Romney Might Have Followed Wall Street’s Money Too Far

by Wendy Simmons | October 18, 2011 2:06 pm

Republican presidential hopeful Mitt Romney has raised about six times as much cash from the employees of Wall Street firms as has President Barack Obama, according to a New York Times analysis of recent campaign finance filings[1]. This discrepancy is particularly noteworthy, given that the financial services industry was a major backer of Obama’s 2008 campaign. In fact, Goldman Sachs (NYSE:GS[2]) was Obama’s biggest supporter in the private sector: Its workers coughed up $1 million last time around.

So far in this election season, that same group has offered up a mere $45,000 for the president, dwarfed by the $350,000 they have given to the Romney campaign.

What’s changed in three years? Bear with me as I point out the obvious.

Remember that most of the Wall Street money Obama received came before Lehman Bros. collapsed in September 2008, setting in motion a financial death spiral. Obama’s response to the collapse of the financial industry could not have been known by those working in the industry before it actually cratered.

The response came in the form of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which aims to address the structural problems that led to the credit boom and bust. It is a massive piece of legislation, the details of which still are being written by the bureaucracy. All of the GOP presidential contenders have made repeal of Dodd-Frank a major part of their platform, second only perhaps to the repeal of Obama’s other major accomplishment — health care reform.

The full effects of Dodd-Frank will not be clear for some time, but it is becoming painfully obvious to the financial service industry that profits will be squeezed and the entire sector likely will shrink. While some (e.g., Paul Krugman) argue that less finance is exactly what we need, others, like Mitt Romney and his GOP rivals, contend that the regulatory burden imposed by Dodd-Frank is too costly, will constrain credit and will dampen growth.

Romney’s empathy for Wall Street on this issue clearly has worked, as his financial records show. But it could prove to be a big problem for him in the general election.

As the “Occupy Wall Street” movement swells, political players cannot help but take a position on the leaderless (and so far, agenda-less) worldwide social protests that are voicing dismay over massive economic inequality and just generally bashing big banks. House Majority Leader Eric Cantor, R-Va., already has referred to the group as a “mob,” and Romney has accused the protestors of engaging in “class warfare.”

Although it still is early, right now many Americans are sympathetic to the grievances of the protestors. Polling data on this nascent group, however, is mixed. According to a recent NBC poll, 53% of Americans approve of Occupy Wall Street[3], compared to the 25% of Americans who approve of America’s other populist movement — the Tea Party. A Gallup poll, however, found only about a quarter of the public agreed with Occupy Wall Street’s goals[4].

The 20-percentage-point difference can be explained by the wording of the question. In the NBC poll, the interviewers were given a description of the protests; in Gallup’s version, only “Occupy Wall Street” was mentioned. The difference is more than just a polling quirk. It suggests that people, when informed about the protests, as more likely to agree with the protesters. If the group has staying power, it might garner more public support. (Of course, if the protesters actually get more specific, they also likely will lose a lot of support.)

If Mitt Romney wins the Republican primary and begins the traditional move to the “center” during the general election, he will have a tough time explaining his deep ties to Wall Street and repudiation of a popular piece of financial reform. After all, Dodd-Frank is loathed by professional Republicans but supported by most Americans.

Obama’s biggest obstacles to re-election are a dismal economy and lack of enthusiasm among his supporters. The “occupiers” of Wall Street cannot do anything to create jobs, but they might give Democrats something to get excited about[5].

And Romney might find himself full of Wall Street money at exactly the wrong moment.

As of this writing, Wendy Simmons did not own a position in any of the aforementioned stocks.

  1. recent campaign finance filings:
  2. GS:
  3. 53% of Americans approve of Occupy Wall Street:
  4. a quarter of the public agreed with Occupy Wall Street’s goals:
  5. something to get excited about:

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