The Wall Street bankers are making it personal. They’ve bailed on Barack Obama.

Mitt Romney has said he’d like to repeal the Dodd-Frank Act. That seems to have been enough to cause former Obama supporters like Jamie Dimon of JPMorgan Chase, whose former vice chairman Bill Daley served in the Obama administration, to switch sides. Morgan Stanley and Citigroup employees have also stopped supporting Obama to the extent they did so in 2008.

Presidential campaign contribution data compiled by the Center for Responsive Politics reveals a dramatic shift by megabanks to support Romney over Obama, who enjoyed their companionship and most of their money in 2008. Financial services PACs, individual PAC members, financial service firm employees, and families of financial services employees have contributed $1.6 million to date to Mitt Romney’s campaign.  Four of the top five firms whose employees and PACs contributed to Romney were on Obama’s top 20 contributors list instead in 2008. Only one of those financial institutions is still in Obama’s top 20 in 2012 – Goldman Sachs – and it’s all the way down the list, at No. 19. It was No. 2 in 2008.


Is Dodd-Frank the real reason, or enough of a reason, for The Street to abandon Obama? Taking risk out of the financial system – big-bank profits be damned – was an intended feature of the Dodd-Frank bill, not a bug. The objectives of financial reform shouldn’t suddenly be a surprise to the financial services industry. Are these bankers really nervous they’ll have to start making money the old-fashioned way – earning it? Isn't the political and economic environment, including the European crisis, rather than regulatory uncertainty the real reason megabanks are pulling back on bonuses and grabbing back unearned compensation?

The FDIC, Federal Reserve, OCC and SEC didn’t release their coordinated proposal for implementation of the dreaded Volcker Rule until October 2011, almost a year and a half after the Dodd-Frank law was passed. The CFTC just released its proposal on Jan. 18. The endgame is still not known.

The Dodd-Frank reforms, especially the Volcker Rule, may scare the living bejesus out of certain bankers. But we’ve a long way to go, in my opinion, before any reforms that may be enacted can be blamed directly for weakness in bank earnings or used as justification for lower bonuses. According to Davis Polk’s Dodd-Frank Progress Report, as of Feb. 1, only 23.25%, or 93 of the 400 total rulemaking requirements, have been finalized and only 39.5% have been proposed. More than one-third of the required rules, 149, have not even been proposed and more than 50% of the rulemaking requirements have missed the legal deadlines for proposals.

In addition to delays in Dodd-Frank implementation thanks to effective financial services industry lobbying, there’s a multistate settlement agreement on fraudulent foreclosures that gives banks immunity from further prosecution over robo-signing. In return, the banks will pay those borrowers about $2,000 apiece. Over the next three years. The settlement also requires the banks to make principal reductions funded primarily by investors who bought mortgage-backed securities, not the banks that originated the mortgages based on inflated appraisals that justified the inflated loans in the first place.

The SEC is also helping big banks that will be accused of wrongdoing by filing briefs in support of Citigroup’s desire to keep settling mortgage-related claims without admitting any guilt. They never have to say they’re sorry.

The Justice Department has not filed any charges arising from the SEC cases against banks or bank executives for bad conduct related to the sale of mortgage securities. The DOJ closed its criminal investigation of Countrywide, one of the largest subprime mortgage lenders, and its former chief executive, Angelo Mozilo.

I don’t see much that these bankers should be afraid of. On the contrary, I think the Obama administration has been a great friend to giant banks even though it’s getting tougher for the administration to ignore the 99% of the population they said they would represent when elected.

With nine months to go until the election, the TBTF bankers are voting for “business as usual” with their wallets. But they had better manage their risk and develop a contingency plan. Their big bet on Romney to maintain the status quo might not pan out and they’ll be stuck with Obama. Maybe that’s not as bad an outcome as the complainers would have you believe. 

Francine McKenna writes the blog re: The Auditors, about the Big Four accounting firms. She worked in consulting, professional services, accounting and financial management for more than 25 years.