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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455Comments
Nov 14, 2012 10:40AM
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"WASHINGTON (AP) - President Barack Obama is lobbying business and labor groups to support $1.6 trillion in new revenue to avoid an impending fiscal cliff, telling the two sides he remains committed to requiring the wealthy to pay more in taxes..."
$$$$$$$$$$$$$$$$

I'll re-iterate that the idea of higher taxes alone is not enough or will fix what ails us.

Administrators, lawyers, bankers, politicians and business inheritors all are well-off or rich but not by effort, more like by station.

Families, labor & small business are suppressed and impoverished. Flat out... those who take have taken too much and MUST give back. You say- one issue at a time but while Congress took six months off, America was impaled on what BIG has stuck us with-- debt and NO job recovery. It is only FICTION that people are lazy and cannot find work. It is TRUTH that a tier class separation is behind it and blockading has destroyed us.

WHY are there no bankers in JAIL? WHERE does the money come from that is used to puff the markets up in the morning and are recalled after 3pm? WHERE are the lenders that are critical to the credit and housing mess corrections? Bankers are not lenders. Harvard U cannot produce a person capable of fixing what bankers have abused. Are we to WAIT on 12/21/12 and be "surprised" or are YOU going to do more than 'propose'? We want SOLUTIONS. If Congress is stalemated by that Norquist Pledge, arrest those who signed it and send them to GITMO. We don't tolerate terrorism in America, even if it's in Congress.

Hard work isn't paying. Corruption is. If you want Americans to swing over to the dark side and fry up some grubbers and inheritors... so be it. If you would prefer more integrity... tell Boehner to DO IT NOW and tell McConnell to resign.

Beginning IMMEDIATELY, a list of lobbies who are in contact with elected Officials is to be put on major media websites with blog (not social network gimmick) access for comments. Time to tell members of Congress who are not sweating out progress, where they can go and how fast. I PAY TAXES on 70% LESS INCOME than I once had. No one has helped us in 4 years now. It isn't about 47%, its about deadbeats who take and have ruined. DO YOUR JOB, DESTROY WHAT DESTROYS AMERICA.
Nov 12, 2012 7:22PM
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What about the Feds QE1 QE2 QE3 and all this free money at the Fed window on wall street ! And all the tax cuts for over a decade now ! Gee how long are you going to blame Obama for your failings in the market ? Talk about handouts ? Lets see the US tax payer bailout wall street and they have not even paid back their money> Chrysler did ! Whats wrong with all the money boys on wall street ! There no risk anymore the Feds and the US treasury will bailout socialized wall street now LOL .. So Talk about handouts? Wall street is the KING WELFARE BAILOUT SOCIALIZED through and through ... And Ben went to Harvard ??? LMFAO at guys like you ...
Nov 9, 2012 12:49PM
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If you have no money to invest in the market as is the case with most Democrats, no wonder you dont mind a little uncertainty and unsettled economy.........You are more worried about getting your share from Govt. handouts.......Whatever happened to getting your money the hard way....EARNING it? Go ask E.F. Hutton and rub his bulls balls, maybe they'll act as your new crystal ball for handouts.
Nov 9, 2012 9:06AM
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As a common sense proud Middle Class woman, I am all for fiscal conservatism under these conditions:
1. Stop handing Big Oil billions it doesn't need.
2. Stop handing red states federal funding until they spend their own state funds first.
3. Stop Big Oil from pushing more drilling that is costing taxpayers more for pollution cleanup and spills. (We now fork over 50% of the Valdez spill Exxon caused and BP can't be far off.)
4. Stop Big Pharma from rigging the prices of American pharmaceuticals to earn profits so they can pay their execs obscene salaries.
5. Stop Big Insurance from invading every aspect of human life with their monstrosity sale of insurance for everything from your pet to your Charmin.
6. Stop the wealthiest 1% from getting huge tax breaks and then helping themselves to tax subsidies for the businesses they are plundering.
7. Stop allowing corporations to have a vote. I haven't seen a single corporation on election day walk into a voting booth. Cut corporate taxes and take away their vote.
8. Stop spending money on tax subsidies for businesses who record one record profit after another and put that money into US defense, education and infrastructure...all issues the 1% consider a loss of their wealth.
9. Force CEOs to use the profits they earn to pay their own bills and not beg handouts from the federal kitty...that would reduce those obscene salaries in a heartbeat. It's their obscene salaries that plundered their companies not their overhead.
10. Stop playing games with the income tax codes so that the 1% get a huge break while the 99% end up covering federal revenue losses.


