Once a reliable cash source for the president, Wall Street has all but abandoned Obama in his reelection campaign. And he isn’t the only Democrat to lose their goodwill.
A rough analysis of this cycle's political donations shows that banks gave Democrats about half as much as in 2008. Four years ago, seven of the twenty companies whose employees gave the most to the Democratic National Committee came from the financial-services industry, for a total of about $2.9 million, according to data compiled by the Center for Responsive Politics. This year, the same was true of just four of the top twenty companies, with the employees donating less than $1.5 million to the DNC. In 2008, finance employees in the top twenty gave the Democratic Senatorial Campaign Committee $1.6 million. This year, just $500,000.
The reasons for their abandonment of the Democratic party—which usually receives about as much from the industry as Republicans do—have been made plain. For one, the banks are not at all pleased to have borne the blame for the Great Recession. “They’re super successful in their own little ecosystems,” a former Democratic fundraiser said. “When they get called out, even if they brought it on themselves, it’s as if their boss came into their office for the first time in 10 years to say, you’re doing a bad job.” What’s more, the banking crisis’s chief legislative response, Dodd-Frank, eats into their profits. But what if those gobs of cash they redirected to the GOP, as retaliation, fail to vault Romney to the White House and Republicans to the Senate majority? How will Wall Street make amends with the party they just spent millions of dollars attempting to boot from power?
The budding consensus is that the banks will re-open their checkbooks. Democrats, if they retain the Senate and White House, would the cards in ongoing discussions about how to regulate Wall Street and rebuild the economy. As the former fundraiser points out, the historical caution of Wall Street—hefty donations to both sides, and fifty years of fruitful relationships with Democratic fundraisers and lawmakers—almost demands a return of equilibrium. Of course, how soon peacemaking will happen, and how publicly, given the notable number of Wall Streeters who have been outspoken about their displeasure with Obama, remains to be seen. But even Paul Begala, a fundraiser for the Obama-aligned super PAC Priorities USA Action—and thus, a man who has spent the better part of the year being told by the finance industry to shove off—anticipates some form of reconciliation. “Both the business community and the President need each other,” he wrote in an email.
He did, however, marvel at the audacity of Wall Street’s shift in allegiance. “For people whose job it is to hedge against risk,” he wrote, “almost no one is hedging for an Obama victory, although it's more likely than not that Obama will in fact win.” At least in recent years, no one has ever accused Wall Street of over-cautiousness. And their break with Democrats will have its lasting effects. Whether the banks can undo those effects—for the right price—is another question mark. For one, the man they perceive to be their arch-foe now owes them even less than he did last go-round. “No one will be able to say [Obama] is beholden to Wall Street,” Begala wrote.
But most critically, Wall Street’s shift to the GOP has shown Democrats that it needn't rely on the bank's financial support. The overwhelming success of Obama’s ridiculously lucrative fundraising apparatus helped make up for their absence. So did contributors in Silicon Valley, says the former fundraiser—plenty of tech groups made Obama’s top donors list—and deep-pocketed supporters of same-sex marriage. True, Priorities never kept apace with the Romney-aligned, Wall Street–favored Restore Our Future. But super PACs have proven to be less dominant, at least in the presidential race, than many Democrats feared.
For their part, bankers seem resistant to the notion that they have further eroded their relationship with Democrats. For them, things couldn't possibly get worse, a belief emphasized when I called the Financial Services Forum and their vice president for communications pointedly reframed my question: “So, just so I have this straight: You want to know how the financial services industry would deal with the same status quo we’ve been working under for the past two years?”
And it wasn’t every Democrat who suffered because of Wall Street’s diminished loyalties. A few of them—naturally, those on the Senate and House finance committees—are well taken care of. Sen. Debbie Stabenow, for instance, saw an increase in donations from financial giants, receiving $15,050 more from Goldman Sachs this year than in her last campaign. (Her campaign did not respond to questions about the donations.) Goldman employees donated $78,200 this year to Sen. Kirsten Gillibrand, who also drew $27,350> from JP Morgan Chase employees.
Assuming the industry is ready to resume risk-averse behavior, Wall Street would likely patch things up with a victorious Democratic Party. It will help that a lame-duck Obama, whose anti-bank rhetoric contributed to the falling out, would have nothing left to campaign for (or against). “The president is on the political sidelines as of next Wednesday,” the fundraiser said. “He won’t drive the message anymore, the other Democrats will, Nancy Pelosi and Harry Reid and Chuck Schumer and Steny Hoyer. … And you don’t hear the Chuck Schumers of this party attacking Wall Street.” But Elizabeth Warren certainly has during her challenge of Sen. Scott Brown, who, as a result, is beloved by Wall Street. If she and any number of like-minded Democratic challengers should land on the Hill this January, they will surely remember that they got there without the help of Wall Street.
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