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Hillary Not Truthful About Wall Street Speaking Fees

02/08/2016 05:39 am ET | Updated Feb 08, 2016
  • Les Leopold Author, "Runaway Inequality: An Activist's Guide to Economic Justice"
ASSOCIATED PRESS

Anderson Cooper: "But did you have to be paid $675,000 [for three speeches to Goldman Sachs]?"

Hillary Clinton: "Well, I don't know. That's what they offered."

Hillary is veering from the truth when she suggests her $225,000 per speech fee, paid three times by Goldman Sachs, was "what they offered."

It was not what they offered -- it was what Team Hillary demanded.

A review of her 2014 tax return posted on her website shows that $225,000 was her minimum fee.

She received $225,000 for 34 of the 41 speeches listed on her tax return. Of the remaining 7 speeches, two were for 250,000 and the others for $265,000, $275,000, $285,000, $305,000 and $400,000. In total she received $9,680,000 for these speaking engagements in 2013.

Wall Street firms funded 14 of her 41 talks. In addition to Goldman Sachs, the list includes Morgan Stanley, Deutsche Bank, Fidelity Investments UBS and Bank of America. Her benefactors also include hedge funds and private equity firms like Apollo Management and Kohlberg, Kravis, Roberts.

Why did Hillary Take the Money?

Carl Bernstein, of Watergate fame and Hillary biographer, commented on CNN that the White House is "horrified that Clinton is blowing up her own campaign." He said they can't believe she took the money and didn't see the ethical problems that would dog her.

It is not credible for her to argue that she took the money because she wasn't sure she was going to run for president or that she was "dead broke." She and Bill hauled in $139 million from 2007 to 2014.

It seems enormously difficult for Hillary to explain, even to herself, why she took the money. One possibility is that she wanted to send a message that she would not use populist rage against Wall Street during her campaign. That instead she would work with Wall Street to solve financial problems for the good of the country. We will find out more when (if) her transcripts are ever found and released.

But the boarder reason may lie in the fundamental relationship between the Clintons and their wealthy friends and benefactors. Hillary, Bill and Chelsea (whose husband is a hedge fund partner) believe that Wall Street is a vital part of economy, composed mostly of very bright, honorable and talented people, like their classmates at Yale and Stanford. Sure, every now and again there are a few bad apples, but the barrel is fundamentally sound.

How could she be so politically tone deaf on this issue?

It's because she still lives in world surrounded by so many of the best and brightest in and around Wall Street. Attacking them would be like attacking her community of friends and financial supporters. How could taking money from such decent, talented and productive people be wrong? Isn't it fair to earn a $225,000 speaking fee, given that's what Wall Street elites earn per hour?

So What's Wrong with Taking Money from Wall Street?

The pundits point out that she has created a "perceived" conflict of interest, whether real or imagined. In essence they are saying that there's nothing inherently wrong with taking the money. It's not really tainted.

Hillary states that she never changed her vote due to campaign contributions. But evidence is mounting via previous accounts by Elizabeth Warren, that Hillary may have switched her position on bankruptcy laws to please her Wall Street contributors after becoming the Senator New York.

But these attacks miss the most basic question: Is money tainted? Is it blood-money?

Sanders believes it is by arguing that "the business model of Wall Street is fraud."

There is considerable data to support him.

1. Fines and Settlements:

Since 2009, Wall Street has paid $204,000,000,000 in fines and settlements.

This is the equivalent to writing a $640 check to every man, woman and child in America including all undocumented residents. It's hard to imagine an industry running up such a liability unless its basic business model was deeply flawed.

They violated laws by the facilitation of money laundering for drug cartels and rogue nations, illegally evicting homeowners, selling fraudulent mortgages and mortgage backed securities, manipulating vital interest rates, insider trading, and facilitating off-shore tax evasion.

The damage done to homeowners and those who lost their jobs during the Great Recession is arguable far worse than the problems caused by drug trafficking. Yet millions have been arrested, fined, convicted and jailed through the failed War on Drugs, while not one of Wall Street's top banking executives has gone to jail or even paid a fine. (Conveniently, $204 billion have been paid by the companies, not by the top executives.)

2. Profits Extracted Through Pay Day Lending

Loan sharking is something from the Sopranos. But payday lending, the legalized form of loan shaking, is a mainstream Wall Street activity. An estimated 120 million payday loans are issued annually worth a total value of $42,000,000,000. One study reports:

"The average effective interest rate on a payday loan is 455% (APR). For a loan of $300, a typical borrower pays on average $775, with $475 going to pay interest and fees over an average borrowing cycle."

Large Wall Street banks provide funds for the 17 primary payday lenders. The list includes Wells Fargo, Bank of America, US Bank, JP Morgan Bank, and PNC Financial Services Group. (Bank of America paid $225,000 to for a Hillary speaking engagement on 11/13/2013.)

3. Financial Strip-mining

Perhaps the most pernicious Wall Street activity involves corporate raids and stock buy-backs. Hedge Funds, private equity firms and investment banks have bought up tens of thousands of corporations, loading them up with debt and then milking them dry.

They call it "unlocking value," but it is cold, hard financial strip-mining that adds no value at all to the target firm while squeezing the livelihoods of the average employee.

These Wall Street predators pressure corporation after corporation to use their revenues to buy back their own shares, thereby raising the share price, enriching CEOs and the largest Wall Street investors.

Before 1982 this was considered stock manipulation and deemed both illegal and dangerous to the financial system. However, a SEC rule change under the Reagan Administration, basically legalized unlimited stock buy-backs.

In 1980 2% of corporate profits went to stock buybacks. By 2007 over 70% of all corporate profits when to buy back their own shares. (For an excellent study of this financial strip mining see "Profits Without Prosperity" by William Lazonick. )

So instead of reinvesting in the companies, Wall Street financially stripped them. To fund the debt and stock buybacks, corporations were broken up, jobs shifted overseas, wages cut and benefits weakened, if not eliminated. Millions of workers have watched their incomes decline as money flows to Wall Street and their jobs shift abroad.

By 2006 40% of all corporate profits whent to Wall Street even though Wall Street accounts for only 5% of all employment. (For many more facts and figures on financial strip-mining see Runaway Inequality.)

As a result the gap between the pay of the average worker and a top 100 corporate executive rose from 45 to 1 in 1970 to an incomprehensible 844 to 1 in 2014.

Give it Back!

To the American people, it is obscene for a presidential candidate to receive $250,000 for an hour's worth of speaking . It takes the average family five years to earn that much.

Meanwhile millions of families have to figure out how to pay their underwater mortgage. They have to get by with a job that pays far less than their former job that was shipped abroad. They have to contend with piles of student loans that won't go away.

Newer home buyers, especially those of color, are still suffering from years of predatory lending which stuck them with high interest mortgages even though they qualified for lower interest conventional mortgages.

As a result, most Americans see those $225,000 fees as an affront to their basic sense of fairness and justice.

It will be extremely difficult for Hillary to overcome this gaping flaw. She's taking a pounding precisely because she could not understand why the rest of us detest the world Wall Street is creating. Her wealthy friends are not ours.

Hillary needs to do something very bold to prove to the American people that she can't be bought. Words will never be enough.

Although it may be far too late, there's one remaining possibility:

Give the money back!

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Les Leopold, the director of the Labor Institute, is currently working with unions and community organizations to build the educational infrastructure of a new anti-Wall Street movement. His new book Runaway Inequality: An Activist's Guide to Economic Justice (Oct 2015) is a text for this campaign. All proceeds go to support these educational efforts.

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