President Obama last week took a break from his phony fat-cat-calling of Wall Street executives, to say what he really means. In an
interview with BusinessWeek, he referred to JP Morgan Chase CEO Jamie
Dimon and Goldman Sachs CEO Lloyd Blankfein as "savvy businessmen." He
went on to defend both men's salaries, comparing them to high-paid
baseball players, some of whom have lousy years but still earn
millions of dollars in salary. In other words, what's the big deal
about a couple of savvy fat cats getting even fatter?
Forget the absurdity of the baseball player comparison (for all their
faults, professional athletes didn't destroy the financial system in
2008). The comment's real measure, I am told, is in what it reveals
about the panic setting in among people at the highest levels of Obama's
political apparatus about their ability to raise money from Wall
Street leading up to 2012.
For all the talk about Obama's grassroots fundraising prowess, a
recent New York Times article pointed out just how big of a role Wall
Street money had played in the Obama presidential money
It was always an odd match: The community organizer who wants to be
president and the Wall Street heavy-hitters who probably never heard
the word ACORN before Obama burst on the scene. But the marriage
seemed to work out well. Many top Wall Street executives were
impressed with Obama's poise during the financial crisis -- after all he
didn't suspend his campaign as did his Republican challenger John
McCain when the financial system was on the verge of collapse in the
Fall of 2008.
And it paid off: Wall Street money came flooding into Obama's coffers
with the blue chip investment bank Goldman Sachs (the same firm that
produced President Bush's treasury secretary Hank Paulson) leading the
way. Goldman executives funneled nearly $1 million during the 2008
presidential election cycle -- then candidate Obama's second largest
source of campaign money at a time; ironically, that the firm, along
with the rest of Wall Street, was imploding.
But there are growing signs Wall Street is now balking at helping
Obama and according to both people who raise money for the president
and the former Obama backers in the financial business, the situation
is far worse than Wall Street throwing a few bucks to Congressional
Republicans as the president approval rating starts to dip, as the raw
numbers in the Times story pointed out.
Jamie Dimon apparently still likes Obama -- he's an unofficial adviser on
finance related measures that has been widely reported, but associates
tell me the "relationship" is wearing thin, particularly after the
president -- sensing falling poll numbers and a public outraged by Wall
Street bonuses just a year after being bailed out by the government --
endorsed a bank tax and then some reform measures advocated by his
economic adviser, Paul Volcker, designed to prevent big banks
like Dimon's from engaging in risky bond trades.
People who know Lloyd Blankfein now go to great lengths to point out
that Blankfein was never really that infatuated with Obama -- he
supported Hillary Clinton for president -- and that it was his No. 2,
Goldman president Gary Cohn, who helped raise all that money for Obama.
Yet, most telling is the story I received from a senior banking
executive who was one of the first people on Wall Street to back Obama
over Hillary Clinton back in 2007. He told me he's so tired of Obama's
policies that demonize the rich that he even urged friends to give
money to Republican Scott Brown, who won Teddy Kennedy's seat and has
become the margin of victory in the Republican attempts to defeat
health care legislation.
Much of this, of course, is anecdotal, though if it doesn't change
soon, it could spell real trouble, according one Democratic fundraiser
who said he is well aware of these problems.
"We'll always have the Hollywood Fat Cats," this person said. But he
added, "the lefties aren't as enthused about the president as they
once were," meaning that a good chunk of those small contributions
that added up big in 2007 and 2008 from energized individuals may be
"Combine that with the Wall Street fat cats showing reluctance and we
have a big problem," he added.
Wall Street power brokers, whether they're Republicans or Democrats
are of course the fairest of the fair-weather friends, and they
usually shift their money to the party in power, so amid high
unemployment, the president's falling approval ratings and big
Democratic losses in New Jersey, Virginia and recently in
Massachusetts, it's not surprising that the bankers are hedging their
bets. I can remember the time that John Mack, the current Chairman of
Morgan Stanley, who had been a prominent fundraiser for President Bush
(he was even considered for a job inside the administration as
chairman of the Securities and Exchange Commission) made huge
headlines when he switched sides and announced his endorsement of
Hillary Clinton for president in 2007, when it became clear the
Republicans were on the ropes.
Mack told me he was doing so purely on the merits -- and I believe him.
Mack became a supporter of a health care reform (he and his wife run a
foundation dedicate to health issues) of the sort that Clinton has
long advocated. But one of Mack's closest advisers is Tom Nides, who
has strong ties to the Democratic Party, and Nides no doubt advised
Mack to back what he believed would be the winning team.
It didn't quite work out the way Nides or Mack envisioned as Obama
stole the show, thanks in large
measure to Dimon, the good people at Goldman Sachs, and assorted other
top banking players from Larry Fink at Blackrock, to Greg Fleming who
now works for Mack at Morgan Stanley as one of the top executives
And thanks to many of the president's policies, the fat cats got even
fatter once he took office even as Main Street businessmen were
promised sky-high tax increases to pay for all the hope and change
Obama planned during the campaign, from cap-and-trade energy policies
to universal health care. Despite growing bank profits, the bailout
mechanisms put in place by the Bush administration remain in place to
this day; indeed some of the measures have been enhanced by the
president's Treasury Department, run by Tim Geithner, a long time
bureaucrat who is as close with the Wall Street in-crowd as anyone in
government. Goldman Sach's now infamous $20 billion bonus pool just
one year after it accepted federal bailout money is the direct result
of its ability to feast off these giveaways; it can borrow cheaply
thanks to near zero interest rates produced by the Fed but supported
by the president, and Geithner & Co's designation of Goldman as a
systemically important bank that's "Too Big To Fail."
All of which makes you wonder why any politician wants to get in bed
with people who after you give them so much, will screw you the minute
the political wind changes direction. But maybe that's what the
president meant when he called Dimon and Blankfein "savvy