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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449Comments
Nov 8, 2012 5:14PM
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all these mentioned contributors are aslo contributors to obama.  so what is your beef peterson?
Nov 8, 2012 5:14PM
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She is right lets kill the Bankers and go back to trading live chickens and beads,
170,000 people join the workforce each month and our Pres. is going to put them
all to work building bridges to nowhere, so we can push our cars off of them when we
run out of gas. 49% of us hate the man and his plan, and we will until 2016
BRING IT ON 1
Nov 8, 2012 5:13PM
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if these elelcted officiiasl are so full of themselves to let the country go hayward and be vindictive, who will suffer in the end?  the very people that elected them.
Nov 8, 2012 5:13PM
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It was the lib hero Bill Clinton that signed deregulation in 1999, by repealing Glass Steagal.  That allowed banks to be both savings banks and investment banks.  The feds then told the banks they could not red line mortgage applications and that the fed would back the risky loans.  Banks were forced to lend to unqualified borrowers.  Now the idiots in Washington blame the banks.  Warren could end up being this country's worst nightmare.  Thank goodness Dodd and Frank are gone.
Nov 8, 2012 5:11PM
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If you dont think money buys elections read this article.
Nov 8, 2012 5:09PM
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Naivete' and The Pied Piper won the day.  Where is Timothy Leary when we really need him?
Nov 8, 2012 5:08PM
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Elizabeth Warren is a shrill obnoxious liberal know it all.  No one cares what she thinks.  This article is way overblown.
Nov 8, 2012 5:07PM
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Welcome to the world of entitlements. You voted him in now help him fix the economy.
Nov 8, 2012 5:06PM
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Well that what it gets when you elect someone into office that know nothing about creating jobs or fixing economy they can blame it on bush, the greece crisis, or the republicans but maybe when it sinks to rock bottom people might realize they screwed up but all i have to say is too late now dumbocrats.
Nov 8, 2012 5:05PM
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Obama needs Wall Street and the banks far more than they need him.  The only way to get out of this mess is to grow the economy, Wall Street and the banks can make that happen the government cannot.

 

Businesses cannot grow without money and expertise, Wall Street IPOs and bond sales provide the capital while private equity provides capital and management know how that helps small businesses grow.

 

The banks have made billions and they’ll continue to make billions and they’ll be making billions long after this regime is gone.

 

They don’t need the government to profit, but Obama needs them to get the economy going.

Nov 8, 2012 5:03PM
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We need to find a way to bring the jobs back to America. After the huge amount of unsafe products coming from overseas markets (from dry wall, to baby formula, to dog food), could we pass a STRONG law that denies a company its right to sell its products in our markets if: They do not follow our EPA rules and regulations, follow our OSHA safety rules, follow our child labor laws, food inspection and regulation, and all the other regulations companies in America have to follow. Doesn’t matter where the factory is in the world, it wouldn’t be a tariff. For the health, safety, and welfare of our citizens, you will not be allowed to sell in America. We wouldn’t be telling other governments how to run their manufacturing sector. If they want to let companies manufacture crappy and dangerous things fine, sell them in China, let the Chinese government protect its citizens. If the company doesn’t follow our rules (not the government of the country the company is in) you will not be allowed access to the American markets. It might not be so profitable to take a company overseas to take advantage of a corrupt or weak government just to escape our manufacturing laws to, sicken, injure, pollute, work children, and kill the local populace for pennies a day just to make more money. (Bhopal India disaster) We would be doing the world a great service.   

Nov 8, 2012 5:03PM
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12 minutes ago
The Demos put through the Sub Prime mortage laws under Clinton that is what caused the House of Cards to crumble and the Rep. were not smart enough to overturn it when then had the power. Freedie Mac and Fannie Mae did nothing as government agencies to ring the alarm bell. When housing dropped like a lead ballon so does everything else. If wallstreet gets steamed rolled guess who will pick up even more of government workers guarranteed pensions. We the tax payer who do not have the same gaurantee in our pension plans if we were all tied to the same risk pool for investments (Stocks, Bonds, Mortgages, Realestate, ect. we all would be pushing for fairness and reasonable regulation in these investments but not wishing them to be steam rolled. Cut the governement protested guarantee rates in there pensions and see how fast they become partners in wanting our free market enterprise system to be positive.
Nov 8, 2012 5:03PM
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Men and women who plunder their own companies to bulk up their own salaries and bonuses are obviously not too smart. Did these fools actually think they could claim 80% of their incoming revenues as "profit" forever and then make taxpayers pay the other 20% out of tax subsidies and cuts? Can this really be the calibre of men and women who sit in top corporate positions?

Nov 8, 2012 5:02PM
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Baloney - only the corrupt ones are sweating bullets now and it's high time.  The American people are sick of them making it in on our backs.

This is the United States - by God you play fair or you not only don't get to play ...you pay.  Deal with it!

Nov 8, 2012 5:01PM
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Let's do the math.  A trillion dollar bailout 4 years ago.  Based on the national mean income of just over $50,000 that bailout would pay 2,000,000 salaries for 10 years.  I didn't get one of those jobs.  Did you?  In fact, we lost jobs.  Does anyone know how many?

Giving folks welfare, even when you call it a bailout, doesn't create jobs.  Why should they hire more producers when they can get money, & tax breaks, from the government?  Bailouts create dependency & kill ambition.

Remember your objections to Welfare?  Well Wall Street proved you right.

 

Nov 8, 2012 4:59PM
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Makes you wonder who gets it first on Obama's enemies list.
Nov 8, 2012 4:58PM
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The thing to watch out for is how low the GOP will stoop now to do Grovey's bidding and to recoup the losses of Adelson and the Koch billionaires. You just know the Tea Party Twerps in the House are already behind closed doors looking for a way to chop SS, Medicare and Medicaid...programs already paid for before they'll dare make those earning over $200,000 a year start to actually pay their fair share. And what? Reduce these rich naricissists to the nightmare of Middle Class?

 

They got their bailouts and like little pigs never thought the Gravy Train ride would end. Everyone with a brain knows money always runs out...everyone but the rich bois and girls who can't make sense of a financial tsunami heading their way and not ours. I am enjoying every minute of watching these loonies running for the Kaopectate all because we've turned off their money spigot.

Nov 8, 2012 4:58PM
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Where do they go?  Hmmmm...a couple of thoughts going through my mind but first maybe they should head to church and pray for their own greedy souls so they don't end up at my first thought.
Nov 8, 2012 4:55PM
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we need to go off the cliff. We need to cut military and Entitlement funding across the board. Everone, including wall street needs to feel the pain that every Government has caused by punting all our problems into the future instead of addressing the issues when they happen. Austerity needs to happen in the US. Payscales need to be reset for every single industry. Reduce prices for commodities, costs for tuition, just reduce costs across the board. If salaries and prices are all reset, everyone is on an equal field. Use the money collected by the government to prioritize necessities. Subsidize colleges to teach our students for little to no cost. Pay the professors a livable salary based on the subsidy. Set scales for how much can be earned  in any particular field. health care should be free. Doctors should not be able to charge exorbitant fees for their services. Hospitals should not be able to charge for anything. Subsidize what's important. Stop wasting our tax dollars on certain subsets and try and create one Subset template for the country to follow. Only a Social policy that eliminates fraud and wastefulness will be effective. Eliminate all forms of Lobbying. There is no need for them. It is a non transparent way for Rich politicians to pay back their rich benefactors. It is Payola on a grand scale and it allowed to happen right in front of our faces. The country needs a reset.
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