For Wall Street and U.S. President Barack Obama, this is truly the end of the affair.
Four years after the president successfully wooed the financial industry and its campaign donations, the relationship has ended in reproach from both sides. It’s a breakup that can be measured in the millions of dollars.
According to the Center for Responsive Politics, the financial, real estate and insurance industries had contributed $30.2-million (U.S.) to the campaign of Republican candidate Mitt Romney through the third week of September, more than double the $14.4-million they had given to Mr. Obama.
In the 2008 race, by contrast, the same industries gave $42-million to Mr. Obama’s campaign, far more than the $31-million they provided to his opponent, John McCain.
Both parties draw support from Wall Street and are keen to have deep-pocketed financiers on their side. Unlike four years ago, however, the financial industry is throwing its weight behind Mr. Romney. The shift is forcing the president to redouble his money-raising efforts in other quarters and raises questions about the policy path ahead should he win re-election in November.
The rift between Wall Street and the president has several sources, including the new regulations targeting the sector, the state of the economy, and the prospect of higher taxes. But it also stems from a perceived lack of love from the White House. Bankers have complained, both in private and in public, that they have been vilified by Mr. Obama.
A Democratic official in New York with knowledge of fund-raising activities said that many of his friends on Wall Street have worked themselves into a fury because they feel the President has portrayed them as evildoers. “There’s basically been nothing remotely like that, but they’ve built this into this huge chorus of victimization,” he said. “It’s just way overdone.”
Republicans counter that such perceptions are correct. People in the financial industry have decided that Mr. Obama “was a bad bet for them and their industry,” said John Feehery, a Republican strategist and consultant in Washington. “It’s been a lot easier to get money out of Wall Street for Republicans.”
At the level of individual Wall Street firms, the shift is dramatic. Four years ago, employees of Goldman Sachs Group Inc. gave $6.1-million to political campaigns and three-quarters of those funds went to Democrats, including Mr. Obama. Goldman’s employees gave the second-most of any company’s staff to Mr. Obama’s campaign.
This year, the situation is reversed. Goldman employees have contributed $6.4-million to campaigns through the start of this month and 75 per cent went to Republican candidates. The firm’s employees are the single largest contributor, by company, to Mr. Romney’s campaign.
The size of the switch is remarkable by historical standards. The Center for Responsive Politics tracks contribution data going back to 1990. Prior to Mr. Obama’s election, the campaign contributions of Goldman employees went primarily to Democrats – and Republicans never received more than 46 per cent of the total.
Andrew Williams, a Goldman spokesman, said the firm doesn’t comment on personal donations by its employees.
Like every relationship gone sour, there are key moments that the involved parties cite in their tale of disillusionment. In late 2009, for instance, Mr. Obama went on the television show 60 Minutes and struck a tougher tone toward those in finance.
“I did not run for office to be helping out a bunch of fat cat bankers on Wall Street,” Mr. Obama said. “They don’t get it. They’re still puzzled why it is that people are mad at the banks. Well, let’s see. You guys are drawing down $10-million, $20-million bonuses after America went through the worst economic year that it’s gone through in decades, and you guys caused the problem.”
Late last year, Leon Cooperman, the head of Omega Advisors, a New York hedge fund, wrote an open letter to Mr. Obama decrying what he described as the “divisive, polarizing tone” of the President’s rhetoric, which smacked of “class warfare.”
A long-time associate described Mr. Cooperman as a lifetime Democrat, but in an interview earlier this summer, the hedge fund manager said he was giving the maximum allowed to Mr. Romney. Mr. Cooperman didn’t respond to a request for comment.
The current election is projected to be the most expensive on record, with a price tag of approximately $6-billion. While donations to presidential campaigns or arms of political parties are capped in the thousands of dollars, wealthy individuals and companies can give unlimited amounts to so-called super political action committees, or Super PACs.
The largest Super PAC – called Restore Our Future – is pro-Romney and has raised $96.6-million (officially, such PACs aren’t allowed to co-ordinate their activities with a candidate’s campaign). An analysis earlier this year by the non-profit Center for Public Integrity showed that almost half of Restore Our Future’s funds came from the financial industry, particularly from hedge fund titans and private equity moguls.
To be sure, Mr. Obama still has some friends on Wall Street. And while it is more difficult for him to raise money from people in the financial industry, he is receiving strong support from other sectors, including the entertainment and technology fields. In the overall race for cash, Mr. Obama was slightly ahead of Mr. Romney through July, adding together the funds raised by each campaign, its party’s national committee, and the associated Super PAC, according to a New York Times tally.
Some observers argue that bankers are responding to the burdens on their industry from the Dodd-Frank Act, the massive financial reform legislation enacted in 2010. Mr. Romney has promised that if he is elected, he will repeal the law.
“If you are an executive in a large financial institution of whatever type and you look at the realities of what lies ahead, you probably would like Mitt Romney to win,” said Roy Smith, a finance professor at New York University and a former partner at Goldman Sachs.
Mr. Obama has given “very few indications of incentives for people with a lot of money to vote for him,” Mr. Smith said. “He’s burned the bridge.”