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Robert Wolf, Obama's Top Wall Street Ally, Endorses Tax Hikes For Rich

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WASHINGTON -- Wall Street's hostility toward President Barack Obama has been playing out for years in the form of extreme rhetoric and lopsided campaign contributions benefitting Mitt Romney. But Obama's reelection has amplified the voice of his top ally in the financier class, who is now struggling to remind his banking brethren that the president largely agrees with them on most public policy issues.

In an interview with HuffPost Live, Robert Wolf, former chairman of the Americas for Swiss banking giant UBS, said that the election should end the verbal abuse directed toward Obama, and that most financiers are generally sympathetic to Obama's policy platform -- including a deficit reduction plan that pairs spending cuts with tax increases.

"I would say as a guy who is probably the closest advisor to the president who was on Wall Street, I would say that during campaign season there is always a lot of rhetoric back and forth. The campaign is over, the country has spoken and the President has won," Wolf said. "Wall Street and the president align on many things. One, we all believe that there needs to be fiscal responsibility and everyone is in favor of having a fiscal deal that is balanced. I think if you asked Wall Street today, 'Do you think revenue should be on the table?, the answer would be, I would say 99 percent of the people would say, 'yes.'"

WATCH a clip from Wolf's HuffPost Live interview above, or view the entire segment below.

Wolf and Obama are close. During the 2008 financial collapse, Wolf counseled then-Sen. Obama on the meltdown, and was eventually named to Obama's Jobs Council, alongside CEOs from General Electric and Xerox. He left UBS this summer, after taking flak from the company for press appearances in which he discussed his relationship with Obama.

Wolf also told HuffPost Live that he expects the capital gains tax rate to increase. Former President George W. Bush cut capital gains to 15 percent, far lower than the 35 percent tax rate that currently applies to the ordinary income of wealthy Americans. The move was a major boon for the wealthy, as 50 percent of all capital gains -- increases in the value of investments -- flow to the richest 0.1 percent of taxpayers, according to The Washington Post.

"The private sector probably has an awareness that the capital gains rate will likely go back to somewhere around the low-20, maybe 20 percent, 22 percent, in that range," Wolf said. "I don't think a lot of people have a significant problem with being in the low-20s. Most people could live with where we were during the Clinton era, where he had great growth and we had a balanced structure with respect to our spending and our revenues."

But Wolf, who now runs the consulting firm 32 Advisors, has his work cut out for him selling that to the world of finance. Many bankers remain critical of Obama, at least in part over misperceptions about his policies and the political process.

For the first time since 1996, Wall Street did not back the election winner. From 2000 to 2008, the winner of the White House was also the top recipient of contributions from the finance, insurance and real estate industries.

In 2012, Wall Street went all-in with Romney -- one of their own -- contributing a record $52 million to his campaign through Oct. 17, according to the Center for Responsive Politics. Wall Street's Obama largesse cratered, compared with 2008. Obama received only $18.7 million from the finance, insurance and real estate sector through Oct. 17, compared with $43 million for his 2008 campaign.

For much of high finance, Obama's original sin is rhetorical -- telling 60 Minutes in 2009 that he didn't run for president to help out "a bunch of fat cat bankers." By 2010, hedge fund managers and bankers were complaining about Obama as a matter of course. SkyBridge Capital managing director Anthony Scaramucci told Obama at a CNBC town hall that he felt "like a pinata" that was getting "whacked" by the president all the time. Blackstone CEO Steven Schwartzman said that Obama's tax proposals for private equity managers were akin to "Hitler's invasion of Poland."

These complaints largely ignored Obama's policy record, which has been generous to Wall Street. He continued George W. Bush's bank bailouts that subsidized not only bank creditors -- a common feature of financial rescues -- but shareholders, an unusual class of beneficiaries. Since the highest-paid bankers and traders are compensated largely in stock, this feature was directly beneficial to bankers themselves, not merely their firms. Obama also chose not to nationalize or break up any of the banks that were receiving aid, and pushed to include a special provision in the economic stimulus legislation that protected the bonuses of bankers who worked at bailed out firms.

