CLEVELAND — Donald Trump is adding fuel to Wall Street anxiety about his candidacy, jabbing directly at big banks this week with new language in the official Republican Party platform that calls for the restoration of the 1933 Glass-Steagall Act, a move that would force the breakup of large financial institutions.
The embrace of the controversial law, long championed on the left, is deepening the estrangement of the financial-services sector from the presumptive Republican nominee, according to industry leaders and lobbyists, who are now struggling to assess what role and influence they would have in a Trump administration.
Tony Fratto, a former Treasury and White House official in the George W. Bush administration, called the embrace of Glass-Steagall “really dumb.” He suggested it could push pragmatically oriented bankers toward Democratic candidate Hillary Clinton.
“They are not buying a ticket on the crazy train,” said Fratto, who now represents major banks and other financial-industry players at Hamilton Place Strategies. “Banks and the financial sector do not like volatility. He is the volatile candidate, and under those circumstances, supporting Hillary Clinton looks like the flight to safety.”
The sharp response from Fratto and other industry figures came as Trump was rolling out his economic agenda at the second day of the Republican National Convention.
Wall Street’s objections signaled a growing breach in a party that has enjoyed a steady stream of campaign contributions from banks and hedge fund and private equity executives over the past 15 years.
Perhaps the most telling evidence of the alienation is Wall Street’s near-absence from the festivities here this week. Major banks that sponsored GOP nominee Mitt Romney’s coronation in Tampa four years ago are missing. Some of the party’s wealthiest donors, such as hedge fund billionaire Paul Singer, are pointedly staying away. The Financial Services Roundtable, the industry’s leading trade group, is not even putting on an event.
The distancing reflects Trump’s swipes at Wall Street and positions on free trade and immigration, which have alarmed finance-industry leaders, said Howard Schweitzer, who served as a senior Treasury Department official under President Obama and President George W. Bush.
“People assume because he resides in New York that he’s cozy with Wall Street, and he just isn’t,” Schweitzer added. “For all those reasons, they aren’t excited about him. They don’t know him, and they don’t like his policies.”
In 2012, the financial-services industry lavished money on Romney, a private equity chieftain, with the largest share of contributions to his campaign coming from employees of Goldman Sachs, Bank of America, Morgan Stanley, JPMorgan Chase, Wells Fargo and Credit Suisse, according to the Center for Responsive Politics. The securities and investment sector alone poured $37 million more into a super PAC backing the GOP nominee.
The response to Trump, by comparison, has been notably muted: As of May 31, employees of banks, securities firms and insurance companies had donated just $127,041 to his campaign, according to the center.
Longtime Republican fundraisers on Wall Street said it has been an uphill battle to persuade industry players to ante up because of a wariness about his policy stances and a perception that Trump is hostile to their interests. Trump “won’t come anywhere close” to the proportion of funds that Romney and Bush collected from the financial-services sector, according to one well-connected veteran financier.
Trump allies note that the current figures do not reflect the campaign’s biggest fundraising haul, when it raised $52 million last month in conjunction with the Republican National Committee. Steven Mnuchin, a hedge-fund manager with strong ties to Wall Street, serves as Trump’s finance committee chairman. He said he has seen a strong response from the financial-services sector.
“I believe there is significant support,” Mnuchin said. “We had 22 events across the country last month, and within those events there was very significant support from business leaders, private equity funds, hedge funds, financial services across the board.”
Mnuchin said the media has promoted an inaccurate image of Trump’s posture toward the industry.
“Donald is not critical of Wall Street,” he said. “He is critical of Hillary Clinton for accepting large speaking fees from Wall Street. That’s different from him being critical of the financial-services industry.”
However, Trump has repeatedly bashed hedge-fund managers for the tax rate they pay, saying last year that they are “getting away with murder.”
At a Monday breakfast hosted by Bloomberg Politics, Trump campaign chairman Paul Manafort said the candidate’s critique of a “rigged banking system” was a central part of his message.
