Betrayed Wall Street donates to GOP now

NY Times:

If the Democratic Party has a stronghold on Wall Street, it is JPMorgan Chase.

Its 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.

The shift reflects the hard political edge to the industry’s campaign to thwart Mr. Obama’s proposals for tighter financial regulations.

Just two years after Mr. Obama helped his party pull in record Wall Street contributions — $89 million from the securities and investment business, according to the nonpartisan Center for Responsive Politics — some of his biggest supporters, like Mr. Dimon, have become the industry’s chief lobbyists against his regulatory agenda.

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.

...

“The expectation in Washington is that ‘We can kick you around, and you are still going to give us money,’ ” said a top official at a major Wall Street firm, speaking on the condition of anonymity for fear of alienating the White House. “We are not going to play that game anymore.”

Wall Street fund-raisers for the Democrats say they are feeling under attack from all sides. The president is lashing out at their “arrogance and greed.” Republican friends are saying “I told you so.” And contributors are wishing they had their money back.

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Mr. Obama’s fight with Wall Street began last year with his proposals for greater oversight of compensation and a consumer financial protection commission. It escalated with verbal attacks this year on what he called Wall Street’s “obscene bonuses.” And it reached a new level in his calls for policies Wall Street finds even more infuriating: a “financial crisis responsibility” tax aimed only at the biggest banks, and a restriction on “proprietary trading” that banks do with their own money for their own profit.

“If the president wanted to turn every Democrat on Wall Street into a Republican,” one industry lobbyist said, “he is doing everything right.”

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Senator John Cornyn of Texas, chairman of the National Republican Senatorial Committee, said he visited New York about twice a month to try to tap into Wall Street’s “buyers’ remorse.”

“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,” Mr. Cornyn said.

Wall Street is feeling like the guy who gives a snake a ride across a flooded river only to be bitten anyway, because a snake is a snake and they should have known what the Democrats would do anyway.

To some extent these contributions are protection money like that paid to the mob, but the Democrat mob can not be trusted when it comes to Wall Street.

The concern on proprietary trading which had nothing to do with the financial meltdown, is misplaced. To some extent it goes to the bogus premise that these bankers were engaged in wild speculation when in fact they were the victims of a government program to make bad loans to people who could not afford them and the failure of their risk management people to comprehend the nature of the risk and the cascading effect of the failure of some of the investments. None of these banks would have engaged in the business if they any comprehension of the risk the government was imposing on them with these bad loans. It is just not in their nature to engage in "bet your company" investment transactions.

The losses they sustained were certainly punishing, and the TARP loans have not been a good deal for them, even though they are mostly paid back now. It should be remembered that these loans were more about unfreezing the credit markets than bailing out the banks. In fact the proprietary trading accounts helped many of these institutions ride out the downturn. Taking tha away from them will only make their position more precarious in the next downturn.