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Is Wall Street Hoist on Its Own Petard?

Is Wall Street Hoist on Its Own Petard?

A very Salinesque political poster? "Uncle Joe is watching you."

Ernest Hemingway had this boast that he said in an obsessive-cumpulsive way, and it was, "How do you like it now, gentlemen?" This seems an apt (if not cruel) description of where Wall Street and the financial services sector in general finds itself today with the Obama Administration.

Having contributed generously to the Obama presidential campaign (for what purpose, one wonders?), financial institutions now find themselves the object of scorn and mean populist rhetoric from the very man they hoped to influence (hence the "hoist on its own petard" reference). As this article on Bloomberg BusinessWeek points out, finance has been tarred and feathered since Obama took office. Now, gradually and all of the sudden, the financial sector has turned its love to a brewing Republican backlash.

Here is an interesting snippet from the Bloomberg article:

"While strong profits have returned to Wall Street during Obama’s stewardship of the economy, the bankers’ shift toward Republicans was reflected in campaign contributions this year. David Hirschmann, president of the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness, said that bankers and the business community feel demonized by the administration . . . .

"In June, the month when Congress was putting final touches on the Dodd-Frank regulatory law, employees in the securities and investment industry gave 68 percent of their donations to Republicans, according to research from the nonprofit Center for Responsive Politics.

"Contrast that with 2008, when employees of securities and investment firms contributed $14.9 million to Barack Obama’s presidential campaign, more than any other industry and $6.2 million more than they contributed to Republican John McCain. Obama’s five biggest corporate sources of money included employees of Goldman Sachs Group Inc., Citigroup Inc. and JPMorgan Chase & Co., the center said.

"Now political action committees at almost all the big banks have rebalanced. Goldman Sachs’s PAC has so far given 51 percent to Democrats for the 2009-2010 election cycle, down from 64 percent in 2007-2008. Morgan Stanley cut contributions to Democrats from 54 to 47 percent, Bank of America Corp. from 53 percent to 44 percent and Citigroup from 53 percent to 50 percent. JPMorgan’s PAC is the only one to increase support for Democrats, from 47 percent in 2007-08 to 49 percent so far in this cycle."

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