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 8, 2012 4:37PM
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Save your temper.  1984 arrived 4 years ago.
Nov 8, 2012 4:36PM
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Wall Street is in tizzy because of the fast approaching Financial Cliff, not because Obama was re-elected. During Obama's time in  office the stock market has risen steadily, bringing back gains lost before his term began and has even increased from the pre-crash good old days.
Nov 8, 2012 4:34PM
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The 99% have spoken. The 1% better listen...
Nov 8, 2012 4:32PM
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Bama holds grudges and punishes.   Sounds like just the man to reach across the aisle and change the broken political machines.
Nov 8, 2012 4:31PM
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You seem to be missing something....It is the golden rule, the one with the gold makes the rules.  These guys are 10 times smarter than anyone in government.  And they are always a step ahead.  Obama is in way over his head and always has been.  He nothing more than a trophy president he has zero business expense.

You fools that voted for him deserve what you get.

Nov 8, 2012 4:28PM
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Hey lets not forget about the Libor Scandal! No one talks about it much! These future swaps are gonna hit hard! Massive amounts of public money in these things! Bankers in Europe are getting hammered right now as well.Its time to convict and sentence these guys for what they have done!
Nov 8, 2012 4:28PM
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I hope Liz Warren can keep to her plan and shakeup the wall street and banks greedy bastards. Now she has to get a seat on the committee. Hope she don't follow in footsteps of others and let money overtake her thinking as did the bill for letting anyone join the unions as she got appointed to head of labor and that bill faded so fast it wasn't funny companies were shaking in there shoes on that one mine included equal pay and limited job tasking meant they would have to hire more people instead of making one person do it for less money   Just a thought
Nov 8, 2012 4:27PM
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Nobody helped me, so here's to you scum bag bankers. eat it and can you read between the lines.

It's a good day for feeding the piranha's of the beaten down.
Nov 8, 2012 4:25PM
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Stupid A**holes, did you think this crap could go on forever.

You have danced and now it is time to pay the piper.

Nov 8, 2012 4:25PM
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Elizabeth Warren is another liberal socialist idiot. Banks did not cause the financial disaster GOVERNMENT FORCING BANKS to make UNQUALIFIED HOME LOANS is what destroyed the financial markets. IF idiots like Obama and Warren will STOP trying to "decide what 'FAIR' " is we would be doing alright. Who are they to decide what 'FAIR' is? Is that FAIR they decide that SOLAR ENERGY gets 90 BILLION dollars even though all the companies GO BANKRUPT or the FAIR is ZERO DONW HOME LOANS????

 

Hell those deals sure did not turn out "FAIR" to taxpayers but sure made a lot of FREE MONEY for Obama's supporters.

Nov 8, 2012 4:25PM
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So let me get this strainght Warren is going to basical destroy the banks and wreck the the financial markets to get even with them for following the law that the democratic congress pass concerning redling and this isgoing to help the middle class get home loans, auto loans how?
Nov 8, 2012 4:24PM
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They will pay a price. But how many companies hire and base expansions on Wall St?  Everyone will pay this price.  The bankers can just tolerate it more.
Nov 8, 2012 4:24PM
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Making a mountain out of a molehill - RICH democrats don't want their $$$ screwed with, either.

 

I can't believe the number of democratic voters that still believe that Democrats are "just like us"

ROTFL! They get a salary most of us would dream to have, a retirement and healthcare package that's probally one of the best in the world.

Oh, and so many of them are MULTI-MILLIONAIRES.

 

Yeah, they just like us, which is why they "care so much" about us.

Nov 8, 2012 4:23PM
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Can't deny our country is fractured.
Nov 8, 2012 4:23PM
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Poor Walstreet, the people that were given billions of tax dollars by Obama... Walstreet  that bankrupted the entire world...Poor Walstreet.  About half of them should be in jail serving life sentences for their derivitives.  They knew what was coming.  Geitner knew too. 
Nov 8, 2012 4:21PM
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u  sad people put it back office,now deal with him,his goal is to ruin america and he is doing a fine job
Nov 8, 2012 4:21PM
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"The problem with Socialism is that soon you run out of other peoples money".
Margaret Thatcher

Nov 8, 2012 4:20PM
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Let Warren do her ghost dance all she wants. This poser is a puppet and a liar.
Nov 8, 2012 4:19PM
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Yep, Elizabeth Warren, who lied about her heritage and acadmeic background for her own political gain will be the voice of morality and propriety for the finance industry.  I am looking forward to the markets crashing.  Stay in B rated bond funds.
Nov 8, 2012 4:19PM
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What our country needs are more regulations for banks and other lending institutions. We need to bring back the Glass Steigle act that was repealed and opened the flood gate for the banksters and other criminal types. Elizabeth Warren is the person that can do that. We should all support her efforts to get our country back to a healthy financial balance.
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