data from the Center for Responsive Politics. In the 2012 election cycle, Clayton gave $2,000 to Josh Mandel, a Republican who was challenging Sen. Sherrod Brown (D-Ohio), a bank critic and ally of Sen. Elizabeth Warren (D-Mass).
Schumer rallied Democrats to vote nearly in unison against Mnuchin, Trump’s last high-profile Goldman alum. The current treasury secretary misled Congress about his history with foreclosure fraud during his confirmation hearing. The sole Democrat to break ranks on the Senate floor was Sen. Joe Manchin (D-W.V.).
Manchin’s maneuver is part of a longstanding strategy for Democrats representing conservative states: Act more like Republicans. Trump is popular in West Virginia, and Manchin has made no secret about his outreach to the president.
Progressives think Manchin is missing the basic lesson of Trump’s election ― the centrality of populism to Trump’s political rise.
“A big part of Trump’s appeal to working people in the Midwest was that he was going to drain the swamp here in Washington and fight for the economic interests of working people,” said Jeff Weaver, a manager with Our Revolution, an offshoot of Sen. Bernie Sanders’ presidential campaign.
“The people he has picked for his Cabinet, including Clayton, clearly show that was a blatant lie,” Weaver added. “And I think we need to stand together as Democrats against a government stacked with people from Goldman Sachs and corporate interests. Even people from red states ought to be able to stand together for working people against Wall Street. That’s a political winner.”
Sullivan & Cromwell has deleted nearly all of Clayton’s biography from its website, but when he was initially floated as a potential SEC nominee, the firm proudly touted his work helping big banks on the bailout and in a series of fraud cases tied to the financial crisis.
In addition to helping Goldman with its bailout, Clayton represented Bear Stearns in its federally assisted rescue sale to JPMorgan Chase, and defended Ally Financial during negotiations surrounding several big banks’ $25 billion national foreclosure fraud settlement with the federal government. Clayton’s bio also described his work on behalf of two separate firms, each described as “a large financial institution,” to settle mortgage malfeasance cases with the federal government.
“Jay Clayton has spent his entire career serving Wall Street, representing Goldman Sachs and other big banks,” says Americans for Financial Reform Executive Director Lisa Donner. “Americans need an SEC Chair who will stand up to those interests, not represent them.”