It’s time for Wall Street to start worrying

Money is more likely to buy happiness than to buy a presidential candidate friendly to Wall Street this year.

Donald Trump’s convincing sweep of Pennsylvania, Maryland and three other northeastern states this week puts him within shouting distance of the GOP presidential nomination. He must still win a couple of tough contests – Indiana, California – but the feckless stop-Trump movement seems to be crumbling. Trump might even win the nomination outright instead of dickering for delegates at the Republican national convention in July.

Hillary Clinton is even more certain to be the Democratic presidential nominee, now that Bernie Sanders’ impassioned leftward challenge has petered out. Sanders has won an impressive 17 out of 40 states so far, proving the appeal of his populist message vilifying big banks. But Sanders is effectively eliminated in the delegate count that will determine the Democratic nominee.

That leaves two likely candidates for the general election who both have something to prove by cracking down on Wall Street financiers and other corporate interests. “Voters in both parties loathe Wall Street and the banks,” Greg Valliere of Horizon Investments wrote in a recent note to clients. “It’s a toxic brew for the markets.”

Trump has argued that hedge fund managers “are getting away with murder” because of tax breaks that help boost profits for billionaires. His tax plan would lower the corporate rate but it also “reduces or eliminates loopholes used by the very rich,” according to Trump’s own website. Trump also wants to cancel or renegotiate several major free-trade deals and slap tariffs on a host of Chinese imports, which could remake much of the U.S. economy and hike prices for consumers. And he loathes corporate “inversions” that allow American companies to move their headquarters overseas in order to evade paying taxes to Uncle Sam.

Clinton -- the likely winner next November, according to a recent CNBC poll -- may actually be more moderate toward Wall Street, which she represented as a senator from New York for eight years. But she’ll also be under pressure to prove she was never swayed by millions she earned from giving speeches to Wall Street firms such as Goldman Sachs and Deutsche Bank. Clinton wants to raise capital gains taxes, tighten banking regulations, impose new fees on banks and assess a new surtax on millionaires. There’s even speculation she may poke Wall Street in the eye by choosing Sen. Elizabeth Warren – possibly the big banks’ most aggressive foe in Washington – as her vice presidential running mate.

Candidates often fail to enact their favored policies once they get into office. And if Clinton wins in November, she will most likely face a Republican House, as President Obama does now, that will be able to kill legislation Republicans oppose. But if polls pitting Clinton against Trump are accurate (a huge if, this far ahead of the actual election), Clinton could trounce Trump in an election that gives Dems control of the Senate and possibly even the House, once thought safely in GOP hands.

If that were to happen, Clinton could face Sanders-style pressure from the left to rein in banks even more, push taxes higher on the wealthy and strengthen other regulations. “Investors would have to contemplate the troika of Clinton, House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer,” writes Valliiere. “Not a market-friendly scenario.”

The Republican business establishment has already tried to pre-empt such scenarios by pouring millions into the campaigns and super PACs of business-friendly GOP allies such as Jeb Bush, Scott Walker, Chris Christie and Marco Rubio. So far, big donors have wasted more than $200 million on contributions to failed Republican candidates. Ted Cruz and John Kasich, the two Republicans left facing Donald Trump, have pulled in another $175 million in campaign and super PAC funding. Trump, by contrast, has spent about $50 million – less than 15% of the money spent by rivals – much of it his own cash.

If million-dollar donations can’t forward Wall Street’s agenda, the battle will undoubtedly shift to lobbying inside the Beltway once the elections are over. Banks are already fighting with gusto to weaken new rules put into place by the 2010 Dodd-Frank reforms, arguably losing more battles than they’re winning. The new rules are forcing banks to hold higher reserves and take fewer risks, which in turn is depressing bank profits. There may be more belt-tightening to come. Voters are still angry, and they may not be finished with Wall Street.

Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.