Nov 9, 2012 8:59AM
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And here they go...all the foxes who spent 12 years in the Wall Street henhouse loaded up on chicken nuggets. And isn't it just like these sly little foxes to start getting antsy now that the last hen is gone?

I love every minute of watching Wall Streeters grow ever more aware of the stupidity of their decisions. Most sane, rational business people don't expect a lifetime of business success. Sane rational people know that ALL businesses have their ups and downs and if you are really as intelligent and savvy as these foxes pretend to be, you endure a rough spot and get over it by hard work, breaking a sweat and actually using all of your brain power to survive. That's not what these Wall Street Whiners believe...In their pathetic minds, there should never EVER be downtime in business ...up is all they want. But want isn't need...and these are loonies who have lived so long in excess, they are no totally incapable of downsizing to meet their NEED to live within their means. So yes...they will overlap into your incomes to make sure they continue their excesses.

Excess, overindulgence and greed...3 of the most financially destructive behaviors and Wall Streeters possess them all. It's why they can't figure out why a common sense business man like Warren Buffet can outwit the market every time. This is a huge DUH factor for the rich bois and gals who think excess is necessity...DUH...Dumb Uppercrust Hubris.

Nov 9, 2012 8:53AM
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Katy...I do understand "business"...I don't understand "snaky, skanky, underhanded "business" and that's what today's businesses are. I owned a business before you were out of your Pampers. I later worked for 2 Fortune 50 execs...Don't tell me what I know and saw first hand.

Business isn't price gouging consumers so you can cover your high risk investment losses as Prudential did when their real estate investments went south. Business isn't stagnating your employees salaries for 10 years all while your CEO salary, bonuses and perks rise to 1,000 times what you pay your lowest paid employee...I believe that's called piggery.

You don't call in profits up to 80% and then use all of that to buy $7,000 shower curtains for your office boudoir and then take beady eyes on programs Americans have already paid for, decades ago so you can pay less in taxes, get truck loads of tax subsidies your employees, consumers and taxpayers will end up having to cover the loss of that revenue.

Get off it already. Pay your fair share of taxes. If you are supposed to pay 28% ...Pay it. Get rid of your Beamer, your Mercedes and stop whining about how poor you are because you live on "only" $250,000 a year. If you can't make it on that...you'd be just as unable to make it on a billion a year...as is proven by the biggest greedheads who ended up in jail...Ebbers, Madoff, Skilling and the rest of the Enronitis mentalities. Sorry...I don't buy that brand of tantrums.

Nov 8, 2012 11:15PM
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Wall Street better stop bitching and get to work investing instead of creating exotic gambling scams.
Nov 8, 2012 9:21PM
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"Plus, placing Warren on the finance committee instead of banking could be viewed as an olive branch of sorts to Wall Street."

Really? I didn't realize Wall Street needed or deserved an olive branch.
Nov 8, 2012 9:13PM
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Entrenched ideologies on both sides of the political spectrum have divided this country to the point of extremism. Time for a "Common Sense" party. Fiscal conservatism with social conscience.  
Nov 8, 2012 9:08PM
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The FIRST thing businesses do with a tax hike, or the threat of one.......

is to CUT EXPENSES.

