By any measure, Wall Street has received a pretty sweet deal from Washington since the 2008 meltdown. Government rescue and bailout efforts halted the sickening market declines, defrosted the credit markets, and saved the largest banks. With a few exceptions, the Obama administration has tended to the financial industry with kid gloves. In fact, during the frenzied 2008 campaign, Wall Streeters generally favored Obama–Biden over McCain–Palin by a large margin. But Wall Street’s biggest investment firms have fallen decidedly out of love with the president since its flittering affair in 2008.
An article in Tuesday’s Wall Street Journal examines how Goldman Sachs, one of the Obama campaign’s biggest supporters in 2008, has broken with the incumbent.
In 2008 employees of the leading investment bank donated a little more than $1 million to Obama. That was more than four times the sum they gave to John McCain, and it made Goldman, in effect, the second-largest donor to the Obama campaign. But so far in the 2012 cycle, theJournal reports, Goldman employees have chipped in a paltry $136,000 to the incumbent, and have donated nearly $900,000 to the Romney campaign.
Another notable exception is JPMorgan Chase & Co. Employees of the megabank contributed $808,799 to the Obama campaign. So far this cycle, however, they’ve donated $663,219 to the Romney campaign. CEO Jamie Dimon may have once been tight with President Obama. But his employees are much tighter with Romney now. Among corporations, only the employees of Goldman Sachs and Bank of America have given more to Romney, according to data from the Center for Responsive Politics.
The Daily Beast looked at some of the biggest players back in August, and in all it amounts to a major trend.
According to the Center for Responsive Politics, through October 1 the securities and investment industry overall gave about $4 million to the president in this cycle. (By contrast, in 2008 the industry gave Obama $15.8 million.) Through October 1, the same industry has given more than $16 million to Mitt Romney’s campaign.
What accounts for the shift? Several factors.
Wall Streeters are angry. They’re angry in large measure because their bonuses have fallen sharply since the 2008 financial crisis, and because their business models no longer work as they did during the boom years. Investment banks have been forced to reduce the amount of leverage they use, and that has impacted the firms’ profits. Compensation is expected to be down this year,, which makes Wall Streeters grumpy.
Since the financial system nearly bankrupted the country, Wall Street firms have also been subject to more regulation. And that ticks bankers off too. Dodd-Frank—which in some cases force banks to set aside capital to offset possible losses—remains grossly unpopular on Wall Street. The Volcker Rule, one of the more controversial measures of the Dodd-Frank bill that went into effect over the summer, prohibits investment banks from running internal hedge funds and conducting proprietary trading. And as the Journal notes, this has harmed a once-lucrative part of Goldman’s business. In July JPMorgan Chase CEO Jamie Dimon called the rule “unnecessary” in his testimony to the Senate Banking Committee.
Part of the support of Wall Street for Romney can be chalked up to what Romney stands for, and who he is.
There are also inclinations that Wall Street is just sick of being the target of the president’s occasional attacks. Obama’s references to “fat-cat bankers” apparently rattled Goldman execs. Hedge-fund manager Leon Cooperman accused the president of waging “class warfare” in an open letter published last year (PDF). Some conservatives point to Obama’s pandering to the Occupy Wall Street crowd as evidence for his dislike of the industry. Perhaps the most famous instance of this came in a 2011 speech, where the he told protestors: “you are the reason I ran for office.” And Obama has consistently argued for higher taxes on high-earning Americans—like investment bankers.
Of course, it’s not just about what Obama has said and done. Part of the support of Wall Street for Romney can be chalked up to what Romney stands for, and who he is. Romney has pledged to do away with what he calls the “excessive regulations” that Obama has enacted. He’s pledged to keep the Bush tax cuts intact, and to enact new ones. And while he spent most of his professional career in Massachusetts, Romney, as a private-equity titan, was very much a part of the large Wall Street ecosystem.
Thanks to early voting, individual citizens can cast their preferences for president long before the polls open in November. Campaign donations allow Wall Streeters to do the same. And this year they’re voting for Romney.