How Kamala Harris is winning over Wall Street

New York (CNN) — Vice President Kamala Harris’ presidential campaign is courting everyday Americans tired of the country’s affordability crisis. But she is winning over some key figures on Wall Street.

Since the whirlwind launch of her presidential campaign after President Joe Biden dropped out of the race in July, Harris has won the support of some prominent Wall Street figures.

At times, big business clashed with Biden, whose progressive administration fought mergers and routinely blamed corporate greed for the inflation crisis. So Wall Street’s embrace of Harris, who supported Biden’s policies, was no guarantee.

“Harris has a better relationship with Wall Street than even Joe Biden had,” Jeffrey Sonnenfeld, founder and president of the Yale Chief Executive Leadership Institute, told CNN in a phone interview on Tuesday.

Harris’ stances on Corporate America and Wall Street are a bit more of a blank slate than Biden. But as a California attorney general and senator, she had a generally more open approach than Biden had with Silicon Valley, where America’s biggest companies reside. And so far, Wall Street titans are opening their checkbooks, bringing her a sizeable pool of money from a part of the economy that in the past has favored Republican candidates.

At the Democratic National Convention on Tuesday night, former American Express CEO Ken Chenault strongly endorsed Harris, particularly contrasting her with Donald Trump.

“She knows that a market-based economy needs a strong and effective government. Kamala Harris understands that we need help to turn good ideas into thriving companies, that we can create good-paying jobs by helping manufacturers expand,” he said. “Unlike her opponent, she knows the way not to build an advanced economy is a broad tariff that would only raise prices, hurt consumers and businesses and cost jobs.”

But even before Harris revealed key details of her platform, Roger Altman, founder and senior chairman of Evercore, told CNBC last month that he supports Harris and that expects her campaign to be “very well financed.”

Blackstone president Jonathan Gray contributed $413,000 to the Harris Action Fund at the end of July, a source familiar with his giving told CNN. In June, Gray gave $56,600 total to the Harris Action Fund and Harris for President, according to Federal Election Commission data.

Alex Soros, son of billionaire liberal donor George Soros, endorsed Harris in an X post last month. George Soros also supports Harris, his spokesperson told CNN. Avenue Capital Group CEO Marc Lasry donated $100K to the Harris Action Fund in March, according to FEC data.

Sonnenfeld, known as the “CEO Whisperer,” argued that Harris’ stronger relationship with Wall Street compared to Biden’s is because she toned down the “class warfare” rhetoric and had a track record as California attorney general acting fairly — even if not overly favorably — with businesses.

“She went after abuses but didn’t see the scale of enterprise itself as misconduct. She knows that thriving businesses are good for the economy and the average American worker,” Sonnenfeld said.

Of course, some Wall Street bigwigs have made their support for Trump clear. Bill Ackman, billionaire hedge fund manager and chief executive of Pershing Square Capital Management, endorsed Trump as president in a July X post. Blackstone CEO Stephen Schwarzman said in March that he is backing the former president’s bid. Key Square Group founder Scott Bessent is a supporter of Trump and attended his rally in Asheville, North Carolina.

Of policies and positions

Burns McKinney, managing director at NFJ Investment Group, says that some big investors might favor Trump’s promises of tax cuts and tariffs over Harris’ populist economic policies, since they could spur growth.

But such tax cuts could lead to higher deficits, and US corporations would likely pass along those tariff costs to consumers by raising prices, he said — both factors that could push up inflation, an issue that until recently was top of mind for Wall Street.

The Federal Reserve began hiking interest rates aggressively more than two years ago from near-zero levels during the Covid pandemic. Annual inflation was running at 9% at its peak in June 2022. Last month it fell below 3%, raising hopes among traders that the central bank could manage to bring inflation to target without triggering a recession.

Harris’ policies could also be inflationary. Her proposed policies center around making big-ticket expenses from housing to groceries to childcare more affordable, largely through offering tax relief for the middle-class and lower-income Americans and challenging price gouging. While giving Americans more money to spend should be good news for consumers, that could also push up demand for goods and services and, in turn, prices.

Harris’ campaign said Monday that she will fight to hike the corporate tax rate to 28% from the current 21%, a reversal of Trump’s tax cuts, which lowered the corporate income tax rate from 35%, to help pay for her campaign promises. Some investors have criticized the proposed tax rate hike, arguing that it could weigh on US companies and crimp the economy.

Of course, Trump has vowed to impose massive new tariffs on China and all trading partners, moves that could provoke a destabilizing global trade war. That would create massive uncertainty, something investors famously despise.

Beyond trade policy, investors are bracing for a potential shift in governance style if Trump is returned to the White House. In particular, Sonnenfeld pointed to Trump’s history of attacking iconic American companies such as Harley-Davidson, Delta and Nike.

“Wall Street hates Trump’s mercurial vindictiveness. Trump’s temperment creates havoc in financial markets,” Sonnenfeld said.

Federal Reserve independence

Some institutional investors also say that a key issue for Wall Street when deciding who to back could be the candidates’ differing attitudes toward the Fed’s longstanding independence.

Led by Chair Jerome Powell, the Fed functions as its own government institution and is overseen by Congress. Trump, who tried to pressure the Fed to lower rates during his presidency, has said that he believes the president should be able to directly influence monetary policy. On Monday, he attempted to soften his previous comments. Harris has vowed to keep her input out of the Fed’s decisions.

The Fed’s autonomy is meant to prevent political agendas from swaying monetary policy. Some investors worry the central bank could lose its credibility, one of its most important tools for fulfilling its dual-mandate of price stability and maximum employment, if the US president were to have explicit influence over its actions.

“That would be really problematic,” said Gerald Goldberg, chief executive of GYL Financial Synergies.

Harris’ relationship with Wall Street titans has been tense at times, most notably when she was the California attorney general and took on big banks in the aftermath of the housing crisis.

Harris pulled California out of discussions in 2011 with other state attorneys general to show that the still-forming deal needed to be tougher on banks. Her actions helped secure a roughly $20 billion settlement for Californians.

Harris has formed relationships with businesspeople, including Lazard President Ray McGuire and Centerview Partners co-founder Blair Effron, and is expected to lean on her connections for advice, according to people familiar with the matter. Harris in July joined a conversation with supporters hosted by JPMorgan vice chairman Peter Scher at his home, a company spokesperson told CNN.

A source previously told CNN that Harris hosted JPMorgan Chase CEO Jamie Dimon for lunch at the White House in recent months. But Dimon “never endorses a particular candidate,” a JPMorgan spokesperson told CNN.

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CNN’s Kayla Tausche and Tami Luhby contributed to this report.