NEW YORK — Looking back, the end of Wall Street’s love affair with President Obama came at a meeting in the Oval Office.
Surrounded by 13 of the nation’s biggest financial CEOs, Obama fired the first shot: “My administration is all that stands between you and the pitchforks.” A few months later he tongue-lashed them as “fat cats” and struck a populist tone to raise taxes on the rich and slap tough new regulations on their businesses.
There was no surprise after all this that financial executives would respond with their checkbooks. For every dollar that Wall Street has given to Obama this election, it has given three to Romney.
Election day might mark the official breakup between Wall Street and Obama. But, with the race as tight as it is, the question is whether the lopsided Romney support will help the industry or cause it four more years of agony.
“Money always wants a seat at the table,” said Jeff Connaughton, a former lobbyist and political aide who has written about Wall Street’s influence in Washington. “If Obama wins a second term, Wall Street is going to want to have a seat at that table and not a reelected president who feels spiteful.”
Wall Street has plenty of reasons to support Romney, the former Massachusetts governor.
Obama and a Democratic Congress put in place a far-reaching overhaul of the financial system known as Dodd-Frank. Critics contend that the law adds burdensome regulations that squeeze profits and hinder recovery.
Obama also supports raising taxes on the wealthy and investment managers. He has sometimes struck a populist tone amid complaints by Occupy Wall Street activists and other critics that no senior executives have gone to jail for causing the financial crisis.
The financial sector has bet big on Romney. The industry — including insurance and real estate — has so far sent $52.4 million in campaign donations to Romney, according to data compiled by the Center for Responsive Politics. That’s almost 19% more spent on ousting Obama than the $44.2 million the financial sector spent on putting him into the White House in 2008.
If the president wins reelection, he wouldn’t necessarily bring down the hammer on Wall Street. Even though Obama wouldn’t be able to run again, congressional Democrats may still have to curry favor with the financial services industry, Connaughton noted.
Tuesday’s election may be Wall Street’s last chance to avoid the brunt of Dodd-Frank, many of whose regulations have yet to go into effect. Romney has said he would “repeal and replace” the law, saying he supports certain provisions. Regulators have yet to implement many Dodd-Frank rules, including the controversial Volcker Rule that would sharply limit firms’ ability to trade with their own funds.
“The real hope is, certainly if Romney becomes president, that it just won’t be enforced,” said Michael Greenberger, a former top Commodity Futures Trading Commission regulator who teaches law at the University of Maryland. “Wall Street is angry — it’s pinching them, it’s reducing their profits.”
A Romney fundraiser in New York City last month drew investment bankers, hedge fund managers and other financiers. Among financial luminaries were Bob Diamond, former chief executive of the British banking giant Barclays, and Paul Singer, the hedge fund mogul who recently made headlines for seizing one of Argentina’s navy ships over unpaid bonds.
Attendees voiced agreement with Romney’s tax policies, support of smaller government and disappointment with Obama’s handling of the economy and how the president has worked with business leaders.
The Obama administration has “really been harassing businesses,” Bob Israel, a private equity manager, said at the Oct. 15 fundraiser, as benefactors dropped contributions into silver punch bowls on the third floor of the glitzy Hilton New York hotel in Midtown Manhattan. “The history of our country is not to hold up wealthy people as villains but as beacons, as magnets, as examples that you’d want to emulate.”
As co-founder of Bain Capital, Romney helped pioneer the practice of buying out companies, turning them around and selling for a profit. Wall Street may feel inherently more comfortable with Romney, who can see the country’s ills through a financier’s lens.
“There’s a belief out there that the Obama administration really doesn’t have a firm grasp on underlying economics,” Todd Hagerman, a banking analyst with Sterne Agee, said in a phone interview.
Either way, Wall Street’s support of Romney marks a sharp reversal from 2008, when the deep-pocketed industry supported Obama over Sen. John McCain (R-Ariz.).
Then, donors in the securities and investment industries gave $16.6 million to Obama’s campaign, but only $9.7 million to McCain’s, according to data from the Center for Responsive Politics. The category includes employees of such firms as venture capital, hedge funds, stock exchanges and investment banks.
This election, only $6 million, or 23%, of Wall Street’s cash to the two main presidential campaigns has gone to Obama, versus $19.7 million to Romney, as of Oct. 17, the CRP data show.
“Everybody’s very focused on going the extra mile,” John Lehman, a former Navy secretary who is now chairman of private equity firm J.F. Lehman & Co., said at the Romney fundraiser, which was headlined by his vice presidential running mate, Rep. Paul D. Ryan (R-Wis).
Notable in support for Romney is Goldman Sachs Group Inc., the powerful investment bank. Goldman Sachs donated more than $1 million to Obama when he first ran for president in 2008, while giving only $240,295 to McCain, according to the CRP data. The data reflect contributions by employees, immediate family and political action committees, not the organizations.
This time, Goldman ranks as Romney’s No. 1 contributor, giving him $994,139, according to CRP data. Four other top Romney contributors include Wall Street powerhouses: Bank of America Corp., Morgan Stanley, JPMorgan Chase & Co. and Credit Suisse.
Obama has taken in only $184,925 from Goldman this election. Four years ago Goldman was the president’s second-biggest contributor, but its ranking has sunk to 53rd. (Goldman’s PAC did not donate to either campaign this election, according to the CRP.)
Not everyone in finance supports Romney, of course. Orin Kramer, who runs the hedge fund Boston Provident, praised Obama for taking unpopular steps to save the auto industry and financial system from collapse, and dismissed Romney as disingenuous.
“The arguments for Romney from sophisticated financial types … is that they’ll cut their taxes and everyone else will pay for it, and he’ll cut their regulatory costs,” Kramer said. “But otherwise he’s just reading from the script to get the deal done.”