That means cutting back on employee's hours, cutting their pay, OR simply cutting them altogether.

The BOTTOM LINE for all business is PROFIT MARGIN.

If they can't do it, they SHUT THE DOORS!

Raising the prices that consumers pay hurts their competitiveness and market share....so that is the last resort.

Handing out PINK SLIPS is always the better option, but not for the laid off worker.

The economy is desperate for some certainty.

That hope was shattered Tuesday night.

The layoffs will now commence.

Businesses will begin dropping their healthcare coverage altogether, because the fines are cheaper that the costs.

They will continue to sit on their capital rather than expand their businesses.

They will be going to W's seminars in the Caymans for more ways to get out of this place.

Be patient, pay attention, keep your eyes on the unemployment rate in the coming months.

Watch for another recession to hit us.

You wanted it apparently.

You voted for it.

You are going to get it.

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I'm black and did not vote for Obama. Since 2008, I thought he was a snake. The military & economy has been in worst shape since he has been in office and "dummies" voted for him because of his skin color, gay rights and abortion. What the hell happened to all of the talk about fixing our economy?!?!?
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Amen! I didn't vote for him. I always thought he was a snake that talks way too much!
Nov 8, 2012 8:53PM
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For anyone who thinks America is headed in the wrong direction we can give a majority of voters exactly what they wanted on election day complete economic failure of the United States. Simply work to provide for basic needs and save the rest. Stop all spending on any items that are not needed. If a majority of American's want economic failure let them have it.
Nov 8, 2012 8:51PM
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How can the contributors to this post be so ignorant?  Does anyone really believe that the ultimate goal of any President is to crash the U.S. Stock Market?  No President including George W. Bush WANTED to see the economy crash, but it did because of many factors.  Some in his Administrations control and some not.  The market has had almost a three year run upward.  It is time for a correction folks.  A correction does not mean a crash.  It means a correction.  This would be a very good thing for all investors.  Then it will start to uptick again at some point.  Stop blaming President Obama for every single thing that goes wrong in the financial markets.  NOBODY ever complains when the market is in a positive mood.  The fact is the nature of a stock is to rise and fall in value over and over again for many reasons.  Stop fretting over the daily swings.  No one individual has that kind of control over anything, but to have the kind of anger and hate that is being demonstrated in this feed helps nobody.   
Nov 8, 2012 8:50PM
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Unfettered capitalism (perhaps under regulated capitalism is more appropo) can have disastrous unintended consequences. Witness the near collapse of the global financial community in 2008. Effective regulation requires both regulators and regulated to hammer out a set of conditions and constraints that allow for a freely functioning marketplace while safeguarding against abuses. While this is no easy task, it is essential to the health and growth of the economy. Attacking financial institutions or political parties is not helpful to the cause of strengthening capitalism.
Nov 8, 2012 8:48PM
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Washington, Wall Street, Bankers, Lobbyists, Big Business......it's all just one big fricken daisy chain.
Nov 8, 2012 8:46PM
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They forgot to mention the public nightmare too.

You guys who had a hand in this...unleashing the government on Wall Street...AGAIN, will eventually feel the pain in your own wallets.

Maybe not in the immediate future, but definitely when the 2014 midterms roll around.

These ill-informed kids who voted for the rock star really put the screws to their grandparents.

You can take that to the bank.

Nov 8, 2012 8:46PM
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To see our future in a decade or 2 is Greece...even though they are close to bankruptcy due to the unions and unbridled social programs, none of the citizens want to cut back, so 80,000 are rioting in the streets.

 

This may be our future - Obama wants to raise our tax rates, so that he can give his race more money....that is truly the bottom line!! Right now the US wage earners making over 70k per year or higher pay 87.8% of the taxes.

 

Welcome to socialism - the new America!!

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Interesting article.
Seems to say that the market is in the crapper because of its backing of Obama.
Personally, I think it has more to do with the fiscal cliff and the higher taxes to come.

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