In recent years, Democrats were the party of choice for Wall Street's deep-pocketed masters of the universe. In March 2008, the Los Angeles Times proclaimed that Democratic presidential candidates were the "darlings of Wall St." The finance, insurance, and real estate, or FIRE, sector gave $10 million more to Democratic presidential candidates in 2008 than their GOP counterparts. And in 2009, 98 percent of donations from the top ten hedge fund managers went to Democrats.
But, as Peter Stone and Michael Isikoff report on Wednesday, the love is gone between Wall Street's high fliers and the Democratic Party. The title says it all: "How Wall Street Execs. Bankrolled GOP Victory." According to campaign finance data, a clutch of wealthy hedge funds injected $10 million into Republican campaign committees in the run-up to the midterm elections in November. Not only did hedge funders write some big checks, Stone and Isikoff found, they also "held multiple fundraisers and coordinated strategy to direct what appear to be unprecedented sums into the coffers of GOP and allied political committees."
The animus between Barack Obama's party and Wall Street isn't hard to grasp. There's been no shortage of public anger at Wall Street over issues like undercutting financial reform, six- and-seven figure bonuses during the recession, and the taxpayer-funded bailouts of the nation's largest banks. At times Obama has fed into that outrage, railing against "fat cat bankers" and renegade "speculators" on Wall Street. That anger helped propel a financial regulatory reform bill through Congress last summer, a bill that nearly all of Wall Street opposed. That bill, which the GOP also fought again, is largely the reason the Democrats' ties to big finance have frayed in the past year.
To illustrate just how much influence Wall Street can have on an election, Stone and Isikoff point to the reelection of Rep. Scott Garrett (R-NJ):
As it became increasingly clear late last summer that Republicans were likely to capture the House, the partners at Elliott Management Corp., a $17 billion Wall Street hedge fund that specializes in distressed foreign debt, mobilized to boost Garrett's political fortunes. One of the firm's senior officers threw a fundraiser for Garrett. The firm's executives and one of their spouses wrote checks totaling $195,800 to two of the congressman's political fundraising committees, campaign records show.
Of that amount, $45,000 was donated by nine Elliott executives to the congressman’s leadership political action committee Supporting Conservatives of Today and Tomorrow. As first reported by the The Record newspaper, another $150,800 was donated to a newly created entity called the Scott Garrett Victory Committee, which was registered by a GOP fundraiser using a post office box in Athens, Ga...
Elliott executives—one of whom wrote a check for $35,000—ended up providing about 96 percent of all the funds raised by the Garrett committee, according to the review of campaign records by CPI and NBC.
Garrett coasted to victory on November 2, trouncing his opponent by a two-to-one margin.
There's plenty more in Stone and Isikoff's investigation, including a breakdown of all the big hedge fund managers who made sure the GOP crushed the Democrats in the midterms. If you want to truly understand how the GOP won the most House seats in an election since World War II, then you need to read this story.
Of course, with a wave of new Republicans starting their new jobs on Wednesday, Wall Street's donor will be expecting them to return the generosity. Number one on the list: Repealing the Dodd-Frank financial reform bill.