Read

Search form

This Is the Worst Election for Wall Street in Decades

This Is the Worst Election for Wall Street in Decades
Wed, 11/7/2012 - by Nathan Vardi
This article originally appeared on Forbes

In October, Wall Street hosted a rich fundraiser at the Hilton New York for Mitt Romney. Hedge fund, private equity and investment banking big shots were among the nearly 200 co-chairs of the event that cost $1,000 to attend. Those who shelled out $5,000 got to leave with a photo with vice-presidential hopeful Paul Ryan, who was the big draw of the event.

Wall Street made a huge bet on Mitt Romney and lost. The financial services sector contributed $61 million to Mitt Romney’s campaign compared to giving only $18.7 million to Barack Obama, according to the Center for Responsive Politics. The $80 million spent on the two 2012 presidential campaigns by the finance sector was more than any other single industry. The finance sector includes insurance and real estate, but make no mistake, Wall Street’s most important firms led the way. Employees of securities and investment firms gave $20 million to the Romney campaign and employees of just Goldman Sachs, once a Democratic money stronghold, gave Romney’s campaign about $900,000, compared to the $136,000 Goldman employees sent to the Obama campaign. Bank of America’s employees also were big givers to Romney’s campaign.

And that was just the cash that went directly to the campaigns. Wall Street was by far the biggest single sector donor to super PACs, with the securities and investments industry investing $94 million, much of it to groups that supported Romney. Much of this cash came from investment managers like Ken Griffin, Paul Singer, Robert Mercer, John Paulson, and Joe Ricketts.

Wall Street’s overwhelming support for Romney represented a big shift from 2008, when many in the financial sector enthusiastically backed Obama. In some ways they were supporting one of their own, given Romney’s private equity background as founder of Bain Capital. But they were largely motivated by their disdain for policies Obama directed against them and the derisive names he called them.

They say elections have consequences and Wall Street is probably going to experience at least some fallout from Obama’s victory. One of the reason’s that Wall Street backed Romney was that he promised to get rid of the Dodd-Frank financial reform law. Now, some elements of the law that Wall Street hates most and have yet to go into effect, like limiting the big banks from making speculative bets, will likely be implemented soon.

In addition, the carried interest tax trick, which has allowed private equity and hedge fund investors to pay lower capital gains taxes on rich performance fees as opposed to higher ordinary income tax rates, will be under direct threat. In fact, all dividend and capital gains tax rates may very well increase in a second Obama term, which Wall Street won’t like at all.

But perhaps the biggest loss for Wall Street from the 2012 election will be to its reputation. The finance sector also poured money into Scott Brown’s Massachusetts Senate race, but failed to defeat Elizabeth Warren, a Wall Street foe who helped create the Consumer Financial Protection Bureau. Wall Street is increasingly looking small. It was unable to win a battle against a man many on Wall Street came to see as an enemy. Who is afraid of Wall Street? The place has lost its deterrent threat.

Sign Up

Article Tabs

Fascinating, creative initiatives around the world – from co-operative finance and crowdequity schemes to alternative currencies and reclaiming the public's control over money-creation – are emerging to strengthen the commons.

Housing costs are skyrocketing in Seattle – up 12% for a family home in the last year – and a 2012 study in the Journal of Urban Affairs showed that an increase of $100 in median rents results in a 15% increase in the homeless population.

The media, which came to the story so late, can only process so much – but if you live in Flint or the State of Michigan as I do, you know all too well that what the greater public has been told about the water crisis only scratches the surface.

Congressional hearings on the Flint water crisis were convened on Wednesday – but two people who should be in the hot seat weren't there. Next up, Iowa Caucus: Is this what Democracy looks like? And Obama signs the TPP.

By 10:20 a.m. on Thursday, up to 1,000 protesters were at the Sky City Convention Centre. Their aim? Disrupt proceedings for as long as possible, and by late morning they were succeeding in shutting down large parts of the capital.

One in five renters in Britain could not afford to pay January’s rent out of their normal salary and were forced to resort to credit cards, loans, overdrafts, pay day loans and borrowing from friends and family in order to pay housing costs.

Posted 5 days 20 hours ago
Chinese economic integration, Chinese financial power, G7 nations, emerging market power, Asian Infrastructure Investment Bank, Asian Development Bank

China and other emerging economies, frustrated by their lack of representation in global financial decision-making, could potentially create their own parallel institutions and, in the long term, construct a parallel or opposing economic system altogether.

Posted 4 days 20 hours ago

This week we passed the five-year anniversary of Tahrir Square, but do we even know – or care – what's happening there now, and do we see the parallels with what's going on right here? We speak with an Egyptian activist who sets the record straight.

Posted 3 days 14 hours ago
corporate tax avoidance, corporate tax breaks, tax havens, tax shelters, corporate tax evasion, Citizens for Tax Justice

Sanders pledged Friday to close loopholes that allow Fortune 500 companies to exploit offshore tax havens, which last year enabled them to avoid paying U.S. taxes on over $2.1 trillion in accumulated profits.

Posted 5 days 20 hours ago
divestment movement, fossil fuel divestments, coal divestments, oil divestments, Copenhagen renewable energy

If the mayor's proposal is approved at a finance committee meeting Tuesday, the Danish capital will become the country’s first investment fund to sell its stocks and bonds in fossil fuels.

Posted 5 days 20 hours ago

One in five renters in Britain could not afford to pay January’s rent out of their normal salary and were forced to resort to credit cards, loans, overdrafts, pay day loans and borrowing from friends and family in order to pay housing costs.

By 10:20 a.m. on Thursday, up to 1,000 protesters were at the Sky City Convention Centre. Their aim? Disrupt proceedings for as long as possible, and by late morning they were succeeding in shutting down large parts of the capital.

corporate tax avoidance, corporate tax breaks, tax havens, tax shelters, corporate tax evasion, Citizens for Tax Justice

Sanders pledged Friday to close loopholes that allow Fortune 500 companies to exploit offshore tax havens, which last year enabled them to avoid paying U.S. taxes on over $2.1 trillion in accumulated profits.

It marks the largest investment to date in worker co-ops by a city government in the U.S.

money in politics, Citizens United, super PACs, campaign finance laws, corporate campaign financing,

The presidential campaign is now a super PAC-fueled arms race where almost everyone has a money bomb – half the cash raised so far came from those groups, which have no contribution limits.