As the debacle in Afghanistan consumes the Biden administration, Wall Street is keeping a closer eye on another debacle: that is, the president’s ambitions to turn the US into a European-style progressive paradise.
It’s not that Biden and his acolytes in Congress and appointees to various regulatory agencies haven’t already moved the country decidedly leftward since his election. As this column has pointed out repeatedly, the “reconciliation” tactic has cleared the way for trillions in spending, a vast expansion of the welfare state that includes handing out checks so people won’t go to work.
But my Wall Street DC watchers — the in-house lobbyists that the banks hire to monitor legislation and regulations — say Biden’s quasi-socialist remake of America has finally hit a formidable wall of resistance.
They see it in issues large and small — budget battles and the fight over more obscure financial matters that suddenly become fierce ideological debates between progressives and free-marketeers.
The upshot: Republicans are now starting to join forces with moderate Dems to hold the line on the creeping AOC-like socialism.
One of the big issues, of course, is Biden’s $3.5 trillion spending boondoggle that has stalled — at least for now.
The White House was planning to ram the package through the Senate on reconciliation with no GOP support. Then it began to leak that the spending bill was all but written by socialist Vermont Sen. Bernie Sanders. The big-ticket items: Free college, universal health care, prekindergarten on the taxpayers’ dime, amnesty for illegal immigrants, etc.
The DC watchers say moderate Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona have been getting an earful from back home about the socialist laundry list. It seems that people in these states don’t share the same zeal for wealth redistribution and high taxes.
That’s when the whole thing began to unravel. Manchin and Sinema are balking as this column goes to press. The progressives are pissed because they wanted to vote on the spending plan before doing infrastructure and now are threatening to stage their own revolt.
Biden, distracted by Afghanistan and just about everything else on his desk, seems oblivious to the fact that on top of a military humiliation, he’s about to be handed a major domestic-policy defeat unless he cuts some deal that neither side seems to want at the moment.
“Biden is finding out that it’s impossible to hold together a coalition where one part wants a leftist remake of the country and another part doesn’t,” said one of those DC watchers.
“He’s also discovering that most Americans are with those who don’t want to remake the country.”
How Robinhood survived
As the budget bill hit a brick wall, something odd happened with Biden’s plan to remake the securities markets to resemble command-and-control economies in Europe.
Earlier in the year, the lefties on the House Financial Services Committee wanted to ban something called payment for order flow, or PFOF as it’s called on Wall Street. This is a routine, albeit esoteric Wall Street practice. It is also an essential part of the growing discount-brokerage business, which has become something of a cultural phenomenon over the past year with first-time investors making decent money selling and buying stocks in a cheap, efficient manner.
One reason investors can trade so easily is the technology developed (with some hitches along the way) by companies like Robinhood, E*TRADE, etc. They can do so cheaply due to PFOF, where the discount brokers sell their customer orders to third-party brokers for a fee.
Enter Elizabeth Warren, the Democratic senator from Massachusetts, who sees a Wall Street scandal behind every trade. Lately she’s been braying about corruption in the order-flow business with her allies pointing out that other, presumably more enlightened countries, don’t allow the practice.
Though she hasn’t offered much proof of sleaze, the Dems on the House Financial Services Committee couldn’t let a good non-Wall Street scandal go to waste. They tried to ram a ban on PFOF through the committee using their majority status.
It didn’t happen for the same reasons the spending bill was stopped in its tracks. Robinhood lobbied members about the merits of the order-flow business, noting that it has democratized trading across race and class here in the US.
Other countries may not allow PFOF, but their economic foundations aren’t based on allowing the rich and poor to enjoy the benefits of the free market. In late July, moderate Democrats joined with GOP members and said a ban on something that gave all people access to trading stocks is socialism run amok.
Yes, the Wall Street crowd has its faults. They will do business with despots in China and virtue-signal about diversity here at home. But they are finding the Biden administration insufferably leftist, and are cheering the pushback on issues large and small.
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