President Barack Obama’s attack on Bain Capital and private equity has evoked silence from leading allies in the Democratic Senate and vigorous opposition from prominent supporters. Those staying silent are also some of the heaviest recipients of Wall Street cash, according to a Washington Free Beacon analysis.
Standing silent during the controversy over Obama’s “Steel” ad, which blames Republican nominee Mitt Romney for mass layoffs at several factories (most of which took place after Romney left the company) are some of the most media hungry Democrats on Capitol Hill.
Sen. Chuck Schumer (D., N.Y.), the third ranking Democrat in the Senate, and freshman Sen. Kirsten Gillibrand (D., N.Y.), declined a New York Times interview to discuss the controversy on Wednesday. Neither senator has returned calls from the Washington Free Beacon, nor did second ranking Democrat, Illinois Sen. Dick Durbin, and former presidential candidate Sen. John Kerry (D., Mass.).
“Many top Democrats are quietly hedging their bets. They’re thinking, ‘What if Obama doesn’t win?’ They’re still going to be in D.C.,” said a top Senate Republican aide. “What you’re seeing could be one of the first indicators that not all Democrats are confident Obama can hold on.”
The silence from Democratic leadership has surprised Nicole Gelinas of the Manhattan Institute, a free-market think tank.
“These guys aren’t shy about criticizing the banks,” she said. “Durbin was out there talking about Bank of America for charging $5 debit fee charges, which they didn’t even go through with … It’s curious.”
Schumer’s silence has drawn the attention of many political observers, including former Bush spokesman Ari Fleischer.
“Silence of the Schumer. Senator who bankrolled D takeover of Sen w private equity & wall street $ stays mum as O attacks,” Fleischer tweeted on Thursday.
A New York-based political consultant who has worked on both sides of the aisle is not surprised that Schumer has stayed mum.
“No one has heisted more money out the backdoor of Wall Street than Chuck Schumer,” the consultant said. “He’s not going to talk about Bain even if he does believe those things.”
Schumer is not up for reelection until 2016, but he has already raised millions of dollars from financial companies, including about $325,000 from private equity sources between 2007 and 2012, according to the Center for Responsive Politics.
Bain Capital is Kerry’s largest donor, contributing $76,200 since 2007. Durbin netted nearly $150,000 from private equity companies and law firms specializing in private equity during that time.
That is chump change, however, compared with Gillibrand’s private equity haul.
The freshmen senator elected to replace Secretary of State Hillary Clinton in 2010 raised nearly $1.8 million from private equity sources during the time under review.
“They’ve made a calculation that they have to go all-in on private equity, and I think they made the calculation that their hypocrisy would catch on,” the Senate aide said. “Somehow Obama’s camp thought they can be hypocritical and get away with it, and they didn’t.”
Obama attended a $38,500-a-plate fundraiser hosted by Tony James, an executive at Blackstone Group, one of the world’s largest private equity firms, on the same day that the Bain ad hit airwaves. The fundraiser frustrated Obama supporters in the investment world, one of whom told the New York Times that attendees “were incredulous” at the timing.
Financiers are not the only people left scratching their heads at Obama’s attack on private equity. Leading Democrats, including former Obama auto czar Steve Rattner, Massachusetts Gov. Deval Patrick, Virginia Sen. Mark Warner, California Sen. Dianna Feinstein, Delaware Sen. Chris Coons, and former congressmen Harold Ford Jr. and Artur Davis, have come out against the ad. Obama surrogate and Newark Mayor Cory Booker, a rising star in the party, caused national headlines when he called the ad “nauseating” on NBC’s Meet the Press, pointing out that Bain Capital helps to pay for government and union retirement plans.
The state retirement system of Schumer’s New York holds about 10 percent of its $150 billion assets in private equity firms, though it holds no investments in Bain Capital specifically. The system depends on investments to make 82 percent of its annual retirement costs.
The industry has impressed union officials.
“There’s been a steady trend upward in the private equity area … you can’t really argue against the results,” said Don Kelly of New York’s Civil Service Employees Association. “We don’t do social investing. The investment strategy is to make money for the pension fund and secure our benefits for thousands of state workers and relieve the taxpayers burden.”
CSEA spokesman Stephan Madarasz said that the union “is not at odds with the president,” but is “comfortable with private equity.”
“You don’t want to tar everybody with the same brush,” he said.
Romney should use the unpopularity of the anti-Bain ad to seize on the issue of Wall Street, experts said.
“Romney can’t just ignore finance; he shouldn’t give Obama an advantage that he doesn’t deserve,” Gelinas said. “Public trust in the financial system is at an all time low since Obama took office, so people obviously don’t trust Obama to control ‘too-big-to-fail’ banks.”
Romney could win over voters by pushing for “free market solutions—raising interest rates, getting rid of free debt so that you can end ‘too-big-to fail’—these are things he could do” to “fix the financial system and level the playing field” between big banks and the general public, Gelinas said.
The New York politico who spoke to the Washington Free Beacon on condition of anonymity agreed with Gelinas. Romney, he said, needs to go on the offensive against Wall Street by pointing out links between the Obama administration and infamous financiers, such as Jon Corzine, the former New Jersey governor Obama considered for a cabinet position. Corzine drove investment company MF Global into bankruptcy and faces allegations that he illegally shifted billions of dollars from customer accounts to cover his bad bets on European debt.
“There’s a huge difference between criticizing private equity where a company puts its own money at risk to try to salvage a business and going after Obama over Wall Street,” the New York politico said. “Bain is not in the same business as a company losing client money on bad investments: That’s not capitalism, that’s a crime.”