On Wall St, time to mend fences with Obama

Nov 09 2012, 00:43 IST
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SummaryTop five sources of contributions to Romney were big banks

Del Frisco’s, an expensive steakhouse with floor-to-ceiling windows overlooking the Boston harbor, was a festive scene on Tuesday evening. The hedge fund billionaires Steven A Cohen, Paul Singer and Daniel Loeb were among the titans of finance there dining among the gray velvet banquettes before heading several blocks away to what they hoped would be a victory party for their presidential candidate, Mitt Romney.

The next morning was a cold, sobering one for these executives. Few industries have made such a one-sided bet as Wall Street did in opposing US President Barack Obama and supporting his Republican rival. The top five sources of contributions to Romney, a former top private equity executive, were big banks like Goldman Sachs and JPMorgan Chase, according to the Center for Responsive Politics. Wealthy financiers — led by hedge fund investors — were the biggest group of givers to the main “super PAC” backing Romney, providing almost $33 million, and gave generously to outside groups in races around the country.

On Wednesday, Loeb, who had supported Obama in 2008, was sanguine. “You win some, you lose some,” he said in an interview. “We can all disagree. I have friends and we have spirited discussions. Sure, I am not getting invited to the White House anytime soon, but as citizens of the country we are all friendly.”

Wall Street, however, now has to come to terms with an administration it has vilified. What Washington does next will be important for the industry, as regulatory agencies work to put their final stamp on financial regulations and as tax increases and spending cuts are set to take effect in the new year unless a deal to avert them is reached. To not have a friend in the White House at this time is one thing, but to have an enemy is quite another.

“Wall Street is now going to have to figure out how to make this relationship work,” said Glenn Schorr, an analyst who follows the big banks for the investment bank Nomura. “It’s not impossible, but it’s not the starting point they had hoped for.”

The love affair between Wall Street and Obama soured soon after he took office and championed an overhaul in financial regulations that became the Dodd-Frank Act. Starting over with the White House will not be easy. One senior Wall Street said Wall Street “made a bad mistake” in pushing so hard for Romney. “They are going

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