The Two Faces of Nydia Velasquez: Champion of the Working Class, Darling of Wall Street

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The Congresswoman has received heavy contributions from the
financial services in her current campaign, as well as previous ones.

On a sunny Monday morning this past June, surrounded by dozens of children holding signs with “We Love our Daycare” and “No Education, No Future” scrawled out in crayon and marker, Brooklyn Congresswoman Nydia Velazquez led a protest against the Bloomberg Administration’s proposal to close day-care centers and after-school programs as part of citywide budget cuts. During the protest held outside the Jonathan Williams Daycare Center, one of the five day-care centers in Williamsburg that was in danger of being closed, Velazquez decried the city for putting poor, working mothers in the position of giving up desperately needed jobs and earnings to care for their children instead.

The 10-term Democratic representative from New York’s 12th District has long presented herself as a champion of working-class families, an astute choice in a district where the median income in 2010 was just over $23,000, and where more than 35 percent of children live in poverty,  according to the Annie E. Casey Foundation’s Kids Count Data Center.

During this summer’s Democratic primary race for the newly drawn 7th District, Velazquez campaigned on a platform of working for lower-income families. She touted her fight to secure millions of dollars of funds for New York City public housing, her instrumental role in gaining federal money for food banks and public schools, and her involvement in passing ObamaCare, which would make healthcare more affordable.

But populism is only part of the political identity of Nydia Velazquez. A substantial share of her campaign contributions have come from financial institutions, public records show. Her challengers in the primary election last June, the only serious opposition she faced in her 20-year career in the House, attacked her for being in Wall Street’s pocket, and not looking out for her constituents on Main Street. They cited her donations from the financial-services sector and her votes in Congress supporting its interests. Velazquez’s office did not respond to numerous requests from theBrooklynInk.com for comment on these matters.

Over Velazquez’s career, banks and bank lobbies including Goldman Sachs, JP Morgan and the American Bank Association– one of the most powerful lobbyist groups in Washington–have consistently been among the leading contributors to her campaign. Unlike individuals, who can contribute no more than $2,500 to a given Congressional candidate, banks and corporations cannot directly contribute to campaigns; instead, corporations, however, can form political action committees through which they may donate up to $10,000. This year, one-fifth of the $500,000 Velazquez raised came from financial institution PACs. And more than half of her top 10 contributors were banks or bank lobbies, including Goldman Sachs, American Express and the American Bank Association.

The primary candidates debate on NY1. From L to R: Dan O’Conner, George Martinez, Councilman Erik Dilan, Rep. Nydia Velazquez (Photo courtesy of danoconner2102.com)

In the only debate between the primary candidates, Velazquez’s opponents — New York City Councilman Erik Dilan, economist Dan O’Conner and Occupy Wall Street activist George Martinez — questioned her support for the Financial Services Modernization Act of 1999. That measure repealed key provisions of the Glass-Steagall Act, which kept commercial banks out of the investment market. The 1999 legislation deregulated the financial industry, and is viewed by many economists and liberal politicians as one of the primary causes of the 2008-2009 recession.

During the debate, which was televised on NY1, Velázquez hotly denied voting for that bill. The Congresswoman’s office issued a press release the next day stating that the she had misspoken.  The debate was not the only when Velazquez displayed a faulty memory when it comes to her role in repealing bank regulations. Only weeks earlier, as a  member of the House Financial Services Committee, she took part in a session grilling JP Morgan Chase CEO Jamie Dimon on his bank’s risky investments, which led to multi-billion dollar losses.  Members peppered Dimon with questions about JP Morgan Chase’s aggressive lobbying in Washington opposing the proposed Volcker Rule, a law that would ban banks from making investments with their own money.

During the session, Velazquez demanded to know if Dimon was for or against the Glass-Steagall bank separation — a separation she had voted to repeal. If the separation was still in place, an investment bank like JP Morgan would not have been allowed to merge with a commercial bank like Chase and thus could not have taken risky bets with its own money. When Dimon said he opposed it, Velasquez said, “I thought so.”

“She outright lied about her vote on repealing Glass-Steagall, a bill which was very unpopular to Democratic voters,” Dan O’Conner said in a recent interview. “She is a prototypical example of how money controls policy, when you look through her campaign contributions over the years it’s so glaringly obvious that she is very popular among banks and for years the overwhelming majority of her contributions are from banks.”

