FIRE Fighters
Senators who opposed nominee amid bank lobby smear campaign received almost $2 million in donations from finance, real estate and insurance
For a few weeks last year, the masters of the universe were made to sweat. In September, President Biden appeared to walk back his campaign fundraising promise that “nothing would fundamentally change” under his administration when he nominated Saule Omarova to lead the Office of the Comptroller of the Currency (OCC).
The relatively obscure regulatory agency holds immense power over banks, but rarely chooses to exercise its authority in deference to the financial industry. Omarova would have taken a different approach, having gone from a white shoe law firm on Wall Street to George W. Bush's Treasury Department to a career in academia scrutinizing and criticizing the effects of financialization; the orientation of the political economy to benefit the growth of the financial sector and its satellite industries above sectors that produce tangible commodities. After the 2008 global economic crisis, Omarova dedicated her research to chronicling the banking industry's accumulation of power and how high finance leveraged its newfound importance to engage in reckless behavior, which caused economic harm on a scale not seen since the Great Depression. Industry functionaries howled at the news of her nomination.
The banking industry might lack the public approval that it once had before the 2008 crisis, but unfortunately for Omarova and the productive economy, public opinion matters little in Washington, where Wall Street tantrums are still incredibly effective. Republicans came out in unanimous opposition to Omarova in a shrill and venomous fashion, and days after an incredibly contentious confirmation hearing on November 18, right-leaning Democrats on the Senate Banking Committee said that they wouldn't support Biden's pick to lead the OCC. Without the votes to be confirmed in an evenly-divided Senate, Omarova formally withdrew her nomination in early December.
Committee members' reasons for opposing Omarova tended to vary based on party. Republicans focused on her academic work, with some tying Omarova's research to her youth in Soviet-era Kazakhstan to engage in old-fashioned red-baiting character assassination. Her Democratic critics, meanwhile, mostly focused on her opposition to bipartisan banking deregulation enacted during the Trump administration, avoiding personal slights to keep their focus on her skepticism of financial industry power.
But banking committee members of both parties opposed to Omarova held one thing in common: they raked in campaign donations from finance-related industries in the aftermath of the confirmation hearing. A review of donations worth at least $1,000 logged in federal campaign finance disclosures show that in just six weeks, from Omarova's confirmation hearing until the end of the year, members of the Senate Banking Committee who opposed her nomination raised at least $1.96 million from finance, insurance, and real estate (FIRE) industry sources. The money was given to the lawmakers' campaign committees, their leadership political action committees (PACs), their joint-fundraising committees, and, on the Republican side, to Super PACs--nominally independent committees formed by supporters of candidates that can raise and spend unlimited amounts on campaign ads.
FIRE is an acronym that gained popularity in the 1980s to better classify companies dependent on rising asset prices and interest payments—the sort of firms that burgeoned in the neoliberal era as the U.S. economy underwent financialization. FIRE enterprises comprised about one-tenth of the economy in the in the immediate post-war era. They made up 21.2% of U.S. Gross Domestic Product last year.
The industry donations and the outcome of the Omarova confirmation process make it unlikely that financial dominance is going anywhere--even with banks making for easy villains post-2008, and the increased likelihood of new banking crises on the horizon. Republicans look likely to win back one or both houses of Congress in November midterms and are firm in their commitment to allowing capital to do as it pleases.
The six week time frame following the Omarova hearing also coincided with huge donations to Republicans from six conservative billionaire financiers. Ken Griffin, Craig Duchossois, Paul Singer, Marc Rowan, Julian Robertson, and Warren Stephens donated a total of $24 million to Super PACs established to support Republican candidates for the House and Senate.
Griffin is a hedge fund manager with a net worth of more than $25 billion, and known for his role as the CEO of Citadel Securities. The firm made headlines recently for being a counterparty to Reddit users who banded together to engage in the so-called meme stock short squeeze of 2021.
Singer is also a hedge fund manager, has a net worth of about $4.3 billion, and is best be known for being a vulture capitalist--specifically, for buying Argentinian government bonds for pennies on the dollar after the instruments went into default in the wake of the country's financial crisis in 2001, and then suing to extract billions from Argentina's public coffers.
Duchossois is the chair of a privately-held family investment management firm that he inherited from his father, which is best known for its involvement in horse racing and its ownership of Churchill Downs, home of the Kentucky Derby. The Duchossois Group manages at least $2 billion in assets.
Rowan is in private equity, specializing in insurance management, and has a net worth of about $4 billion. He is the CEO and co-founder of Apollo Global Management, which might be best known for the ties between its former CEO, Leon Black, and well-connected serial child abuser Jeffrey Epstein.
Robertson is a famed ex-hedge fund manager who still invests in the industry, and has a net worth of about $4.8 billion. He recently made headlines for praising twice-disgraced ex-employee Bill Hwang. In 2012, Hwang pleaded guilty to insider trading charges, and in March 2021, he lost billions in the collapse of his family fund, Archegos Capital, on risky opaque bets on the prices of U.S. media stocks. “I think he made a mistake and I expect that he’s coming out of it and he’ll go right on,” Robertson said of Hwang in June 2021. Ten months later, Hwang was indicted on federal fraud charges related to the Archegos collapse.
