Issue of the week: Wall Street’s bad election bet

last updated 8 January 2015

Wall Street’s heavy gamble on Mitt Romney turned out to be a disaster, said Steven Syre in The Boston Globe. Feeling personally stung by President Obama’s “fat cat” attacks and aggrieved over what they consider burdensome reforms, bankers who supported Obama in 2008 turned their backs on him in droves this year, sending a torrent of cash Romney’s way. The six largest groups of Romney donors were employees of big banks like Goldman Sachs and JPMorgan; wealthy hedge fund managers and private equity bosses gave millions more to GOP Super PACs. But these Wall Streeters awoke on Nov. 7 to a sobering reality. The market’s 300-point plunge the day after the election tells you everything about their mood, said Charles Gasparino in the New York Post. “Obama is regarded in the financial world as among the least economically sophisticated presidents in years,” and the prospect of his “class warfare” tactics for another term has Wall Street rightfully fearful that we’re headed for fresh economic disaster.

“The 1 percent doth protest too much,” said Andrew Leonard in Salon.com. How exactly have the past four years been bad for Wall Street? Many of the Dodd-Frank reforms that get bankers so agitated “haven’t even been proposed” yet, much less enforced. And despite all the “unhinged rhetoric” about Obama’s resentment of success, the president “is hardly the Wall Street hater many of his wealthy critics made him out to be,” said David Futrelle in Time.com. During his first term, the Dow Jones Industrial Average nearly doubled, corporations saw their profits grow an average of 78 percent a year, and banker bonuses remained high. Now, having weathered the financial world’s election snub, Obama has “given little indication that he’ll adopt a more aggressive stance with Wall Street the second time around.” So what exactly has these financiers so upset?

Their startling lack of influence, said Kevin Roose in NYMag.com. Wall Streeters were convinced they had the power to put the private equity guy in the White House, so that they wouldn’t have to “hang their heads, hide their jets, and apologize for their success” for another four years. But all their seven-figure checks “ended up not mattering in the least.” Banking titans, used to feeling important, have been “left feeling more impotent than ever.” As one former Goldman Sachs executive said, “Wall Street turned on Obama, and Obama won without them.” The biggest fear of these 1 percenters may soon come to pass: that Obama, having endured their griping in his first term, “will now be free to ignore the Masters of the Universe completely.”