Detractors like O’Conner also point to Velazquez’s vote last July against the Federal Reserve Audit Bill as another example of her protecting banks’ interest. The bill — sponsored by Rep. Ron Paul, a Republican with well-known libertarian views and passed the House by a vote of 327-98, in a rare show of bipartisan cooperation — would have ordered greater scrutiny of the Fed’s bank-rescue deals and financial support to foreign countries’ central banks following the financial crisis of late 2008 and early 2009. The bill also has the support of the vast majority of Americans. A recent Rasmussen poll showed nearly 80 percent of Americans favored auditing the Fed and revealing the results to the public.  Shortly after the bill was passed Senate Majority Leader and Nevada Democrat Harry Reid vowed the Act would not be put to a vote in the Senate. It should be noted that back in 1995 Reid spoke on the Senate floor advocating a full audit of the Federal Reserve. It should also be noted that Reid has received more than 2 million dollars in campaign contributions from the financial sector since becoming Senate Majority leader in 2007.Velazquez isn’t the only Democratic with close ties to big banks. Democrats and Wall Street have had a close relationship since the boom years of the 1990’s when the Clinton administration pushed for financial deregulation and formed close ties with financiers.  And New York Democrats have benefited from that relationship. Like Velazquez, Senator Charles Schumer and Rep. Carolyn Maloney — all Democrats, and members, respectively, of the Senate Finance Committee and House Financial Services Committee — rank among the top recipients of contributions from financial institutions.

“She is sitting in a gold-mine position,” said Craig Holman, a Capitol Hill lobbyist for campaign financing and government ethics for the watchdog organization Public Citizen. Holman explained that banks only give money to members of Congress who are on financial oversight committees and who are incumbents — incumbents win 80 percent of their elections.  The contributions do not correlate with ideology or party affiliation but seek to foster close relationships with House and Senate members serving on committees responsible for monitoring, writing legislation and enforcing existing laws that affect financial institutions.

Financial services make up more than half of the top ten contributors to Velazquez’s campaign. (Mary Wojcik/The Brooklyn Ink)

 

And with so much money to spend, bank lobbies have become among the most powerful groups in Washington, currying influence by throwing lavish fundraisers and events to honor favored candidates and soliciting executives of banks to give maximum contributions to those candidates’ campaign war chests.

But Costas Panagopoulos, director of the Center for Electoral Politics and Democracy at Fordham University, explained that it is not uncommon for banks or major corporations to contribute to the campaigns of representatives who have oversight over legislation affecting their businesses.  “These industries rely on support from committee members for beneficial policies,” he said. “So it is common that they support members of these committees financially to maintain good relationships with them, or to express appreciation for supporting beneficial policies.” While it is unclear if such contributions could shape the Velazquez’s position on issues, Panagopoulos said it might be that the banks don’t want to risk the alternative given how frequently incumbents win reelection.

Aside from portraying herself as a champion of the working-class, Velazquez has often cited her position as co-chair of the House Small Business Committee and her role in promoting small business growth. Her website touts a number of bills she helped push through the House in support of those businesses, such as tax relief legislation and loan guarantees, and her efforts to open up the federal marketplace to small firms.

But this year the American Small Business League called Velazquez one of two of the most anti-small business U.S. Representatives. The other is her co-chair of the House Small Business Committee, Republican Sam Graves. The league accused Velazquez and Graves of working to dismantle federal small-business programs, diverting billions in federal contract dollars earmarked for small-businesses to billionaire venture capitalists and their syndicates. In 2008 Velazquez sponsored and pushed a bill through the House, which would effectively change the definition of a small business from “independently owned” to include businesses owned up to 49.9 percent by larger firms, including venture capitalists. (The measure, though, ultimately died in the Senate.) Velazquez and Graves also blocked the Fairness and Transparency in Contracting Act, from being voted on in the House. The league argues that by blocking the bill, the two Congress members are allowing billions of dollars’ worth of federal small-business contracts to be diverted to subsidiaries of large companies such as Lockheed Martin and Boeing instead of being awarded to small-businesses.

Velazquez’s alignment with financial institutions is only part of a larger problem in Washington where money buys access and political power.  “Unfortunately, there is no check on influence-peddling,” said Holman. “We rely on private campaign contributions and rely on a system were corporations contribute the most.  It’s a very effective way of buying influence over policy.” But Holman explained that this is not a new phenomenon; money has bought access throughout the history of U.S. elections. He warned, though, that since the Citizens United ruling allowing corporations to make unlimited contributions to SuperPACS, the amount of influence and sway corporations have over policy is nearing dangerous precedencies.

“It’s bringing us back to robber baron days,” he said, “when they had senators representing big oil and not districts.”

 

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