Stephens inherited an investment bank from his father, and is now worth about $2.8 billion. He is known in Republican politics for going from an opponent of Donald Trump in the 2016 primaries to a major supporter in 2020, with a lull in financial backing for the GOP during the 2018 midterm. Stephens was reportedly livid that the Republican tax reform bill, which passed that year, only cut the hedge fund tax rate from 39.6% to 37%.
Stephens was joined in his capital strike by Griffin and Singer. But all three are back supporting the Republican Party this midterm with a vengeance, hoping that the Congress will convene in January with more lawmakers willing to carry water for the finance industry.
Republican members of the Senate Banking committee have also received $7.7 million in lifetime donations from commercial banks, including $1.6 million from lobbying groups that opposed Omarova: the American Bankers Association, the Independent Community Bankers of America, the Bank Policy Institute, and the U.S. Chamber of Commerce. Some of the lobbyists likened Omarova to a communist bureaucrat, with the Bank Policy Institute accusing her of being interested in modeling the banking industry after the Gosbank, the central bank of the Soviet Union.
Of the three banking committee Democrats to oppose Omarova, the largest sum was raised by the Democratic lawmaker who has done most to stymie the Biden administration's agenda at almost every turn—actions that have earned her accolades and financial support from partisan Republicans. Arizona senator Kyrsten Sinema received $334,700 in FIRE donations to her campaign committee and her leadership PAC, Getting Stuff Done, in the six weeks after Omarova's confirmation hearing. And while Sinema didn't bother showing up to the hearing itself, she raised $43,400 from finance industry sources the day after the hearing. (On the day of the hearing, she granted 30 minutes of her time to Washington Post reporters who quoted her as saying: “No one tells me what to do”--an assertion at odds with her admission, in April 2021, of taking cues on labor law reform from “business leaders.”).
The other two banking committee Democrats to oppose Omarova, Mark Warner and Jon Tester, received $127,200 and $82,100 in industry donations to their respective campaign committees and leadership PACs in the weeks after the confirmation hearing. Warner isn't up for re-election until 2026. Tester and Sinema are both up for reelection in 2024. By comparison, in the same time frame, a vocal Democratic critic of deregulation and financial sector excess who is up for re-election in 2024, Sherrod Brown, only received $64,800 in industry donations, despite chairing the committee.
On the Republican side, four conservatives on the committee are facing reelection in November: Tim Scott, John Neely Kennedy, Jerry Moran, and Mike Crapo. In the six weeks after the Omarova confirmation hearing, they received on average $240,593.75 from FIRE donors--almost half of the average Senate Republican haul from the sector during the entirety of the last midterm campaign cycle, thanks, in part, to the aforementioned hedge fund managers' protest of tax reform.
Of the four, Scott raised the most from industry sources after the hearing, which he used to badger the nominee about her academic work without asking her a single question. The South Carolina lawmaker raked in $400,325 in FIRE donations to his campaign, his leadership PAC, and his joint-fundraising committee. Campaign fundraising committees linked to Scott also received six-figure donations from the finance industry just before the Omarova hearing. Paul Singer and fellow hedge fund manager Daniel Loeb respectively gave the Tim Scott Victory Fund, the lawmaker's joint-fundraising committee, $219,000 and $266,300 in the third quarter of 2021.
Loeb, whose net worth is about $4.2 billion, donates money to some liberal causes including the Brennan Center for Justice, the Innocence Project and to organizations supporting gay and transgender rights. He was also a supporter of Barack Obama's presidential campaign, and has made headlines recently for backing Democratic candidates looking to defeat left-wing Democrats who are critical of the US-Israel relationship, such as Rashida Tlaib. Some of the money is “dedicated to empowering” Black candidates, despite the fact that Loeb, who is white, once criticized a Black Democratic leader of the New York Senate by saying that she was worse for her community than the Ku Klux Klan due to her support of public schools. Earlier this year, Loeb also gave hundreds of thousands of dollars to committees supporting Congressional Republican candidates, after joining Stephens, Singer, and Griffin in the 2018 boycott of Republican Congressional causes.
The Super PAC that supports Scott, Opportunity Matters, also received huge donations last year from finance industry Republican megadonors. Craig Duchossois gave $250,000 to the organization two days before the Omarova confirmation hearing, and Marc Rowan donated $150,000 to the fundraising committee in February 2021. The money has helped raise Scott's profile--along with $15 million from tech investor Larry Ellison, the eight richest man in the United States--to make the South Carolinian the most prolific Republican fundraiser in 2022, a rumored presidential candidate in 2024, and a proven friend of the finance industry.
