Business and politics have long had both an uneasy and a cozy relationship in this country. And that’s especially true today.
It’s a strange paradox really.
The uneasy part comes from ire on both sides of the political aisle. Of course the Democratic left—AOC, Elizabeth Warren and Bernie Sanders—rail against big business. But Donald Trump and his Twitter army on the right howl about Wall Street and Silicon Valley too.
The cozy part? The Citizens United ruling and big money lobbying has allowed business to influence Washington and state houses like never before.
Let’s be honest, the swamp is still plenty swampy.
I mention all this by way of background when considering the appointment of Kelly Loeffler to be the acting U.S. Senator from the state of Georgia. To be clear, I haven’t uncovered any deep, dark secrets here, it’s just that everywhere you look you see money. Big money.
Here’s the story:
Loeffler, a Republican businesswoman, was appointed this week by GOP Governor Brian Kemp to replace GOP Senator Johnny Isakson, who’s stepping down for health reasons. (You may recall Kemp. President Trump endorsed him during a Republican primary in 2018, when Kemp received national attention with campaign ads where he brandished a shotgun he said he would use to round up illegal immigrants. Kemp narrowly defeated Stacey Abrams in the general election.)
Loeffler will take office on January 1, and though Isakson’s term ends in January 2023, Loeffler will have to run for election in November if she intends to serve past January 2021.
Which all makes sense as far as it goes. Except there are a few wrinkles here, including cryptocurrency, the New York Stock Exchange, never mind Trump and the ever-changing face of national politics. Oh and money. Lots of money.
Loeffler you see, is married to Jeffrey Sprecher, founder and CEO of the Intercontinental Exchange (ICE) which owns the NYSE. Loeffler also works for ICE—as the company is known. She had been vice president of investor relations and corporate communications, and is now CEO of an ICE subsidiary, Bakkt, a fledgling platform which would reportedly make trades between bitcoin and traditional (or fiat) currencies. Or as the company website says, “Bakkt’s mission is to expand access to the global economy by building trust in and unlocking the value of digital assets.” Bakkt counts big money partners like Microsoft, BCG and Naspers (the South African Internet giant) as investors, while Akshay Naheta, a managing partner of Softbank, the Japanese multi-billion dollar investment company, is on its board.
Ordinary investors may come across Bakkt at some point. Coindesk reports that “Bakkt has more recently announced its intention to develop a consumer-facing mobile application for bitcoin payments, expanded custody services, as well as options and cash-settled futures contracts to be rolled out in the coming weeks.
‘I have really good relationships with people on both sides of the aisle’
Sprecher’s story is pretty remarkable, (you can get a good grasp of it in this story by my former colleague, the inimitable Carol Loomis.) Since Sprecher bought the New York Stock Exchange in 2013, ICE’s stock has more than doubled, far outpacing the S&P. Sprecher and Loeffler live in a $10.5 million, 14,908-square-foot mansion, [which when bought was Atlanta’s priciest] according to Loomis, and which Sprecher, “thinks of as ‘kind of Santa Barbara-like Italianate.’ That fits with the identity of its builders and previous residents, Jerome and Bridget Dobson, who produced and wrote the now bygone soap opera Santa Barbara.” Sprecher and Loeffler are reportedly worth some $400 million.
Loeffler, who joined ICE in 2002 and married Sprecher in 2004, formerly worked for Toyota and Citigroup. She’s also on the board of Georgia Power, a big subsidiary of The Southern Company (SO), the nation’s second largest utility (by number of customers.) Said to be “bright and hard-charging,” according to an executive familiar with her—and an athlete growing up—Loeffler also co-owns the local WNBA team, the Atlanta Dream. Loeffler’s partner is Mary Brock, wife of John Brock the former CEO of bottler, Coca-Cola Enterprises, now Coca-Cola European Partners, (CCEP.)
