Will Wall Street Get a Bigger Return on Investment with Republicans?

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Wall Street does not like the political speech it's hearing from Washington, so it's using its Supreme-Court-granted right to make its money talk. Specifically, Wall Street is shifting more of its money to Republicans. But it's not immediately obvious that Republicans can win votes by siding with Wall Street. So Wall Street's bigger bet on Republicans may not end up paying off.To put that bet in perspective, the latest data suggest that Wall Street is still betting heavily on Democrats -- just not as heavily as before. The Washington Post reports that the latest numbers from the Center for Responsive Politics reveal that instead of spending on Democrats 2:1, the securities and investment industry is now splitting its contributions about evenly between Democratic and Republican candidates.

Commercial Banking Leans GOP


Interestingly, the commercial banking industry has been and remains more Republican in its political contributions -- according to the Washington Post, "after a brief dalliance with Democrats" -- commercial banks gave nearly twice as much to Republicans during the last three months of 2009.

What is bothering Wall Street about the Democratic party? While Wall Street clearly dislikes efforts to regulate it more and limit executive compensation, the straw that broke the camel's back was the January proposal to impose a TARP (Troubled Asset Relief Program) tax on financial firms. When Obama followed up a few days later with a plan to restrict the growth of large banks, The Washington Post quoted an anonymous banker as saying, "I'm not voting for him again."

But will Republicans be any better for Wall Street? After all, Republican candidates are also trying to curry favor with voters by spurring public outrage over bailouts and budget deficits -- part of which are due to those bailouts. Republicans might tone down their language a bit compared to Democrats -- but if President Obama is any indication, Democrats are trying to be on both sides of the Wall Street issue.

Outrage Or Empathy?


Obama has referred to Wall Street bonuses in a way that both captures public outrage over them and expresses empathy for Wall Street banker's plight. How so? According to the Washington Post, Obama has called outsize Wall Street bonuses "shameful" and "obscene" while also assuring business executives that he does not "begrudge people success or wealth."

Why should the average American care about this? Because Wall Street's interests do not always line up with theirs. For example, I am guessing that Wall Street is much happier about using up to $23.7 trillion in taxpayer cash and guarantees to keep its bankers in multimillion dollar bonuses than the taxpayers are.

And thanks to that bailout, Wall Street had a fantastically profitable 2009. Now it's using those profits to tilt Washington policy so it can preserve the heads-I-win, tails-you-lose regulatory structure that caused the financial crisis for the next generation of bankers.

If that means more Republicans in Washington, that's fine with Wall Street.
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