New Wall Street nightmare begins

Its presidential pick loses big, and one of its harshest critics heads to the US Senate. Where do bankers go from here?

By Kim Peterson Nov 8, 2012 2:47PM
Images: Bank Vault (Radius Images/Jupiterimages)Wall Street is in a bit of a political pickle these days. It made a large, risky bet on Mitt Romney's presidential campaign, and now must try to fix its fractured relationship with President Obama.

Even worse, one of its biggest fears has come true -- Elizabeth Warren as Senator -- which may lead to an even bigger nightmare: Elizabeth Warren on the Senate's banking committee.

What's an embattled banker to do? Make nice, and fast. One Wall Street lawyer told The New York Times that the industry "made a bad mistake" in backing Romney so completely. "They are going to pay a price," he said. "It will soften over time, but there will be a price."

Romney's top five contributors were Goldman Sachs (GS), Bank of America (BAC), Morgan Stanley (MS), JPMorgan Chase (JPM) and Credit Suisse (CS).

But as Romney fades into history, Warren is coming on strong. It's kind of amazing to see one woman so completely rattle the industry, but that's what's happening after Warren's decisive victory over incumbent Sen. Scott Brown in Massachusetts. She helped create the new Consumer Financial Protection Bureau, but backed away from it when Congressional Republicans revolted at the idea of her as its first director.

She moved quickly into the political arena. "Wall Street CEOs -- the same ones who wrecked our economy and destroyed millions of jobs -- still strut around Congress, no shame, demanding favors, and acting like we should thank them," she said at the Democratic National Convention. "Anyone here have a problem with that? Well I do."

Now there are two questions surrounding Warren's entry into the U.S. Senate. Will she soften her tone in order to legislate effectively? And will she get a seat on the Senate Banking, Housing and Urban Affairs Committee, which oversees the financial services sector? A senior aide on that committee told Bloomberg that it's not a sure thing, and that a decision won't happen until January.

Senate Democrats, who watched Republicans block Warren from the consumer bureau she worked hard to create, may end up giving her the seat she wants.

But one Hill watcher -- perhaps a lobbyist hoping to sway the situation -- told Politico this week that the Senate Finance Committee would be a better fit. "The banks all have tax issues that are at least as important as regulations, and that's a better committee in terms of fundraising," said the anonymous insider, noting that Warren will be in high demand as a Democratic fundraiser. Plus, placing Warren on the finance committee instead of banking could be viewed as an olive branch of sorts to Wall Street.

That leaves Wall Street's powerful lobbyists with a clear mission: Get Warren as far away from the banking committee as possible.

As for the industry itself? It needs to mend fences with Obama, and then try not to get steamrolled over the next four years. As Warren and other new senators -- including Tammy Baldwin and Angus King -- flesh out their political and legislative ambitions, Wall Street will continue to be a prime target.

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Nov 8, 2012 6:09PM

"When the people find that they can vote themselves money, that will herald the end of the republic."

Benjamin Franklin

Nov 8, 2012 6:09PM
Nov 8, 2012 6:09PM

Here WE go, Same Old BS. If the politicians REALLY CARE ABOUT THE AVERAGE PERSON, they would stop all this BS and protect our interest in this country. That's all they care about is GETTING RE-ELECTED AND KEEP ALL OF THE FREEBIES THAT THEY GAVE THEMSELVES. Sure wish this election would of turned out differently. People don't realize what will happen in the next 4 years.

I feel that my vote was wasted, don't know if I will ever vote again. This system is so CORRUPT.

Nov 8, 2012 6:06PM

We are not after socialism, we just want the banksters to stop robbing us all by dipping into our treasury at every opportunity and then laundering the money through offshore accounts.

The Spire Law Group LLP is already taking these criminals to court. Seeking the return of 43 trillion dollars worth of ill gotten gains. Alot of the Wall Street folks and a fair few higher ups in government have already been implicated and served their deserved subpoenas to appear in court. Now if Ms Warren can join the fight, all the better. I predict that Mr Holder might just find his sorry butt in jail for his part in the theft.

Nov 8, 2012 6:04PM
The best thing for the country IS going over the fiscal cliff in a barrel. It would fix the markets too, since the pain and recovery would be felt top to bottom instead of just the bottom. Denial does not change the facts; ALL tax payers need to pay more (or at least something), and Government  budgets MUST be cut. This teetering on the brink will continue until the facts are collectively accepted and acted upon. Please turn off the TV and/or radio and read the Constitution, especially the fine print.
Nov 8, 2012 6:01PM
"Where do bankers go from here?". Typical left wing comment. It should read "Where does the average American with a retirement account go from here?". A populace deserves the Government it elects. God help us all.
Nov 8, 2012 5:58PM
Obama is not a socialist; Democrats are not socialists; there is not a socialist agenda threatening to engulf the USA. How  with our tax burden near a historic low, and our debt at at an all time high, the idea that revenue increases as part of a fiscal package should be verboten is beyond me. Are those on Wall St., and many posting on this board, so stricken with blind fear that they don't recognize this fact?

There is not a legitimate plan on the table that doesn't include far more in spending cuts than in revenue increases, generally by a ratio of more than 2:1. When you have 16 trillion in national debt, you have to look at both.  I am a small-businessman; I have six employees, up from two in 2008. My wife and I, by President Obama's plan, our due to have our joint income tax rate increase. And, we agree with that. We have planned for it, we can work around it. If much larger businesses and corporations (who are, under the President's plan, in fact looking at a DECREASE to a rate of 28%), are so rattled, so terrified by the possibility of taxes, and their business model can be so shattered by such nominal hikes, then there is a serious problem with their business model.

