Wary of impending reforms following the financial crisisr, the financial sector — whose irresponsible behavior was a major factor in causing the global recession — donated heavily to members of both parties during last year’s election cycle. In all, the financial, insurance, and real estate industries (collectively known as “FIRE”) donated $476 million to federal campaigns in 2008, dwarfing nearly every other sector.
The 2010 election of Sen. Scott Brown (R-MA) suggested the public is fed up with the financial industry’s heavy influence in our political system, combined with the fact that unemployment is abnormally high while big banks continued to dole out huge bonuses. A poll conducted among Brown voters who had previously supported Obama found that 51 percent of them believed “that Democratic policies were doing more to help Wall Street than Main Street.”
The Obama administration responded to the Massachusetts election by unveiling a new, tough set of financial reforms — crafted by former Fed Reserve chairman Paul Volcker — that would “put limits on the size of banks and…prohibit commercial banks from engaging in…proprietary trading,” prompting one financial observer to remark that the “administration will do anything to stop us revisiting the financial abyss of 2008, and now, the man who ended the stagflation crisis of the 1970s, has finally been heard.”
The New York Times reports today that the financial sector — which donated more to Democrats than Republicans in the 2008 election cycle — is responding to the Democrats’ populist push by channeling their contributions and support from the Democrats to the Republicans:
[JP Morgan Chase] chief executive, Jamie Dimon, is a friend of President Obama’s from Chicago, a frequent White House guest and a big Democratic donor. Its vice chairman, William M. Daley, a former Clinton administration cabinet official and Obama transition adviser, comes from Chicago’s Democratic dynasty.
But this year Chase’s political action committee is sending the Democrats a pointed message. While it has contributed to some individual Democrats and state organizations, it has rebuffed solicitations from the national Democratic House and Senate campaign committees. Instead, it gave $30,000 to their Republican counterparts. [...]
Republicans are rushing to capitalize on what they call Wall Street’s “buyer’s remorse” with the Democrats. And industry executives and lobbyists are warning Democrats that if Mr. Obama keeps attacking Wall Street “fat cats,” they may fight back by withholding their cash.
“If the president doesn’t become a little more balanced and centrist in his approach, then he will likely lose that support,” said Kelly S. King, the chairman and chief executive of BB&T. Mr. King is a board member of the Financial Services Roundtable, which lobbies for the biggest banks, and last month he helped represent the industry at a private dinner at the Treasury Department. [...]
“If the president wanted to turn every Democrat on Wall Street into a Republican,” one industry lobbyist said, “he is doing everything right.”
The Wall Street Journal reported last week that House Minority Leader Rep. John Boehner (R-OH) “made a pitch” for supporting Republicans to Dimon while having drinks at a Capitol Hill restaurant. “I just don’t know how long you can expect people to contribute money to a political party whose main plank of their platform is to punish you,” Sen. John Cornyn (R-TX) said.
Reflecting on the Democrats’ new aggressive stance against Wall Street, progressive strategist Mike Lux writes, “In my experience, the biggest single reason for Democrats avoiding populist rhetoric is worrying about the political donations you would lose as a result. … Democrats cannot win in the 2010 elections without going after the big banks, and that means they will have to give up a lot of money. The tradeoff is certainly worth it in terms of extra votes they will get.”