President Barack Obama’s nominee for a high-ranking position at the Treasury Department withdrew his name from consideration this week, apparently bowing to pressure from the left wing of the Democratic Party. Sen. Elizabeth Warren, D-Mass., had led a charge against investment banker Antonio Weiss, arguing that his candidacy for the post was more evidence of a “revolving door” between federal regulators and Wall Street.
Warren’s success in blocking the Weiss nomination has contributed to a widening rift between the Democratic Party and the financial industry. As major Wall Street donors have begun to roll back their support for Democrats, liberal members of the Senate have begun to take a harder line against major banks.
Warren’s outspoken opposition to the Weiss nomination was emblematic of the change in tone. The senior senator — who recently ascended into the Democratic Party’s Senate leadership — has made her political career in part by attacking Wall Street for what she describes as its role in promulgating economic inequality.
Shortly after Obama announced on Nov. 12 that he was nominating Weiss to the Treasury post, Warren went on the attack in an op-ed for the Huffington Post. Saying that “enough is enough,” she chided the White House for what she said was its habit of choosing "nominees with close Wall Street ties for high-level economic positions."
"The over-representation of Wall Street banks in senior government positions sends a bad message,” she said. "It tells people that one — and only one — point of view will dominate economic policymaking. It tells people that whatever goes wrong in this economy, the Wall Street banks will be protected first."
Sen. Dick Durbin, D-Ill., and advocacy groups including the Independent Community Bankers of America (ICBA), soon joined Warren in her opposition.
Treasury Secretary Jack Lew announced Weiss was no longer being considered for the Treasury post on Jan. 12, exactly two months after Weiss had originally been nominated. Instead, Lew said he had invited Weiss to serve as an adviser in a capacity that does not require Senate confirmation.
"I continue to believe that the opposition to his nomination was not justified,” Lew said in a statement. "Nonetheless, I am confident that he will prove himself to be a dedicated, talented, and effective public servant and that he will make an important contribution to the work we are doing to create broadly shared economic opportunity and financial stability that will be a foundation for long-term prosperity."
The failure of the Weiss nomination in some ways parallels an earlier fight over who would become the new chair of the Federal Reserve. After rumors surfaced over the summer of 2013 that Obama would nominate former Treasury Secretary Larry Summers to chair the Fed, liberals quickly mobilized against him. When Summers publicly withdrew his name from consideration in September 2013, it was widely seen as a victory for the Warren wing of the Democratic Party, though Warren — still a relatively new senator at that point — appears to have sat that fight out for the most part.
Warren was far more outspoken in her opposition to Weiss. And as she has settled into her job on Capitol Hill, she has wielded her newfound influence over economic policy in other ways: In November 2014, she used her post on the Senate Banking Subcommittee on Financial Institutions and Consumer Protection to hammer New York Federal Reserve President William Dudley for his institution’s alleged failure to adequately police Wall Street.
In a statement reacting to Weiss’s withdrawal from consideration, Warren hinted that she would keep up the pressure on major financial institutions.
"We’ve already seen that the new Republican Congress is going to aggressively attack the Dodd-Frank Act,” she said. "It is critical that the Treasury Department defend the Act from those attacks and push for strong implementation and enforcement of the law. The risk of another financial crisis remains too high, and we should be strengthening financial reforms, not rolling them back to benefit Wall Street.”
As Warren and her allies have gained more influence within the Democratic Party, Wall Street donations to party coffers have declined. The Center for Responsive Politics recently found that donations to Democratic candidates and institutions as a share of overall Wall Street contributions are at their lowest level in about a quarter of a century.