Financiers Ditch Obama

by Matthew Shaffer

During the Bush presidency, liberals were dismayed at conservatism’s popularity with the working class and wondered, “What’s the Matter with Kansas?” But in the 2008 election, conservatives could have asked, “What’s the matter with Greenwich?” Seventy percent of the donations of Wall Street financiers — the cogs and beneficiaries of the free market that Republicans were supposed to defend — went to Democrats. Obama’s presidential campaign relied on heavy monetary and participatory support from Wall Street.

This has quickly changed. Over at Dealbook, Andrew Ross Sorkin has a great column about financiers reversing their support for Obama.

Daniel S. Loeb, the hedge fund manager, was one of Barack Obama’s biggest backers in the 2008 presidential campaign…

So it came as quite a surprise on Friday, when Mr. Loeb sent a letter to his investors that sounded as if he were preparing to join Glenn Beck in Washington over the weekend.

Loeb dwelt more on politics than on returns in his lengthy Second Quarter 2010 Investor Letter (now in wide circulation). He quoted Ronald Reagan and described an “increasingly worrisome landscape of new laws and proposed regulations that are perceived … to promote ‘redistribution’ rather than growth, and are contrary to free market ideals.”

Other converts include Jamie Dimon (CEO of JP Morgan Chase) and Steven A. Cohen (founder of SAC Capital Advisors), both former Obama supporters. Stephen Schwarzman had to apologize for his outburst against Obama’s policies, but still maintains that Obama is bad for business. These aren’t just scattered anecdotes. The shares of Wall Street donations to each party have reversed. “Since June, when the financial regulation bill was nearing passage, Republicans were receiving 68 percent of the donations,” Sorkin reports.  

It shouldn’t be surprising that wealthy businesspeople dislike the tax, growth, and public-sector-spending policies pushed by Obama. The curiosity is why they once supported him. (For a start, see Kevin Williamson’s great explanation of how Democrats won Wall Street in 2008.) In response to this puzzle, Sorkin relays the “prevailing view” that financiers were originally in thrall to Obama’s appeal to their egos.

Mr. Obama was viewed as a member of the elite, an Ivy League graduate (Columbia, class of ’83, the same as Mr. Loeb), president of The Harvard Law Review — he was supposed to be just like them. President Obama was the “intelligent” choice, the same way they felt about themselves.

Wall Street’s support for Obama was tribalism and identity politics. Financiers shared Obama’s diction, credentials, clothing brand, tastes, and reflexive aversion to the “guns and religion” of the hinterland. But now things are so dire that economic policy has trumped cultural identity.

Democrats are already troubled by the “unprecedented” popular swing against them. These conversions among the financial elite could be serious trouble for Democrats hoping to fund more campaigns from Greenwich.

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