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Investments Lending

How Rep. Scott Garrett’s anti-gay views are splintering Wall Street

Bloomberg digs deep on influential member of Committee on Financial Services

January 14, 2016

Rep. Scott Garrett, R-N.J., holds undeniable influence on the country’s financial system, and especially the country’s housing financial system.

Garrett has long been one of Wall Street’s most powerful advocates on Capitol Hill. Garrett is also a long-time advocate for the reform of Fannie Mae and Freddie Mac. Garrett also sits on the House Financial Services Committee and currently chairs the Capital Markets and Government-Sponsored Enterprises Subcommittee.

But Garrett’s personal views on the Republican Party’s support of gay candidates place Garrett at the center of a storm that’s currently ripping apart both his party and Wall Street as well.

Bloomberg does a deep dive into Garrett’s anti-gay views and the impact those views are likely to have on his continued status as a U.S. Congressman.

The whole thing (and it is a long piece) is well worth your time, but here are few choice excerpts.

The controversy around Garrett began last year, when at a private caucus meeting, he declared that he was going to withhold “hundreds of thousands of dollars” from the National Republican Congressional Committee because of its support for gay candidates.

And according to the Bloomberg piece, Garrett controls a lot of money:

From Bloomberg:

Garrett’s committee is vital to Wall Street. “The rules of the road for handling money and anything with the SEC go through this committee,” says Marcus Stanley, policy director of the nonprofit Americans for Financial Reform. “There’s a ton of money at stake.” In Washington, the committee is known as the ATM, because banks and hedge funds shower the chairman with contributions. After the Dodd-Frank financial law forced hedge funds to register with the Securities and Exchange Commission, Garrett, already the recipient of more Wall Street money than almost any other member of the House, got millions more. The banks pay to have a voice, ensure they’re at the table when new rules are discussed, and insinuate themselves into the chairman’s good graces.

According Bloomberg, most of the money that Garrett collects from Wall Street is supposed to be passed along the Republican Party’s campaign fund, but Garrett’s anti-gay declaration “threw a wrench” into the process.

Again from Bloomberg:

At a private caucus meeting, (Garrett) got into a heated dispute with his colleagues by declaring that he’d withhold hundreds of thousands of dollars in National Republican Congressional Committee dues to protest the party’s support for gay candidates. His outburst immediately caused a rift in the caucus. “I was shocked,” says Richard Tisei, a Massachusetts businessman who was one of the candidates Garrett objected to. “The first time I ran, I was nervous my sexuality would be a problem. But everyone was just great. John Boehner, Paul Ryan—they went out of their way to let me know it wasn’t. Eric Cantor pulled me aside and said, ‘You know, I’m the only Jew in the caucus, so I understand better than anyone how important it is to have you down here to broaden and diversify our ranks.’ ”

But Garrett’s views aren’t only causing a problem within his own party, where many Republicans, perhaps sensing the shift in public opinion about gay rights, have begun to embrace gay candidates.

According to Bloomberg, Wall Street, which acts as one of Garrett’s largest benefactors, is apparently experiencing a crisis of conscience over Garrett’s views.

Again from Bloomberg:

The political fallout from Garrett’s remarks pales compared with the anguish it’s created in some corners of Wall Street. The financial industry ranks among the biggest donors to the Republican Party. But it has also been a pioneer in advancing gay rights. Garrett’s reelection race presents banks and investors with a fascinating—and excruciating—moral dilemma: Do they follow their financial interests and continue supporting a chairman whose antiregulatory views largely jibe with their own? Or do they honor their professed commitment to LGBT equality by cutting off that support and potentially angering a powerful industry overseer?

According to the Bloomberg report, Goldman Sachs, JPMorgan Chase, UBS, Citigroup, and others on Wall Street were among Garrett’s largest campaign donors in his last re-election campaign, but Garrett’s statements on gays and lesbians are leading Wall Street to re-consider its support of Garrett.

Again from Bloomberg:

When contacted by Bloomberg Businessweek to ask about their rationale for sticking with Garrett, U.S. Bancorp and Nomura both said they would cease donations. “We are a company that is committed to diversity and equality in the workplace,” said Nomura spokeswoman Jennifer Will. UBS and Capital Group wouldn’t comment. 

For now, Garrett is still entrenched in his influential positions in Congress, and banks are “leery” of criticizing him because of his sway in Washington, but Bloomberg notes that Garrett has a serious challenger to his seat in the form of Josh Gottheimer, a young Microsoft executive and “veteran of Bill Clinton’s White House.”

And, as Bloomberg notes, if Gottheimer can use Garrett’s views to further the divide between moderate Republicans and those who share Garrett’s opinion on gays and lesbians, he could defeat the long-serving Congressman later this year.

Garrett, for his part, has no comment about these issues. Bloomberg attempted to contact his office for comment before publishing their article, but Garrett's office "ignored multiple interview requests," Bloomberg said. 

HousingWire also attempted to contact Garrett's office to discuss the Bloomberg piece and/or Garrett's views after it was published but HousingWire's request went unanswered as well.

And for Wall Street, the decision to support Garrett, decry his views, or quietly do nothing depends on how much risk each institution is willing to take when aligning itself with someone whose opinion runs counter to so many these days.

The winds of the country have forever changed when it comes to LGBT issues, and Garrett’s antiquated views could lead to his ouster from Congress. And if that happens, Wall Street will lose of its most powerful advocates on the Hill.

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