Last December, James hosted a high-dollar fundraiser for Hillary Clinton that featured Warren Buffett. He’s made six-figure donations to the Center for American Progress, known as Clinton’s White House in exile, and sits on CAP’s Board of Trustees. And he has made no secret of wanting to hold a high-level position in a future Democratic administration, perhaps even Treasury Secretary.
The head-scratcher here is that James runs a private equity firm, exactly the kind of “shadow bank” that Clinton has derided as a scourge to the financial system. Shadow banks are financial institutions that do bank-like activities (such as lending or investing for clients) but aren’t chartered as banks, existing outside of the traditional regulatory perimeter.
Clinton argued during the primaries with Bernie Sanders that they were more dangerous than the big banks, because of the lack of scrutiny on their risk-taking. That was the linchpin of her argument that Sanders’s plan was too myopic, and that her plan, which sought to crack down on shadow banking and deny it sources of funds, was more comprehensive.
James has not only actively engaged in defending the whole concept of shadow banking, he created the original private equity trade group, formerly known as the Private Equity Council. The group later quietly changed its name to the more innocuous-sounding American Investment Council.