At a separate news conference, Manafort noted that the party platform would call for the reinstatement of the Glass-Steagall Act “so that we create barriers between what the big banks can do and try to avoid some of the crisis that led to 2008.”
“You know, we believe the Obama-Clinton years have passed legislation favorable to the big banks, which is one of the reasons why you see all the big Wall Street money is going to her,” he said. “They know she is their champion, and they support her fully. We are supporting small banks and Main Street.”
Glass-Steagall, a Depression-era measure that curtailed investment activities by major commercial banks, was repealed in a 1999 law signed by President Bill Clinton. Its restoration has long been a rallying cry for consumer advocates and politicians on the left, including Sen. Bernie Sanders (Vt.), who say the deregulation set the stage for the 2008 financial crisis.
By pushing for its renewal, the Republican Party now finds itself aligned with liberals such as Sanders, who succeeded in getting a similar measure into the Democratic Party platform this year even though Hillary Clinton has not embraced the idea of bringing the law back.
While many Wall Street players believe it is unlikely that the law will be restored, they viewed its endorsement in the GOP platform as part of an increasingly hostile posture by Trump toward the industry.
One prominent banking industry executive, who requested anonymity because he was not authorized to speak to the media, said the call for Glass-Steagall’s reinstatement will further push Wall Street away from the Republican presidential candidate. “It adds to the impression of unpredictability and uncertainty, two qualities that are a turnoff to banks,” he said.
Industry trade groups issued terse critiques of the language in the GOP platform. In a statement, a spokeswoman for the Financial Services Roundtable warned that “limiting U.S. banks in ways not required of their global competitors will hand over business opportunities and economic growth to foreign banks and companies.” At the U.S. Chamber of Commerce, Tom Quaadman, a senior vice president, wrote that restoration of the regulations would cause Main Street businesses “to take unanticipated measures, scaling back investing.”
The controversy could drive more Wall Street funds to Clinton, who already has the backing of industry leaders such as Henry M. Paulson Jr., a former Goldman Sachs chief and treasury secretary. The former secretary of state and her husband have deep ties to the financial-services industry, which has already poured at least $35 million into her campaign and allied super PACs, according to an analysis of campaign finance data by The Washington Post.
That is not to say Wall Street will abandon the GOP. The industry still has a strong bulwark among Republicans in Congress, particularly allies such as House Speaker Paul D. Ryan (R-Wis.).
But there is a striking dearth of industry events taking place this week in Cleveland — and a diminished corps of lobbyists working the crowd. One leader of a Washington-based financial-services industry group, who requested anonymity to describe private conversations, said he did not know of a single one of his peers or colleagues who planned to attend.
“There are so many Trump statements that are so off-putting, many folks just don’t want to be associated with that,” he said. “A lot of folks find the Republican policy positions inconsistent with economic growth. There’s not a rush to be a part of that.”
Among the notable players skipping the event: former Minnesota governor Tim Pawlenty, who is president of the Financial Services Roundtable; Dirk Van Dongen of the National Association of Wholesaler-Distributors; and Jay Timmons of the National Association of Manufacturers.
One major player is on hand. U.S. Chamber of Commerce President Tom Donohue is holding court in Cleveland and mingling with congressional candidates. The Chamber has been engaged in a sharp public spat with Trump over trade and immigration.
“The free enterprise system is under attack, and the stakes of the election could not be higher,” said Scott Reed, the Chamber’s senior political strategist.
But this week, the powerful trade group is not at the heart of the action.
The upscale eatery the chamber rented in downtown Cleveland to serve as its hospitality venue is a half-mile hike from Quicken Loans Arena and the bustling pedestrian plaza where crowds mill throughout the day and night. On Monday evening, a lone security guard stood outside the restaurant, which bore signs declaring it “The Commerce Room” and “An Exclusive Gathering of the Business Community.”
One guest who came out the door, declining to give his name, did offer one observation of the scene inside: “It’s pretty quiet.”
Catherine Ho and Anu Narayanswamy contributed to this report.