Two politicians just got personal with their war against Wall Street

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One is a name that you’d expect: Massachusetts Senator Elizabeth Warren, who has used her pulpit and influence on the Senate Banking Committee to push Congress to at least consider new and previously scrapped legislation that would shrink and further regulate Wall Street. The other is someone you may not expect: Democratic presidential hopeful Hillary Clinton, who within 48 hours of announcing her candidacy went after hedge funds and private equity firms.

Warren’s tone isn’t necessarily new but her voice in Washington is getting louder. She also took more of a personal line this time around, pleading with Congress to change the tax code for bank executives to align it with the long-term health of the banks themselves. Regulators have pushed banks to change their pay structures to mitigate against short-term risk but modifications to existing tax law would be something different. Warren wants to tax bonuses more aggressively to de-incentivize risk, though details are a bit scarce.

The Massachusetts senator also wants bigger personal financial penalties for those posing risk to the system and a firm cap on the size of big banks, which would undoubtedly lead to more layoffs and smaller paychecks for front office staffers.

Elsewhere, Hillary Clinton spent her first stop on the presidential campaign in Iowa, where she broached the subject of income inequality. She too talked tax changes but, unlike Warren, concentrated specifically on the buy-side. "There is something wrong when hedge fund managers pay lower tax rates than nurses or the truckers that I saw on I-80 as I was driving here over the last two days," Clinton said.

What she was likely referring to is the fact that buy-side staffers earn much of their compensation through investment income, which is considered capital gains and is only taxed at a top rate of 20%. Traditional income at the highest bracket – where most hedge fund and private equity employees would sit – is taxed at a top rate of 39.6%.

It’s an interesting first move for Clinton as she is seen in some parts as a friend to the finance community, though, who knows, it may just be talk.

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Quote of the Day: "The first thing I heard when I got in the business....was bulls make money, bears make money, and pigs get slaughtered. I'm here to tell you I was a pig. And I strongly believe the only way to make long-term returns in our business that are superior is by being a pig. Put all your eggs in one basket and watch the basket very carefully." – hedge fund legend Stan Druckenmiller

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