Wall Street Executives Thrive Under Obama But Still Won't Support Him
WASHINGTON -- They bristled when he called them "fat cats." They fought every step of the way, unsuccessfully, to prevent his financial reform bill from becoming law. And some who supported him in 2008 are now throwing their money at Republican presidential candidate Mitt Romney.
But for all their grumbling, Wall Street executives have fared exceptionally well under President Barack Obama. In fact, some of Wall Street's highest earners are making as much now, if not more, than they did under President George W. Bush.
Take Wells Fargo president and CEO John Stumpf. He made $18.9 million in 2010, compared to $21.3 million in 2009, $13.8 million in 2008 and $12.6 million in 2007. JPMorgan Chase CEO Jamie Dimon has also watched his paychecks fatten over the past three years: He took home $20.8 million in 2010, compared to $1.3 million in 2009 (when some bank executives took a pay cut because of the financial crisis), $19.7 million in 2008 and $27.8 million in 2007.
The list goes on. Goldman Sachs CEO Lloyd Blankfein made $14.1 million in 2010, compared to $862,657 in 2009, $1.1 million in 2008 and $70.3 million in 2007. Bank of America president and CEO Brian Moynihan earned $10 million in 2010, compared to his predecessor Ken Lewis, who made $4.2 million in 2009, $9.9 million in 2008 and $24.8 million in 2007.
Even Vikram Pandit, the CEO of Citigroup who worked for two years for just $1 a year as a symbolic gesture after the financial crisis, was awarded a $23.2 million retention package in May 2011.
Banking elites have thrived under Obama for a number of reasons. For starters, Justice Department prosecutions for financial fraud are at a 20-year low, despite what many claim is a strong pattern of financial-sector misconduct in recent years. The Securities and Exchange Commission has brought few civil fraud cases against big banks, and even those cases were settled so cheaply that federal Judge Jed Rakoff has held up or rejected the deals.
Obama has also kept tax rates low. He extended the Bush tax cuts of 2001 and 2003, which means Wall Street executives' salaries are taxed at 35 percent and their capital gains income -- where the bulk of their take-home pay comes from -- is only taxed at 15 percent. And of course, many big banks are still standing because the president forked over tens of billions in taxpayer dollars to bail them out during the financial crisis that their industry fueled. Amid all of that, Obama didn't touch executive bonuses; in fact, he defended their right to keep them.
"I, like most of the American people, don't begrudge people success or wealth. That is part of the free market system," Obama said, during a Feb. 2010 interview with Bloomberg, of the $17 million bonus awarded to Dimon and the $9 million to Blankfein that year.
Despite thriving under his polices, none of these executives is rallying behind Obama. Even those who identify as Democrats are signaling they'll support Romney in 2012.
Many are angry about Obama's populist rhetoric about the wealthy, since they translate it as code for Wall Street, where many of the richest Americans work. Some bank executives who were previously on good terms with Obama fumed when he said in Dec. 2009, in a moment of frustration over banks not freeing up enough credit to businesses to create jobs, that he didn't become president to help out "a bunch of fat cat bankers on Wall Street."
"They're still puzzled why is it that people are mad at the banks. Well, let's see," Obama said at the time. "You guys are drawing down $10, $20 million bonuses after America went through the worst economic year that it's gone through in -- in decades, and you guys caused the problem. And we've got 10 percent unemployment."
Dimon, a lifelong Democrat once rumored to be on Obama's short list for Treasury Secretary, blasted Obama's "fat cat" remark, saying he didn't think "the president of the United States should paint everyone with the same brush." He also complained last month that the public is giving Wall Street too hard of a time. "Acting like everyone who's been successful is bad and that everyone who is rich is bad -- I just don't get it," he said at a conference.
In a sign that their frustrations may be turning into retaliation, Dimon was spotted last fall meeting privately with Romney. A JPMorgan insider told The New York Post at the time that Dimon hadn't made any contributions to Obama in that election cycle but had been meeting privately with Republican presidential candidates.
Dimon isn't the president's only detractor. Blankfein, who donated $4,600 to Hillary Clinton's presidential run in 2007 and whose company contributed more than $1 million to Obama's 2008 campaign, has said he will support Romney in 2012, according to a Fox Business News report. Goldman Sachs is now the top donor to Romney's 2012 campaign, too.
Moynihan stopped short of a direct challenge to Obama. In an Oct. 3 interview, the president told ABC's George Stephanopoulos that banks don't have an "inherent right" to a "certain amount of profit." Two days later, Moynihan replied in a CNBC interview that he has "an inherent duty as a CEO of a publicly owned company to get a return for my shareholders" and that his customers "understand we have a right to make a profit."
Moynihan's comments came at a time when Bank of America was defending its decision to impose a new $5-per-month debit card fee on its customers. They scrapped the fee a month later, however, in the face of widespread criticism.
Big banks aren't the only Wall Street entities that have prospered under Obama's policies. The government bailouts resulted in shielding hedge funds and private equity firms from losses if they owned stocks or bonds issued by big banks. Low tax rates on capital gains and carried interest also mean these executives are taking home a greater share of their paychecks than their workers who are paid traditional salaries. And while Obama's proposed millionaire surtax has rankled many of these high-earners, the reality is that he passed up the chance to let their tax rates increase in late 2010 when he cut a deal with Congressional Republicans to preserve the low rates.
Zach Carter contributed to this report.
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First Posted: 01/30/2012 4:43 pm Updated: 02/ 2/2012 4:15 pm