This is Loeffler’s first political office, but she’s long been interested in public service. Here’s a salient bit from a 2013 Atlanta Magazine interview with Sprecher and Loeffler. (The whole piece is worth a read.)
Sprecher: Our politics are slightly different, so...
Loeffler: I’m more conservative.
Sprecher: There are certain candidates that she has an affinity for and certain candidates that I have an affinity for, and we like to support good people. When we first started giving money to candidates, it was an interesting thought process because it’s not a charity. But the more we work with government, the more we feel that it’s important that we support good candidates and have good government, and unfortunately it takes a lot of money to run for office. There’s just no getting around it.
But now your profile is a little bigger, and more public with the purchase of the New York Stock Exchange. Does that make you want to be more or less politically active?
Sprecher: It’s a good question and it’s one we’ve been wrestling with, because it’s only a question that has come lately. Your political giving is all disclosed, and so...
You gave a very large gift to Mitt Romney.
Loeffler: We both did.
Sprecher: We separately gave a lot. In that case, we met Mitt Romney and got to know him personally many, many years ago, when he was trying to run in the primaries against John McCain. We met him at a neighbor’s house here in Atlanta when people didn’t really know who he was and he was just exploring whether he could even run. We got to know him and his wife, and have been to his house many times and they’ve been to our house. Taking politics off the table, the Romneys are really lovely people, and well intended. We’d never known anybody that was running for president and actually had a friendship with them! And so it was easy to support a friend. [Turns to Loeffler] Is that fair?
Sprecher: But I have really good relationships with people on both sides of the aisle, and as a company we are completely nonpartisan. We give money to good candidates, Republicans and Democrats and Independents. I think to the extent that people have come to know us in Washington, they know that we as a company are nonpartisan, and frankly this company is incredibly diverse. The employee pool at this company comes from all ages, all races, all religions, and many people that we’ve recruited are immigrants who were raised outside the country who are citizens now. We run a process here where we really want the employees to talk about who they want to give to and who the company gives to and help direct that. I believe that’s in the interests of the company, and I believe that it’s in the interests of our employees that they are politically active. So the answer to your question is we really try to separate our personal giving from what the company represents, and I think we’re respected for that.”
To be sure, Sprecher and Loeffler have given money to politicians. It’s been reported that between 2013 to 2019, Sprecher and Loeffler have donated many hundreds of thousands of dollars to mostly Republican candidates. Loeffler also made a $100,000 gift to participate in Trump’s Nov. 8 roundtable in Atlanta.
Let’s delve into the couple’s support for Romney in particular, because that’s where things get a little sticky. The Wall Street Journal reported that Loeffler donated “more than $750,000 to help the 2012 Republican presidential campaign of Mitt Romney, now a U.S. senator from Utah. A spokesman for Ms. Loeffler declined to comment.” Of course this was all before Trump was a candidate.
Still, Loeffler’s largesse to Romney seems to have caught the attention of Trump and other conservative Republicans. Even though Loeffler was put forth by Kemp, a Trump loyalist, the president reportedly lobbied hard against her, pushing for a more tried-and-true ally, Georgia Congressman Doug Collins. It’s likely Trump wanted Collins not only because that big Romney donation sticks in his craw, but also with Collins, the president would be 100% assured of a vote against impeachment in the senate. (The president has retweeted Collins 36 times this year, according to The Trump Twitter Archive.) With Loeffler, Trump may feel less sure. Conservatives and Fox commentators have speculated as to whether Loeffler is truly a red-blooded Republican.
— Sean Hannity (@seanhannity) December 2, 2019
‘This is a red state but barely a red state’
“One thing is obvious, the fact it’s the Governor’s pick not the president’s pick. Pretty bold move,” said Trey Hood, professor of political science at the University of Georgia, about the Loeffler pick.
