With analysts saying a debt ceiling breach could send financial markets into a tailspin, people on Wall Street are nervously watching from afar to see whether Congress will act. But if they’re looking for someone to blame for this situation, they might start by looking at a few in their own set.
A small group of financiers is responsible for much of the money behind Club for Growth, the conservative anti-tax group that has become extremely successful at encouraging uncompromising voices on Capitol Hill, such as Sen. Ted Cruz (R-Tex.).
They certainly aren't the only finance industry leaders supporting vehemently anti-tax candidates. Cruz, for example, has received substantial support from Goldman Sachs since entering national politics, including $5,000 from Goldman Sachs’ corporate PAC and $61,850 from Goldman executives, according to OpenSecrets.org.
But as our colleague Lori Montgomery wrote last month, the Club for Growth has emerged as a uniquely influential voice in pushing the Republican Party to adopt hard-line tactics, financing primary challenges against Republicans who don't toe its line.
We contacted the group's leading donors to interview them about their views of the House GOP's tactics in the debt limit impasse so far, but none responded to requests for comment. A number of them make a living managing other people’s money, which could lead to some awkward questions if the stock market plummets as much as 45 percent in the event of a U.S. debt default, as some are predicting.
Below is a brief introduction to financiers who support the Club for Growth. Contribution numbers come from OpenSecrets.org; their ages and biographical information have been pulled from public records.
Peter Thiel, 45, Gave $2 million to Club for Growth Super PAC
An early backer of Facebook and a co-founder of PayPal, Peter Thiel is a radical, self-described libertarian who believes that “the great task for libertarians is to find an escape from politics in all its forms.” To that end, he and Patri Friedman (grandson of economist Milton) have formed a nonprofit dedicated to the creation of floating cities -- which they call "seasteads" -- where people can “peacefully test new ideas for government.” (Check out some amazing photos here)
Thiel has a decent financial cushion if the economy craters in the event of a default. He made more than $1 billion from his Facebook investment alone. It’s not clear how investors in his hedge fund firm Clarium Capital Management will fare, though. By the end of 2010, the firm’s assets had fallen by 90 percent from their peak. The company’s main hedge fund, according to Bloomberg, “takes contrarian positions based on major economic trends influenced by government policies, economic cycles, new technology and commodity fluctuations.” No telling how they handle trends influenced by extremely risky political gambits.
Virginia James, 69, gave $1.2 million
Almost nothing is known about James, who is listed in public records as an investor who lives in Lambertville, N.J. Her listed home phone number rang a few times when we called before it started making screeching fax transmission sounds. She did not respond to an e-mail sent to an AOL address also listed in public records.
John Childs, 72, gave $1.1 million
John Childs is the chairman and founder of the Boston-based private equity firm JW Childs, though Childs appears to spend most of his time in Florida. The press-shy executive is a longtime big Republican donor. He gave $1 million to Mitt Romney’s super PAC Restore Our Future last year. He’s also given to Republican Reps. Eric Cantor and Paul Ryan in recent years. The firm JW Childs is a relatively small player in the private equity world and has invested in Brookstone and Sunny Delight.
Robert Arnott, 59, gave $750,000
Arnott, the chairman and chief executive of California-based Research Affiliates, told USA Today last month that he wasn’t concerned about Republican infighting and that he’s not a Republican or a Democrat but a libertarian worried about Obamacare. “Why screw up the economy to force into action something that’s so sloppily written and that will be such a drain on the macro-economy?” he said. In other interviews, Arnott has described “daunting headwinds” heading toward the U.S. economy, what he terms a “3-D hurricane” made up of debt, deficit and demographics.
Robert Mercer, 67, gave $600,000
Mercer is a co-chief executive of Renaissance Technologies, a major hedge fund known as a quant because the firm relies on algorithms cooked up by math and physics PhDs to figure out the best trades to make. Mercer, who is also a member of the National Rifle Association, said in an interview with the Wall Street Journal, “I’m happy going through my life without saying anything to anybody.” Household staff sued Mercer in July, accusing him of not paying overtime and cutting their pay when they didn’t replace shampoo bottles when less than one-third of the bottle remained and “failing to properly close doors,” according to the complaint. Last year, Mercer gave $2 million to the Republican super PAC American Crossroads.
Paul Singer, 69, gave $100,000
Singer, one of the world’s most successful hedge fund managers, is known for his sharply-worded letters to investors that rail against everything from the Federal Reserve to the government of Argentina. In a letter to investors last year, Singer referred to the Fed’s bond-buying stimulus program as “arrant idiocy.” He has also called for increased oversight of the banks. “A great deal of stupidity has chipped away at the massive advantages of Western civilization, which could terminally decline if it remains on the current path,” Singer wrote in 2012. “But these problems can be solved — and swiftly — if the right leaders emerge.”