Reporting from Philadelphia — As Democrats seek to focus voter attention on the nation's economic problems that existed before President Obama took over, they have begun wielding a sharp new tool: the Wall Street reform law and Republican opposition to it.
Large GOP gains in Congress could allow Republicans to hinder, or in some cases block, the ability of regulators to implement the law's stricter oversight of the financial industry.
With the stakes so high, Democrats are highlighting any Republican ties to Wall Street — no matter how dated or tangential. But Republicans are fighting back, downplaying their Wall Street connections even as the financial industry funnels more money to their campaigns than to Democrats heading into the fall election.
Talking tough about Wall Street — its role in causing the financial crisis, its links to candidates and its vigorous opposition to the need for stricter government oversight — is a major part of the Democrats' midterm election theme that Republicans want to return to policies that caused the economic mess, said Rep. Chris Van Hollen (D-Md.), who heads the House Democrats' campaign efforts.
In California, Democratic Sen. Barbara Boxer has accused Republican Carly Fiorina of behaving like a Wall Street executive when she headed Hewlett-Packard Corp. Democrat Ami Bera hits the Central Valley lawmaker he's trying to unseat, Rep. Dan Lungren (R-Gold River), for lobbying for former Wall Street investment bank Bear Stearns, which was one of his clients while working for a Washington, D.C., law firm.
Nowhere is Wall Street and financial reform playing a bigger role than in the Pennsylvania Senate race, pitting Democratic Rep. Joe Sestak against Republican Pat Toomey.
"Wall Street's congressman" is how one Sestak ad brands Toomey.
"The one central theme that runs through all the Democratic campaigns is, 'We represent the middle class and the Republicans represent Wall Street,' " said G. Terry Madonna, director of the Center for Politics and Public Affairs at Franklin & Marshall College in Lancaster, Pa. "The difference in Pennsylvania is they've got a real, live Wall Street trader."
Toomey worked for two banks on Wall Street from 1984 to 1990, Chemical Bank and Morgan Grenfell. He traded the complex financial instruments known as derivatives, focusing on those dealing with currency and interest rates. After arriving in Congress in 1999, Toomey supported broad, bipartisan legislation, signed by President Clinton, to repeal the Depression-era law that separated commercial banks and investment banks.
A year later, Toomey also supported legislation that prevented federal officials from regulating most over-the-counter derivatives. Some experts have said those two laws helped set the stage for the financial crisis.
"Congressman Toomey went down to Congress after having worked on Wall Street … and said, 'Wait a minute, I want to continue to fight for Wall Street,' " Sestak said last week during a campaign stop in Philadelphia.
Sestak and Democrats have hammered Toomey on the issue. A TV ad this summer called Toomey a "Wall Street wheeler dealer" who helped "pioneer the use of derivatives." Referring to the 1999 legislation, the ad said Toomey "wrote the law to weaken oversight of Wall Street."
Toomey's campaign cried foul, saying Sestak distorted the Republican's Wall Street experience and his role in the 1999 legislation, which he simply voted for as a freshman lawmaker. The nonpartisan Factcheck.org agreed that the ad was wrong on those points.
But even as he defends himself, Toomey isn't embracing Wall Street either.
"There's one person in this Senate race who voted to give a $700-billion gift to Wall Street and that person is Joe Sestak," Toomey spokesman Nachama Soloveichik said of Sestak's vote for the bailout bill. "He gave a big fat wet kiss to Wall Street in the form of a bailout and Pat opposed the bailout from the very beginning."
She derided Sestak's allegations as "typical political demagoguery" from a candidate behind in the polls. Sestak trailed Toomey by 9 percentage points among likely voters in Franklin & Marshall College's latest poll last month.
But Sestak continues to hammer on Toomey's Wall Street ties.
"I don't go bash Wall Street. I think they have a value," Sestak said. His complaint is that after Toomey left Wall Street, he went to Washington and fought "for removing rules from Wall Street that will protect the working family."
"He says, 'Trust Wall Street,' " Sestak said. "People don't trust Wall Street."
Madonna said it was no surprise Sestak and other Democrats were hammering the issue.
"I don't know that anyone has a clue what a derivative is, but it makes it sound like Toomey is responsible for the fall of American capitalism," Madonna said. "There is no doubt that the Sestak people see this as a major chink in Toomey's armor and they're going to push it relentlessly."