Billionaire donors want Kamala Harris to escape regulators

On calls with her staff and at fundraisers, deep-pocketed donors have repeatedly singled out Khan, the chairman of the Federal Trade Commission, as holding back the tech sector and other lucrative parts of the economy, according to people familiar with the matter. Private conversations about her replacement have intensified since public calls for her removal in July from Barry Diller, the chairman of IAC Inc. and LinkedIn Corp. co-founder Reid Hoffman, who said Khan was “carrying the war for American business.”

Khan, 35, was nominated by President Biden in 2021 and is a favorite of progressive Democrats such as Elizabeth Warren, who called her appointment “tremendous news.” The stint at the FTC has frustrated traders from San Francisco to New York, who have faced a relative drought of activity in recent years.

Democratic donors on Wall Street will likely continue to privately lobby for Khan to be replaced, some of the people said. However, it is unlikely that any of them will withhold contributions depending on her fate at the FTC, and there has been no clear communication to donors about Harris’ position with Khan, they pointed out.

Meanwhile, Gensler, whose term as head of the Securities and Exchange Commission ends in 2026, is privately disliked by both Democratic and Republican donors, some of the people said. Gensler has pushed for tighter regulations, but donors have been particularly sensitive to what they perceive as he talks to Wall Street, the people said.

Billionaire Mark Cuban, a supporter of Harris, told CNBC this week that the SEC “has to change” and that he asked the vice president’s team to “put my name up for the SEC.” Donald Trump promised at a crypto conference that if elected, he would fire Gensler.

The Harris campaign did not provide a comment for this story.

Douglas Farrar, a spokesman for the FTC, declined to comment. A Gensler spokesman said in an emailed statement that the SEC’s projects “make our capital markets more efficient, transparent and resilient.”

Difficult position

For Harris, who is trying to walk a fine line between attracting donors and appealing to the party’s progressive wing, the pressure to oust Khan and Gensler puts her in a difficult position. Although she has long represented Silicon Valley as a senator for California and is well-versed in antitrust debates, Harris has also sought to appeal to Americans irritated by rising prices, big corporations and Wall Street.

Antitrust lawsuits filed by the FTC under Khan’s leadership sought to block Microsoft Corp. to buy video game publisher Activision Blizzard Inc. and were aimed at stopping Kroger Co.’s $25 billion merger of grocery stores. and Albertsons Cos. So far, the FTC has a mixed record in stopping transactions, losing two early cases but having more success in recent lawsuits.

Two donors close to Harris’ campaign said the argument being made against Khan is that the FTC’s efforts to stop mergers are hurting the economy. The point is, if Harris wants to project herself as pro-growth and pro-business — as she and the surrogates have sought to do — Khan will have to be replaced, the people said.

FTC members can only be fired in cases of “inefficiency, dereliction of duty, or abuse of office,” according to federal law, although the president can appoint another commissioner as chairman. While Khan’s term expires in September, she can remain in office until the Senate confirms a replacement. That would allow Harris to pick a new FTC chair if he wins, though it can take a year or more for a nominee to go through the confirmation process.

As for Gensler, much of the frustration on both sides of the aisle stems from the SEC’s efforts to crack down on the digital asset industry, which Gensler described as a blatant violation of securities laws.

No compromise

Both regulators came to their positions with “a pretty aggressive regulatory agenda, and they’ve taken some big steps to try to get it done,” said Jill Fisch, a professor at the University of Pennsylvania School of Law. “They weren’t looking to play it safe. They weren’t looking to compromise.”

It’s a challenge to deal with the different views on regulation that run through the Democratic Party, Fisch said. Historically, the FTC and SEC were close to the industries they oversaw and were meant to be insulated from their politics being overly policy-driven, she said.

“At this point it’s no longer what’s the most sensible thing to do from a market and industry perspective, but what’s politically important and what’s going to please the political leaders – and that’s a very difficult path to follow ,” Fisch said.

Hoffman, who donated $10 million to the Harris campaign, appeared to walk back his remarks about Khan in a later interview, saying he had not spoken to the vice president about his concerns and tried to distinguish between his role as a donor. and an expert in the technology industry.

Diller also said in a CNBC interview in July that he would urge Harris to drop Khan, before retracting his comment.

Hoffman and Diller are worth $5.1 billion and $5.4 billion, respectively, according to the Bloomberg Billionaires Index. Both are also affiliated with companies facing FTC scrutiny.

Hoffman declined to comment for this story. An IAC representative did not respond to an emailed request for comment.

Many donors have privately expressed frustration with the duo’s public remarks against Khan, seeing them as counterproductive and making it more difficult for a potential Harris administration to make changes at the FTC without appearing to owe the billionaires money, according to some of the people.

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