WASHINGTON -- After a year of being pilloried and persecuted in Congress, many of Wall Street's donors have ended their rocky, odd-couple relationship with the Democrats and closed their checkbooks.
The news that a growing number of Wall Street fat cats are no longer giving money to the Democratic House and Senate campaign committees is the latest in a lengthening saga of bad news for the Democrats who face what could be catastrophic losses in the midterm elections.
Since the 2008 election, Wall Street tycoons who helped elect Barack Obama and bankrolled the Democrats' gains in Congress have become the Democratic party's and the president's favorite whipping boys. The financial industry was to blame for the subprime mortgage catastrophe. It was responsible for the recession. It bore the blame for the collapse of major financial institutions.
In all of Barack Obama's campaign speeches, you would have to search high and low to find him blaming buyers who bought a home that was beyond their means, buyers who made no down payment or buyers who lied about their income. He never blamed the reckless use of adjustable-rate mortgages that contained interest rates that would soon be beyond their means. You won't find any evidence of Obama pointing the finger of blame at the two corrupt government mortgage giants, Fannie Mae or Freddie Mac, who bear much of the blame for the subprime scandal that has cost taxpayers untold billions of dollars in bailouts that will never be repaid.
Democratic leaders in Congress were equally myopic about the mortgage scandal, blaming it almost wholly on Wall Street, the one sector of the economy that had long eluded their efforts to engulf it in a thick web of suffocating government regulations.
Now the Democrats are on the brink of achieving their long-sought goal in the financial regulatory reform bill, which will create a powerful new federal agency with free rein to impose whatever regulations it deems necessary -- plunging the markets into uncertainty and fear.
That was the last straw for many Wall Street donors who had fattened his campaign with tens of millions of dollars in contributions, and have been a major funding source for the Democratic Senatorial Campaign Committee and Congressional Campaign Committee. The money flow has dropped significantly, according to a fundraising analysis by the Washington Post.
The two campaign committees have seen a 16 percent decline in overall contributions -- raising $49.5 million in this election cycle from donors giving $1,000 or more, compared with $81.3 million at this point in the 2008 election. "Almost half of that decline in large-dollar fundraising" came from New York, the center of the financial industry, the Post found. Among the Wall Street titans who have pulled the plug:
-- Jamie Dimon, head of J.P. Morgan Chase, who has maintained an especially close relationship with Obama. He gave $65,000 to the Democratic committees in 2006 and 2008, but has given nothing to them in this cycle. And in a not-so-veiled sign of his displeasure with the president, he sent a $2,000 check to Republican Rep. Mark Kirk's campaign for Obama's former Senate seat.
-- Leon Black, co-founder of Apollo Global Management, a $53 billion private-equity firm, and his wife, Debra Black. They gave over $200,000 to the Democratic committees in the last two elections. This year: zero.
-- Lloyd Blankfein, chief executive officer and chairman of Goldman Sachs, gave $50,000 to the Democratic campaign committees in the 2006-08 election cycles, but has given nothing this year.
This means the Democrats will have a lot less money to spend in the next four months to defend dozens of very vulnerable House and Senate seats they are now in danger of losing.
Throw in a weak, jobless recovery, an unemployment rate that is running between 9 percent and 14 percent in more than two dozen key election states, a volatile, bearish rollercoaster stock market, and an angry, anti-Democrat electorate -- and it's clear that Obama and his party are in deep trouble. The Gallup Poll this week showed Obama's job approval rating has fallen to 44 percent, a 52-week low. So with his Wall Street supporters deserting him and his party in droves, and business leaders around the country lobbing broadside attacks on his economic policies, Obama was suddenly reinventing himself this week as a born-again free trader, pushing long pending free-trade agreements hammered out under George W. Bush that he criticized throughout his campaign and has largely ignored until now.
In a West Wing dog-and-pony show Wednesday to demonstrate that he wasn't as anti-business as his critics maintained, Obama brought in a parade of Fortune 500 CEOs, naming some of them to an Export Council to double exports over the next five years. He embraced the South Korea free trade pact that Democrats have blocked in Congress, along with pending pacts with Colombia and Panama. "Export growth leads to job growth and economic growth," Obama said. Bush couldn't have said it any better. But it was all defensive political posturing that will hardly change any minds on Wall Street or Main Street. There are the draconian tax hikes on investors and small businesses at the end of the year, and an ocean of punishing and costly regulations, all of which will impede economic growth and new job creation for years to come.