Obama’s Fickle Friends On Wall Street

Andrew Ross Sorkin of the New York Times today waxed eloquently on how quickly President Obama’s friends on Wall Street deserted him.  It was remarkable, however, that they stood by him as long as they did.

Democrats are trying to make the election a referendum on Wall Street.  Wags at MSNBC have even created a new word “bankster” by merging the words banker and gangster.  Hosts on the General Electric Co. (NYSE: GE)-owned cable network repeatedly blast President Obama for being to deferential to Wall Street by not pushing more enthusiastically the appointment of Elizabeth Warren to head the new Bureau of Consumer Financial Protection.

Thanks to Financial Regulation and other policies,  Obama has created an aggrieved class of billionaires such as Stephen Schwartzman, who stupidly likened Obama’s plan to make private equity firms pay their fair share of taxes, to when ” Hitler invaded Poland in 1939.”  He later apologized.  Sorkin notes that one-time friends  such as hedge fund billionaire Stephen A. Cohen are critical of Obama and that JPMorgan Chase (NYSE: JPM) CEO Jamie Dimon feels “burned” by the Administration.

Though they may occasionally dab tears from their eyes with silk handkerchiefs at the thought of a Harvard-trained lawyer betraying his own class,   Wall Street won’t abandon the Democrats entirely.  For instance,  Sen. Chuck Schumer (D-NY) and Barney Frank (D-MA), will still have huge sway over financial policy even if the Republicans take control of Congress.  Lobbyists would prefer to deal with the devils they know rather than they devils they don’t such as Kentucky GOP Senate hopeful Rand Paul.

There are no friends in politics, only allies.  Wall Street embraced Obama after souring on George W. Bush.  It was a marriage of convenience for both parties that unraveled right after the election.  The American people may distrust politicians but they do not care much for bankers either.  Data from the Federal Deposit Insurance Corp. today showed that banks had their highest quarterly profits in three years even as their risk of failure rose.

Democrats are betting that voters will channel their hatred of bankers into the voting booth.  That strategy is at work in Pennsylvania. Rep. Joe Sestak, the Democratic nominee for U.S. senate in Pennsylvania, is trying to tar his Republican rival Pat Toomey as a “Wall Street wheeler-dealer” who once referred to derivatives as an “enormous good.”  The banker bashing has not worked so far in the Keystone State where Toomey leads in the polls.

It’s hardly a shock that Wall Street is shifting its political alliances to the GOP. Republicans, however, should take little solace from their friends on Wall Street whose loyalty changes at the slight change in the political winds.  It’s nothing personal, just business

–Jonathan Berr