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Friday, June 17, 2011

The President and Wall Street

We start chapter 9 by noting that politicians of both parties simultaneously criticize and court interest groups.

In the 2008 cycle, the securities and investment industry (including individuals and PACs) gave 57% of its federal campaign contributions to Democrats. Barack Obama got $14.9 million, much more than any other presidential candidate. In the 2010 midterm, however, the Democratic share fell to 49%. The New York Times reports on the president's response:

A few weeks before announcing his re-election campaign, President Obama convened two dozen Wall Street executives, many of them longtime donors, in the White House’s Blue Room.

The guests were asked for their thoughts on how to speed the economic recovery, then the president opened the floor for over an hour on hot issues like hedge fund regulation and the deficit.

Mr. Obama, who enraged many financial industry executives a year and a half ago by labeling them “fat cats” and criticizing their bonuses, followed up the meeting with phone calls to those who could not attend.

The event, organized by the Democratic National Committee, kicked off an aggressive push by Mr. Obama to win back the allegiance of one of his most vital sources of campaign cash — in part by trying to convince Wall Street that his policies, far from undercutting the investor class, have helped bring banks and financial markets back to health.

Last month, Mr. Obama’s campaign manager, Jim Messina, traveled to New York for back-to-back meetings with Wall Street donors, ending at the home of Marc Lasry, a prominent hedge fund manager, to court donors close to Mr. Obama’s onetime rival, Hillary Rodham Clinton. And Mr. Obama will return to New York this month to dine with bankers, hedge fund executives and private equity investors at the Upper East Side restaurant Daniel.

At Salon, Joan Walsh explains that the left is unhappy:

Facing 2012, the president also has to correct the impression that he's the candidate of Wall Street, and that the TARP program that saved the banking system did so by coddling and bailing out bankers who took reckless risks with other people's money. A couple of data points fromCNN's 2010 congressional exit polls stay with me, because they were shocking. Among the third of voters who blamed Wall Street for the nation's economic woes -- which should have been good news for Democrats -- 57 percent voted Republican. Among those who were "very worried" about economic conditions, 68 percent voted Republican. While TARP was a bipartisan program, it's widely associated with Obama and the Democrats. The fact that so many current and former Goldman Sachs bankers helped craft it made people distrust it. With reason: When bailing out AIG and taking on banks' risky mortgages, Geithner gave them full-dollar value on their "losses," while homeowners continued to lose their homes. The administration opposed efforts to permit bankruptcy judges to modify the terms of mortgages, or to impose a moratorium on foreclosures. Too many people on the left and right believe, not without reason, that the White House let the bankers rig the rules of the game to ensure they remained winners, and others lost. We know that Republicans tagged Democrats, unfairly, as the party of the undeserving poor in the 1960s and 70s; now we risk seeming like the party of the undeserving rich, too.

Finally, it doesn't help that the president raised more money from Wall Street in 2008 than John McCain did, or that overall, Democrats got far more contributions from Wall Street than Republicans did that year ($88 million to $67 million). Of course, Wall Street tycoons are furious with Obama for even moderate attempts at financial regulatory reform: The New York Times revealed energetic efforts by the president and his campaign team to woo back petulant Wall Street donors with lavish dinners and special meetings. In a case of bad timing, the next day the campaign sent emails to its small-donor list coming "from" Barack Obama himself, with the subject "Dinner?" The president announced a lottery for donors who give as little as $5 to win a small dinner with him. It was a nice populist touch, but it contrasted sharply with his outreach to the wealthy, and by comparison, it might have sounded stingy. (Also, the line "I want to spend time with a few of you," given coverage of the Wall Street campaign, might not get people fired up. "A few" isn't inspiring. Dreaming of meeting "as many of you as possible during this campaign" would sound more like the old Obama.)