Wait, so why would Kemp want Loeffler over say Collins? Kemp’s no Romneyite. Simply because Georgia is less hard-core conservative than it used to be. “This is a red state but barely a red state,” says Mark Rountree, president of campaign consulting firm Landmark Communications that works with candidates in Georgia. Kemp is no doubt thinking that someone like Loeffler, whom women and moderates might find palatable, would be more appealing than Collins. Winning the seat for the GOP with someone who is maybe a bit centrist, is better than losing it with a rock-ribbed, right-winger.
“Kemp had to go toward the middle or consolidate his base. Both parties are going through the same issue,” says Doug Teper, a former Democratic state representative in Georgia who has taught at Georgia State University.
Senate Majority Leader Mitch McConnell seems to agree that Loeffler is a better bet. “It seems to me like the governor of Georgia made a terrific appointment,” McConnell said. Looks like there’s another factor at play here too though. Loeffler will spend $20 million of her own money on her campaign next fall, Politico reports. “[That] injection takes financial pressure off the National Republican Senatorial Committee, which is supporting her.”
Loeffler may make believers out of Trump & Co yet. Besides her $100,000 donation to Trump, she’s been making nice to the political right, tweeting in her brand new Twitter account: “What people will learn about me is that I'm a proud patriot, a devoted wife, & a devout Christian. A life-long Republican who is unapologetically pro-2nd Amendment, pro-military, pro-wall, & pro-Trump. I am strongly pro-life & make no apologies for my conservative values.”
What people will learn about me is that I'm a proud patriot, a devoted wife, & a devout Christian. A life-long Republican who is unapologetically pro-2nd Amendment, pro-military, pro-wall, & pro-Trump. I am strongly pro-life & make no apologies for my conservative values. #gapol pic.twitter.com/SzY1Wywclm
— Kelly Loeffler (@kloeffler) December 4, 2019
What about potential conflicts of interest?
Many conservatives have now rallied to her defense on Twitter and Loeffler has been tweeting her support for the president nonstop since the announcement.
Fair enough. Still the whole affair is a bit of a slap in the face to the president.
(I should point out Governor Brian Kemp didn’t respond to a request for comment, while Jeffrey Sprecher declined to comment through a communications officer at ICE. The White House didn’t respond on the record.)
What about potential conflicts of interest here? The point that this U.S. senator has a significant interest in cryptocurrency and is married to the owner of the New York Stock Exchange, both of which are to one degree or another regulated by the federal government. “There are concerns about her relationship to the NYSE and her marriage and her influence,” one Wall Street executive told me.
The NYSE of course would certainly have an interest in any financial transaction tax plans, which have been proposed by Democrats as well as proxy advisory reform recently put forth by the SEC. There is also an ongoing legal dispute between the SEC and the exchanges (including the NYSE.) It remains to be seen how Loeffler will address these intersections between government and the NYSE (and its rival NASDAQ.)
According to Ryan Mahoney, an advisor to Loeffler: "Senate Designate Kelly Loeffler is a woman of character who will act with the highest degree of integrity in the United States Senate. Kelly will work closely with the Senate Ethics Office to ensure everything she does is in accordance with both the letter, and the spirit, of the law.”
ICE put out a press release congratulating Loeffler on Wednesday, minutes after Kemp made his official announcement. (It made no mention that Loeffler is married to Sprecher.) The statement from ICE also said that “Loeffler will relinquish this post before being sworn in as the next United States Senator from Georgia…” And according to Josh King, vice president for communications at ICE: “Although it wasn’t stated explicitly in the news release, you can also infer that, as a result of being appointed to the Senate, she will step down from ICE’s Executive Management Committee.”
That’s a good thing.
The political minuet between Loeffler, Kemp, McConnell and Trump will be fascinating to behold. Just as intriguing here will be following the money. Uneasy and cozy as it goes.
This article was featured in a special Saturday edition of the Morning Brief on December 7, 2019. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe
Andy Serwer is editor-in-chief of Yahoo Finance. Follow him on Twitter: @serwer.