Wall St. seems to be composed in large part these days by a generations of fearful, spoiled people who are not especially competent at their jobs or real-life economics overall. And many investors these days appear to be alarmists and reactionaries, unsuited to the steadiness and stability long-term investing requires. The cowardice on display is truly astonishing. 

If Wall St. had the fortitude and conscientiousness to manage themselves properly, then we wouldn't have had the enormous meltdown of our economic system four years ago. And it wouldn't have needed to government to come in clean up their mess. Now, like all spoiled children, they are balking and whining at any encroachment on themselves and their perceived rights. Ludicrous. Those who work in the financial hierarchy have a lot to learn from the average American business person about guts, dealing with adversity, and patriotism.
Nov 8, 2012 5:57PM

Why do people think that this is a battle of Wall St. versus Dems?  When the stock market tanks because of liberal policies and "sticking it to the rich", my 401K tanks too. 


My lower-middle class finances are the ones taking the hit for all this bickering.  Thanks a lot.  Guess I need to get on welfare, food stamps, and section 8 housing soon so I can be a stay-at-home bum and leech like they want me to be.

Nov 8, 2012 5:56PM

Like many of you, I believe money should go to those who work for it.  Sitting around, eating pizza, watchng TV, waiting for grandpa to die so you can inherit his stock portfollio isn't work.  Clipping coupons so you can collect stock dividends isn't work either.

People who've been to business school have no idea how to run a business, so what they also do isn't work.  Actually they tend to do more harm than good.  Their "management" is the anti-work.

We need business executives who can think.  Folks who know that without producers there's no product.  No product, no business.  Folks with facts at their disposal, instead of that silly nonsense coming out of business schools.

Nov 8, 2012 5:56PM
Consumer Confidence is the key to everything and right now, after re-electing Obama, everyone with $$ and able to create new jobs are pissed !   Worst possible scenario for creating new jobs. 
Nov 8, 2012 5:55PM
the problem with capitalism is eventually only a handful of people have any money.then the starving masses redistribute the wealth with a gun
Nov 8, 2012 5:53PM
I'm really not worried about the economy and jobs in America.  We can always take in each others laundry.
Nov 8, 2012 5:52PM

"My biggest surprise upon taking office was how little power the president actually has."


George H.W. Bush

Nov 8, 2012 5:51PM
I say as a voter who needs my vote counted and my voice heard, place her at the head of that banking committee as soon as possible, this is the way americans want to see things get done by transparent politicians.  This will help the everyday joe so hats off to the democrats proving they want to get things done for the people on a whole not just for the politicians and the gridlock that the republicians want to put on our heads.  Stop her from heading that committee will prove that the powers to be will never change and move forward.
Nov 8, 2012 5:51PM

Can anyone say "Glass-Steagall Act" ??   This needs to be put back into place and enforced. Without it, or something new,..that says and does the same.,..(AND) is correctly overseen,...these crooks on Wall Street and in Politics will continue to rape our financial system until there is 2 classes left "THE RICH AND THE Poor!" 99% will be POOR! (We are almost there now!).........Waaay too much hidden agendas and loopholes.  Where exactly did all the bailout money go? and how is it being paid back and at what intrest rate??  The people need specifics not meaningless lip service and round about statements about "Change" with no real plan to do it.


All politicians have too much to gain by not resolving these issues and even more by allowing the banks run politics and make policy which has been the way since the start of Deregulation of the people's money and the banks that have it.  U.S. Citizens,..Open your eyes!

Nov 8, 2012 5:48PM
So many Romney supporters still crying.  Still cheering for the economy to fail so they can somehow claim victory.  Did you happen to notice that the stock market doubled from when Obama took office and it dipped below 8000???  Quit pretending that the market is doomed under Obama.  I'm sure you were all proud of what George Bush did to the economy and the market???
Nov 8, 2012 5:48PM
N.U.T.S.   It looks like we´re all going to Canada... before the demonstrations start..and the Army starts rounding up people and send them to concentration camps... there is room for 20  million    Same as Natzi Germany..  And now after all these years I could not understand why the country changed so drastically into a Police state... I turns out the the Busch grandfather was a Natzi and partner of Hitler..
wall street didn't wreck our economy. The government and the fed did.
Nov 8, 2012 5:47PM
This ia a hilarious article.  Wall Street doesn't need to curry favor with the socialists.  Thankfully, the republicans still control the House and they can block most of the "indian warren's" attempts.HAHAHA
Nov 8, 2012 5:46PM
You know, I read these boards often and here is my conclusion: Since 2008, it's Bush's fault, the banks fault, Wall streets fault, Obamas fault, corporations fault, Unions fault, Europe's fault, democrats fault, republicans fault, Federal reserves fault, The middfle Easts fault, foreign oils fault and many others fault. Guess what!!! Congress sets the rules we all play by. They owe the lobbyists big time, the Supreme court says raise all the money you can and the fair election money is meaningless. When Roosevelt was elected for the fourth time, congress set the term LIMIT to ten years for the President. Congress has no term limit for Reps or Senators. They owe the money people not you or me. I have lived from FDR through to Obama and greed and wealth owns this country and we all kept quiet when we had a job, paid the bills, owned a home and mom raised the kids. My friends, today having a job? Paying the bills? Owning a home? Mom raising the kids? When the tax laws gave money to the corporations to ship jobs overseas it was the beginning of where we are today. Term limits is what has to happen before this country gets truly back on it's feet.
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