Wall Street Ends Its Obama Love Affair

Charles Gasparino Fox Business March 19, 2010

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By Charles Gasparino FOXBusiness .ybuzz { float: right; margin-top: -4px; margin-left: -2px; } // get ybuzz li to show up properly on the right

Wall Street's love affair with President Obama is officially over "â? at least for now "â? with the CEOs of the biggest Wall Street firms, big banks and large financial institutions expressing their dismay over everything from the president's anti-Wall Street rhetoric, his calls for new regulations on the financial industry and his initiatives that will lead to a takeover of the health-care system, people at the big firms tell FBN.

To be sure, after jumping on the Obama bandwagon during the 2008 presidential campaign in a major way, the relationship between Wall Street and Obama has been strained in recent months, particularly after the president referred to bankers as "fat cats"? in a television interview in December and after Republican Scott Brown's surprise victory to take over the Senate seat held by Democratic Party stalwart Teddy Kennedy in January, where the president immediately endorsed a plan to restrict certain types of lucrative trades.

Some of Wall Street's most prominent executives, such as JPMorgan (JPM) CEO Jamie Dimon, Lloyd Blankfein, the CEO of Goldman Sachs (GS), and Larry Fink, the CEO of money management powerhouse BlackRock (BLK), are all prominent Democrats, and in Dimon's case had advised the president directly on economic matters. Morgan Stanley (MS) chairman John Mack was once a supporter of former Republican president George Bush who crossed party lines and voted for Obama

But senior officials at the big firms say their relationships with the White House are now at a critical stage, with top executives openly saying that they doubt they will support the president as they did in 2008. During the presidential campaign Wall Street firms such as Goldman overwhelmingly supported the president despite his liberal voting record as a U.S. Senator over his Republican challenger John McCain. Goldman, for instance, gave four times more money to Obama than it did for McCain, according to campaign contribution filings.

"If the election was held today, Obama would lose the senior Wall Street executives who had considered themselves Liberal Democrats,"? said one senior Wall Street executive who frequently meets with the CEOs of the top firms. "They thought they were voting for a moderate and now they think they've gotten something else."

Maybe the biggest surprise among the growing list of CEOs suffering buyer's remorse is Dimon, according to people who know the CEO's thinking. Dimon is a committed Democrat, and has a good personal relationship with the president's chief of staff Rahm Emanuel. If asked in public about his views on Obama he would say he's still supports the president. But in private consultations he has said he's disappointed with several aspects of the president's big government agenda, not to mention his open hostility toward Wall Street executives who needed to be bailed out by the government during the financial crisis and who are now paying themselves huge bonuses, people tell FBN. Dimon, unlike other Wall Street CEOs, steered his firm successfully through the financial crisis because he stayed clear of investing in toxic assets.

According to one Wall Street CEO who spoke on the condition of anonymity, the Obama as president is much different than Obama the candidate who wooed top executives in 2007 and 2008. "He came across as nothing short of a moderate,"? said this CEO, who supported the president during the campaign. "On health care he always talked about the need to lower costs, never about a massive new entitlement. Federal spending, he always spoke about the need to level the playing field between the super rich and the poor, not massive income redistribution."?

Of course, Wall Street and Obama may kiss and make up. Emanuel has been dialing senior executives in recent weeks looking to soothe tensions, FBN has learned. And Wall Street loves to curry favor with winner so it can shape legislation that effects its bottom line. The big firms have been spreading contributions in recent months to Republicans, but if the president popularity comes back, Wall Street will likely support his re-election bid with big bucks as they did when he ran the first time in 2007 and 2008.

But with his move to socialize medicine, and his prodding of Senator Dodd to reform the financial industry, which includes higher taxes on firms and a new consumer protection agency, finding common ground may be difficult. "My view,"? said another CEO. "The friendship is over."?

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