It's commonly thought that Democrats are crusaders for the little guy and hate those dastardly Wall Streeters. It's a common misconception. In fact, during the 2008 elections, Democrats far out-earned Republicans in Wall Street-based political contributions. But according to a New York Times article today, that is changing. Given the recent financial regulation efforts in Congress and by the Obama administration, bankers and traders are thinking twice about their Democratic support.
The NY Times says:
Just two years after Mr. Obama helped his party pull in record Wall Street contributions -- $89 million from the securities and investment business, according to the nonpartisan Center for Responsive Politics -- some of his biggest supporters, like Mr. Dimon, have become the industry's chief lobbyists against his regulatory agenda.
Republicans are rushing to capitalize on what they call Wall Street's "buyer's remorse" with the Democrats. And industry executives and lobbyists are warning Democrats that if Mr. Obama keeps attacking Wall Street "fat cats," they may fight back by withholding their cash.
The Mr. Dimon referred to above is JP Morgan Chase CEO Jamie Dimon, a friend of President Obama's. The article also says:
But this year Chase's political action committee is sending the Democrats a pointed message. While it has contributed to some individual Democrats and state organizations, it has rebuffed solicitations from the national Democratic House and Senate campaign committees. Instead, it gave $30,000 to their Republican counterparts.
Ouch. That burns.
Last week, I noted that financial reform may be dead, as Banking Committee Chair Christopher Dodd (D-CT) is going ahead with his bill in the Senate without Republican support. Perhaps Republicans have realized how much they stand to gain by fighting some of Democrats' more controversial provisions, like the consumer financial protection agency and Volcker Plan. But could this also drive Democrats to think twice about aggressive regulation?
I think this could go one of two ways. Either Democrats will suddenly realize that they need Wall Street's money for their uphill campaigns this November, or Republicans will realize (if they haven't already) that refusing to compromise on a bill may draw Wall Street's allegiance and deep pockets to their side of the aisle. Either way, the result I think you'll see is a best-case scenario that financial reform isn't nearly as substantial as it once was hoped it could be -- or might have been if it were put ahead of health care reform.