But many Wall Streeters have had trouble distinguishing between rhetoric and policy, and continue to make factually confused critiques of Obama's presidency.

"The problem is Dodd-Frank and the president, to some extent, used this broad brush with financial reform and they didn't focus on the real specifics," said former Lehman Brothers vice president Lawrence McDonald in an interview with HuffPost Live, arguing that Obama has allowed regulatory agencies to be dominated by "academics and bureaucrats" with no professional finance experience.

McDonald said that Obama should have pushed to expedite a new authority for unwinding failing banks, and required the unregulated derivatives that brought down AIG to be traded over an exchange. Although Dodd-Frank requires both, neither have been implemented. When HuffPost Live noted that banks had been lobbying aggressively to delay these measures, McDonald pushed back.

"You want to say it's lobbying, I want to say that's B.S.," McDonald said. "The reason it's taking such a long time is there aren't people from Wall Street that are actually in there."

According to the Sunlight Foundation, representatives of the 20 largest banks and bank lobbying groups have met with the Treasury Department, Federal Reserve and Commodity Futures Trading Commission more than 1,200 times since Dodd-Frank passed to discuss new regulations. During these meetings, bank lobbyists frequently request that agencies conduct lengthy formal economic studies of potential rules before putting them into effect -- a process that significantly delays implementation. Bank lobbyists have also successfully lobbied Congress to limit funding to both the Securities and Exchange Commission and the Commodity Futures Trading Commission, which makes it harder for agencies to act with appropriate speed.

Financial reform advocates frequently decry the presence of Wall Street professionals at bank regulators. Former Treasury Secretary Hank Paulson's covert meetings with his old company, Goldman Sachs, during the financial crisis raised significant ethical questions, and the revolving door between Wall Street and Washington was a contributing cause of the financial crisis, creating a culture of leniency at regulatory agencies and in Congress.

But much of the campaign cash disparity from finance stems from bankers' personal identification with Romney's Bain Capital career, according to Wolf.

"Romney's from the Wall Street environment. I mean he's a private equity guy, he knew a lot of the people, he's more from that environment," Wolf said. "I mean, I have not polled each of my Wall Street friends, you know, why did you decide to go Romney or not. My view is everyone has a vote. Okay, they use their vote and the people spoke and that's why President Obama will have another four years."

Wolf was a bundler for the Obama campaign, orchestrating more than $500,000 in contributions. Meanwhile, McDonald raised money for the reelection bid of Sen. Scott Brown (R-Mass.), who lost to Elizabeth Warren (D). Warren previously headed the Congressional Oversight Panel for the Troubled Asset Relief Program and is a vocal critic of Wall Street excess and defender of consumer protection rules. Although Obama passed her over for a post heading the new Consumer Financial Protection Bureau -- an agency that is her brainchild -- Wall Streeters often view her and Obama as cut from the same cloth.

"People like Elizabeth Warren have gone after Mastercard and Visa that had nothing to do with the financial crisis," McDonald told HuffPost Live. "That to me upsets me because this is so important. She is going after the least important things. … I think her brush -- because the Obama administration won in a way powerfully there was a mandate, right, there was political capital. I think it was wasted and spread out too thin across all of Wall Street."

Warren had nothing to do with the Federal Reserve's 2011 crackdown on debit card swipe fees charged by Visa and Mastercard that McDonald referred to. But his inclination to blame Warren for unrelated banker complaints is symptomatic of Wall Street's antagonism towards public figures who criticize even obvious financial abuses. Warren pushed successfully for the Consumer Financial Protection Bureau in the wake of a massive subprime lending scandal in which predatory lending was rampant. When she was establishing the CFPB, her first policy move was to create a simple disclosure form that would make the terms of any mortgage immediately obvious to borrowers. This basic transparency has long been advocated by liberals and conservatives alike. But many on Wall Street have taken this message of needed reform as a personal insult.

"On the rhetoric, we need to move forward," Wolf said.

Also on HuffPost:

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