Mike Crapo, chair of the banking committee from 2017-2021, raised second most from industry sources in the six weeks between the Omarova hearing and the end of the year. Crapo received $313,425 in donations to his campaign committee, his leadership PAC, and his joint-fundraising committee—the latter of which has been used by the Idaho lawmaker to sell access to himself. In June 2021, Business Insider obtained documents showing that the Crapo Victory Committee offered tiered benefits to those who gave between $5,000-$15,000, with benefactors receiving more time with the senator in exchange for a larger donation. The practice of officials exchanging time for money was deemed legal in 2016, in a unanimous decision by the Supreme Court, McDonnell v. United States.
Campaign fundraising committees linked to Senator Kennedy raised $205,125 in money from FIRE industry donors in the aftermath of the Omarova hearing. The Louisianan distinguished himself during the proceedings by asking Omarova if he should call her “professor or comrade” in a moment that elicited audible gasps from others present in the room, and a rebuke from Chairman Brown. A Super PAC that supports Kennedy also received at least one six-figure donation from a wealthy financier in the run-up to the confirmation hearing. Saul Fox, a private equity fund manager who once hosted a fundraiser for Donald Trump at his home, gave the committee, Conservative Louisiana, $100,000 in October 2021.
Finally, Senator Moran raised $99,025 from FIRE sources. While he wasn't present at the confirmation, he took to the Senate floor to falsely accuse Omarova of wanting to end commercial banking, accusing her of wanting to establish a “centrally planned economy.”
Republicans and banking lobbyists justified their McCarthyite attacks on Omarova by citing a paper she wrote last year called “The People's Ledger.” In the paper, Omarova argued that retail deposits should move to the Federal Reserve's balance sheet because banks have been leveraging the money to engage in risky speculative activity, which has led to two central bank bailouts of corporate debt markets in twelve years, in 2008 and 2020. Banks would be more prudent if deprived of federally-insured deposits and moving this money to the Fed's books, Omarova wrote, would have the added benefit of enabling monetary policy that could provide direct relief to the average person during a time of crisis. Instead of easing pressure on the economy during times of crisis by shoveling money at banks to buy up their non-performing assets, as the Fed has done repeatedly since 2008, the central bank would be able to give cash directly to people. Bank lobbyists and their allies in Congress characterized “The People's Ledger” as a new kind of Marxist-Leninism, despite the fact that banks make most of their money by collecting interest on loans and managing investments.
Regardless of how “The People's Ledger” was characterized, it’s likely that Omarova's other work was more instrumental in shaping industry opposition to her nomination. In recent years, she has written about how new innovations in financial technology, like cryptocurrency, have mostly been used to undermine regulation and oversight. In 2018, she wrote a paper calling for a national infrastructure bank because maintaining and improving critical U.S. infrastructure isn't sufficiently profitable for Wall Street. In 2012, her research helped expose how Goldman Sachs, JP Morgan, and Morgan Stanley were inflating the prices of various physical commodities—by exploiting loopholes in laws established to create a firewall between banking and commercial activities. And, perhaps most importantly, in 2009, she wrote a paper explaining how industry lobbyists convinced the OCC to allow reckless gambling on derivatives contracts, like the ones that caused the 2008 global financial crisis.
In other words, the banking industry and its allies on Congress attacked Omarova for academic work that she would not have had the authority to implement as head of the OCC, while downplaying her research that demonstrated a deep understanding of how the agency can rein in an industry that has accumulated obscene power, which it has used to make the future of millions of Americans, if not billions of people around the world, more precarious. Omarova, now, will not get the opportunity to apply her knowledge of the OCC's power thanks to lawmakers who have devoted themselves to the industry.
And while the most vicious attacks came from Republicans, Democrats could have confirmed Omarova's nomination without a single Republican vote. But a faction within the party remain wholly devoted to the finance industry. A charitable interpretation of its actions might note that it was just trying to help President Biden make good on his campaign promise: nothing will fundamentally change.
Top campaign finance hauls from FIRE sources, Senate Banking Committee members who opposed Saule Omarova's nomination (Nov. 18-Dec. 31, 2021):
1. Tim Scott (R-S.C.) – $400,325
2. Kyrsten Sinema (D-Ariz.) – $334,700
3. Mike Crapo (R-Idaho) – $313,425
4. John Neely Kennedy (R-La.) – $205,125
5. Mark Warner (D-Va.) – $127,200
6. Jerry Moran (R-Kansas) – $99,025
7. Jon Tester (D-Montana) – $82,100
8. Steve Daines (R-Montana) – $79,800
9. Thom Tillis (R-N.C.) – $76,500
10. Bill Haggerty (R-Tenn.) – $76,000
11. Kevin Cramer (R-N.D.) – $43,500
12. Mike Rounds (R-S.D.) – $32,000
13. Cynthia Lummis (R-Wyo.) – $26,500
TOTAL: $1,961,000
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Questions about the methodology used to calculate FIRE donations here? Other questions? Comments? Legal threats? Complaints about the change to an irregular publishing schedule? Tips? Leaks? Get in touch with Sam Knight
Email: samueledwardsknight@gmail.com
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