Wall Street Mounts Campaign Backlash Against Democrats

Wednesday, 28 Jul 2010 02:40 PM

 

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Wall Street executives who endured two years of blame for the U.S. financial crisis and now face costly industry reforms are turning against Democrats by shifting campaign contributions to Republicans.

Long a reliable source of big contributions for Democratic coffers, financial institutions in New York, Chicago and San Francisco are dialing back donations and vowing to shun lawmakers who pushed for the toughest provisions as reform moved through Congress to President Barack Obama's desk.

Financial executives say they were unfairly blamed for the worst recession since the 1930s so that Democrats could deliver politically motivated reforms to angry voters — reforms that will now cost firms billions of dollars in revenue.

"If you're going to haul me out of the bar and beat me up in the street, don't expect me to buy you a drink," said a source involved in political spending decisions at one Wall Street firm.

Bad feelings may be mutual. Some financial industry donors say they have been asked not to attend fundraisers for Democratic lawmakers who fear association with Wall Street could cost them at the polls.

Since the House of Representatives approved its version of financial reform last December, top Wall Street firms have cut their contributions to Democratic candidates for the House and Senate by 7 percentage points.

At stake for Democrats are tens of millions of dollars that could finance get-out-the-vote operations needed to retain control of the House and the Senate and lay the groundwork for Obama's reelection bid in 2012.

The political action committees of the top six Wall Street firms — Bank of America, Citigroup Inc., Wells Fargo, Goldman Sachs Group, JP Morgan Chase and Morgan Stanley — gave 58 percent of their total donations to Democrats in 2009 but have trimmed their contribution to 51 percent over the past six months.

"It would be a bigger problem if the Wall Street types who have given more reliably to Democrats in the last two or four years turned around and gave comparable or greater sums to Republicans," said Norman Ornstein, political analyst at the conservative American Enterprise Institute.

It is not clear yet whether that will happen.

"We hear about it. We sense it. We'll see if the dollars actually flow," said Rep. Greg Walden of Oregon, deputy chairman of the National Republican Congressional Committee.

All 435 House seats and 37 of 100 seats in the Senate are up for grabs in November. Republicans need 39 seats to take over the House and 10 seats to reclaim a Senate majority.

With a weak economy fueling anti-incumbent fever among voters, Democrats are on the defensive. A Reuters-Ipsos poll on Tuesday showed registered voters favoring Republicans 46 percent to 44 percent with a 3-percentage-point error margin.

The full extent of Wall Street activities will not be known until after the November 2 election. But there has been plenty of evidence that a shift is under way.

Media reports have cited the loss of tens of millions of dollars in individual donations to the Democratic Party's House and Senate campaign committees.

In June, the Democratic Congressional Campaign Committee received $260,000 in donations of $1,000 or more from financial industry donors, about 40 percent less than the $420,000 collected by its Republican rival, according to reports filed at the Federal Election Commission.

Democrats recognized their challenge early and moved aggressively to raise funds. The DCCC had $34 million in cash as July began, twice the National Republican Campaign Committee's $17 million.

Democrats will also remain the majority party in Congress at least through the year and pragmatic business executives are unlikely to cut them off between now and November.

"Look, we've got 100 issues going on. They might screw us on one thing. But they're going to help us on another," said a financial industry contributor.

Even some Democrats on the front line of the debate have shown few signs of real damage so far.

House Democrat Carolyn Maloney, whose constituents on Manhattan's Upper East Side include many financial power brokers, has watched her Democratic primary challenger Reshma Saujani, a hedge fund lawyer, overtake her in fundraising from Wall Street.

But the Maloney campaign said its take from the financial industry is still at 26 percent of total contributions for the 2010 election cycle, just 3 percentage points below 2008.

There are even signs that some contributors have started looking beyond the harshness of the reform debate.

"Most of the country believes the administration is in the pocket of Wall Street. Democrats have to deal with that, because if they don't, they won't be able to govern," said a money management executive involved in fundraising.

"But that sympathetic view is not shared by the majority of people who were demonized," he said.

© 2014 Thomson/Reuters. All rights reserved.

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