02 Jan Why has Wall Street turned on Obama?
I would be very surprised if National Review had a bigger supporter than I, but that is not the subject of this piece. I confess to having been disappointed in a recent piece from their very capable and gifted writer, Kevin Williamson. Essentially, Williamson contends that Wall Street is filled with shady characters and has participated in all sorts of crony capitalism (fair enough). He correctly shares that this would have been a liability for the Democrats in the past, not the Republicans, as the Goldman Sachs and Fannie Mae organizations of the world have been overwhelming supporters of Democrats – particularly Obama. Where Williamson goes off the deep end, though, or at least into really unsubstantiated waters, is his assertion that Wall Street is now supporting Romney because they are expecting crony capitalist favors, and that this will be a problem for Romney because American will not look fondly on a guy in bed with Wall Street. Hugh Hewitt took on Kevin shortly thereafter, and called Kevin out on the idea that there is some monolithic Wall Street entity out there trying to buy the next President as conspiratorial gobbly-gook. Kevin’s defense of his claims involved this challenge to Hewitt: “They behaved one way in 2008, and in the aggregate, they’re behaving a different way this time around. And I assume that there’s a reason for that, and I assume knowing these guys reasonably well, the reason is self-interest.”
Okay, so there’s the set-up. Full disclosures first. I am a Senior Vice President in the Wealth Management Group at a big, big Wall Street company (a household name). I could say a whole lot of things to condemn my own firm, and a whole lot of things to defend my own firm. In fact, the same goes for a lot of the big Wall Street firms. The point of my little piece is not to condemn or defend Wall Street. As is often the case, any attempt at intelligent evaluation would hardly result in a black and white answer. But Kevin wants to take on Wall Street, which is fair enough, and he wants to do so NOT for their profit-motive, but for the sins of crony capitalism they often participate in. Again, fair enough (though he can make that case much better than he did in this article).
What I want to address is Kevin’s challenge to Hewitt itself. If Wall Street is not attempting to buy off Romney, why are they so behind him now versus the approach they took to the 2008 election? To Kevin, it is just obvious that they are looking for someone to grant them political favors, and feel that Obama is no longer the man to do so. However, has Mr. Williamson been watching the news for the last three years? Can he really not think of any other reason that many on Wall Street might want to support Romney than an attempt to curry favor?
First of all, if the purchase of political favors were the goal of Wall Street, the far more logical way to do it would be with, well, the INCUMBENT. It is Obama who has surrounded himself with a Wall Street all-star cast. Besides, where exactly does Williamson get the idea that Wall Street is monolithically supporting Romney? Yes, Romney has some high profile endorsements, but so does Obama. The attempt to create an image that there is anything close to consensus on Wall Street is pure silliness. If one were to look at the political leanings and candidate sympathies amongst the employees of the top six entities on Wall Street, they would find a 50-50 division. And if one were to look at the total dollars contributed from all employees of all Wall Street and Wall Street-related companies, I can wage a significant amount of money that the ratio will be somewhere between 50% and 60% going to one party – not 75% or 80%. Of course, this will have to be evaluated at the completion of this election cycle. But if right now there seems to be a heavier leaning of Wall Street employee money going to the right than to the left, would it make a little sense to look at the words and actions of Obama himself over the last three years?
I am in New York about ten times per year. I regularly meet with some of the top hedge funds, asset managers, and senior executives of Wall Street companies in the country. Of course, I also regularly encounter hotel, restuarant, and car service employees in Manhattan as well. And one thing they ALL have in common: In 2008, they were all over Barack Obama as the greatest thing since sliced bread; and in 2011, they have completely and totally given up hope in this guy. That happens to be the sentiment of the whole country, by the way: A 70% approval rating has turned to a 40% approval rating. So why wouldn’t it be perfectly rational that Wall Street has followed suit? In fact, President Obama has spent three years in office declaring war on the tenets of capitalism, and if Wall Street is often guilty of the sins of capitalism, that does not mean that there are not countless Wall Street employees who believe in the virtues of it! When the President decides to discard the rule of law by placing the needs of his union buddies over the contract law of capital structure (read: GM bondholders), he has made Wall Street mad. When he decides to use the term “fat cat banker” as if it were a regular and acceptable part of the English language, he has earned the ire of the investment community. I am not going to get into the disaster of Dodd-Frank, or the SEC case against Goldman Sachs, or any of the other major events of the last three years that might make one re-think their view of President Obama. Leave all that aside for a moment, Mr. Williamson.
This is a President that said in the commencement address at Arizona State University that the need of our generation is for young people to leave aside their dream for a job on Wall Street, or in the business world, and to go instead pursue a life in community service. See, that is not an attack on Wall Street, per se. It is an attack on the American way of life. No President has any business telling American people that they ought not pursue a life of material prosperity (let alone a multi-millionaire President). The mystery when we look at the tone this President has set is not how 70% of Wall Street appears to be supporting Republicans; it is how 30% is not … Yes, cronyism needs to die an ugly death, soon. But if we are planning to have capitalism when that is done, we are going to need capital markets. And maybe, just maybe, Mr. Williamson, if you actually get to know these guys as I have, you will see that the vast majority of them believe in the capital markets, and even belief in the tenets of American freedom, more than you think. And that alone is a perfectly good explanation for why Wall Street no longer likes Obama.