"For decades, Washington DC has lived by a simple rule:
if it's good for Wall Street, it's good for the
In the last edition of IFLR, Elizabeth Warren was the only
Democrat candidate to make our global list of financial
regulation influencers. Stopping short of endorsing the
Massachusetts senator for the unenviable task of facing up to
Donald Trump in next year's presidential elections, we do
recognise that Warren is the candidate most likely to shake up
our beat. Wall Street in particular would be very worried to
see her sworn into the hot seat in January 2021.
All too often does personality come before policy in the
political arena. Warren is a little different in that she has
concrete plans for how to fix the issues in front of her; she
isn't just slamming her opposition like so many others. A July
18 Medium post titled 'End Wall Street's Stranglehold On Our
Economy' is a clear and concise depiction of Warren's plan to
rejig the economy so that it favours 'American workers and
middle-class prosperity ahead of multinational profits and Wall
"For a long time now, Wall Street's success hasn't helped
the broader economy – it's come at the expense of the
rest of the economy. Wall Street is looting the economy, and
Washington is helping," she wrote.
With flagrant language, the post calls for a return to the
financial system's original purpose: connecting savers and
borrowers while managing risk.
Private equity (PE) would be first under the guillotine of a
Warren administration. Changes would likely create liability
for PE firms for the debt of the companies they buy, as well as
pensions obligations and blocks preventing them from paying
themselves huge, unrestricted fees: measures that would ensure
PE firms are working with target companies, not against
The banking sector, too, would be hit hard. Another release
from Warren suggests revamping the Glass-Steagall Act for the
21st century, reestablishing boundaries between the commercial
and investment banking sector. Warren would also do her best to
reverse as much of the regulatory loosening brought by the
Trump administration as possible, and would likely launch a
number of new initiatives that would act in the interest of
consumers and not corporates, banks or funds. It goes without
saying that her brainchild, the Consumer Financial Protection
Bureau, would be put back on its original course.
Another suggestion is the Accountable Capitalism Act, which
would legally require corporations to focus on the long-term
interests of all stakeholders and not on the short-term
financial interests of their institutional investors.
It would take a reckless gambler to predict with any
certainty who will face up to Trump next year; it might be
Warren or any number of others. If the last election is
anything to go by, it seems likely that many of her policies
and positions will be echoed by whoever wins. In 2015 Sanders
sat much further left than his competitors when it came to
policy, but this time around the field is far more aligned.
Many have adopted his policies outright.
At the time of writing, Warren is polling in second place
behind Joe Biden. While it is of course still very early days
(Trump only entered the race in June 2015), she is looking
steady as a candidate. It would be foolish to write off her
chances. In fact, 26% of those polled in the July 29 Quinnipiac
University national poll felt that Warren's policies are the
best in the pack.
It's unlikely that much, if any of that 26% come from either
the private equity sector or from the US banking system.