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Donors at hedge funds are on track to cut their contributions to Democrats by half compared with two years ago, according to the Center for Responsive Politics.
Donors at hedge funds are on track to cut their contributions to Democrats by half compared with two years ago, according to the Center for Responsive Politics. Spencer Platt/Getty Images
There was a time when some of the Democratic Party's most generous benefactors worked on Wall Street — but not this year.
As Democratic candidates and strategists face the Republican surge, they're doing it without the campaign cash that investment banks and hedge-fund investors have normally steered their way.
When Bill Clinton was president, he could talk the talk with the kings of finance, as he did at a Stamford, Conn., fundraiser in 1996. "I thank you for this money," he said. "We will invest it wisely."
And Wall Street went for President Obama in a big way. His campaign pulled in $15 million from the securities and investment sector. Goldman Sachs accounted for almost $1 million of that, according to the Center for Responsive Politics.
But the cash isn't flowing anymore: Wall Street giving overall is down sharply.
Broken Social Contract
At a town hall meeting last week, Obama was challenged by hedge-fund manager Anthony Scaramucci.
"Listen, I represent the Wall Street community," Scaramucci said. "We have felt like a pinata. Maybe you don't feel like you're whacking us with a stick. But we certainly feel like we've been whacked with a stick."
President Obama signs the financial overhaul bill in July. Because of this and other crackdowns, Wall Street donors feel like the social contract has been broken, according to Ross Baker, political scientist at Rutgers University.
President Obama signs the financial overhaul bill in July. Because of this and other crackdowns, Wall Street donors feel like the social contract has been broken, according to Ross Baker, political scientist at Rutgers University. Charles Dharapak/AP
The president suggested that Scaramucci was worried about the wrong pinata.
"This sense of, somehow, me beating up on Wall Street ... I think most folks on Main Street feel like they got beat up on," Obama said.
That's certainly true. Main Street can't forget that Wall Street got a Washington bailout.
But from inside the financial sector, it looks like this: Obama and the Democrats cracked down on bonuses. They pushed the financial overhaul through Congress. They even created the Consumer Financial Protection Board.
Wall Street donors feel the social contract has been broken, says political scientist Ross Baker of Rutgers University.
"They were willing to tolerate the anti-Wall Street rhetoric; they were willing to tolerate some regulatory reform," he says. "But I think they feel the Democrats' blood lust for Wall Street just got totally out of hand, and they're just not willing to reward that kind of behavior."
So Democrats on Wall Street have been sitting on their wallets.
One Little Bright Spot: Aggressive Ads
According to the Center for Responsive Politics, donors at hedge funds are on track to cut their contributions to Democrats by half compared with two years ago. Donors in private equity and venture capital are only slightly less tightfisted this year.
Incredibly, even with these drops in revenue, things could be worse for the Democrats.
So far, at least, Wall Street's Democrats generally are not switching sides and writing big checks to the GOP. The street has plenty of Republican donors to do that.
And it gives Democratic strategists one little bright spot: Baker says it lets Democrats get more aggressive in accusing Republicans of being in Wall Street's pocket. He says he thinks it's useful, "particularly for a party that's desperately looking for weapons to both defend themselves and to fight back with."
In one advertisement, the Democratic Senatorial Campaign Committee targets Republican Senate hopeful Mark Kirk in Illinois, saying big Wall Street firms have invested in him. In another, Washington Sen. Patty Murray takes aim at her GOP challenger Dino Rossi — "the best friend Wall Street and big banks could ever buy."
There will be another five weeks of Wall Street bashing before Election Day. Then, after that, the presidential campaigns are going to come calling on Wall Street. And those alienated Democratic donors will have to decide what to do.