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| Thousands listen to President Barack Obama's remarks at the National Prayer Breakfast. (Photo credit: Wikipedia) |
Obama lost the support of many bankers in the aftermath of the 2008 financial crisis and the passage of the 2010 Dodd-Frank financial reform law, which sought to shore up the financial system but also cost banks billions of dollars in annual profit.
The Democratic president has openly stated his distaste for "fat cat bankers" who "don't get it", and bankers fears more losses ahead if they cannot influence how the Dodd-Frank rules are implemented.
"He will continue to increase regulation, demonize and vilify businesses, and spend a lot of money, and tax people, and so forth," said Dick Kovacevich, a former Wells Fargo CEO and supporter of Republican challenger Romney. Wall Street firms are also worried about Elizabeth Warren, whose victory in the Massachusetts Senate race may galvanize her to push for more regulations on bank lending to protect consumers. Warren was instrumental in creating the Consumer Financial Protection Bureau, which critics say could weigh down the economy with new regulations.
"I think the Obama win, along with Elizabeth Warren, will lead to more accountability and tighter regulation on Wall Street," said Chris Tobe, who advises pension plans as a principal at Stable Value Consultants and is a trustee of the Kentucky state pension fund. "Especially after a big shift to Romney from Wall Street, Obama I believe will be less likely to hold back on regulation this term."
People working in the U.S. securities and investment industry gave $20 million to Romney's campaign, versus $6 million to Obama, according to the Center for Responsive Politics. Four years ago, Obama received $16 million and Republican nominee John McCain only attracted $9 million.
"I voted for Obama in 2008 but obviously believed that Romney would be better able to handle the problems that we're confronting," said Scott Sperling, co-president of private equity firm Thomas H Lee Partners. "It is incumbent on us to work with the administration in a productive way to deal with these issues." Some banking industry lobbyists say their focus will be on the key regulators Obama is expected to name in his second term.
Among the financial industry's top complaints are the Volcker rule, which prevents banks from making big bets in financial markets with their own money, and the Durbin amendment, which limits the fees they can charge merchants for processing debit-card transactions.
Banks also want to scale back capital requirements, which cut into the returns banks can earn on their equity capital.
As key details of Dodd-Frank have yet to be ironed out, the banks need good relations with regulators to influence their interpretation of the rules.
Chairmen often determine agendas at agencies such as the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), so Obama's choices to fill any open spots could affect how quickly new rules are rolled out. ... Continue to read.
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