Wall Street Moguls Whine About How Tough Their Lives Are With Obama Win
Who is ready to shed a tear for Wall Street? The moguls bet big, and lost. Now, if we are to believe their whining, they are preparing to pay the piper.
“We played the old Beatles song ‘The Taxman,’ on our trading floor this morning,” bond fund uber-manager Bill Gross told Bloomberg on Thursday.
Oh lordy, hard times are coming!
Although, you know, those times might not be quite so hard as the days back in the mid-’60s when George Harrison felt himself compelled to complain about a 95 percent “super tax.” If, during the negotiations to avoid the “fiscal cliff,” President Obama plays a level of hardball that was in short supply for most of his first term, the wealthiest Wall Streeters might see a return to Clinton-era income tax rates on the rich. Anything more meaningful, like a hike in the tax rate on capital gains, or an end to the exemption for carried interest, will require a major breakthrough — successfully bashing through the obstructionism of House Republicans who seem unlikely to accede to any elements of Obama’s agenda, no matter how forcefully the president seeks them.
So come on, if the sharp drop in the stock market this week really was Wall Street’s reaction to Obama’s win, then the 1 percent doth protest too much. At the most, they’ve lost a skirmish. They’re certainly not under any immediate danger of losing the war. And one thing’s absolutely sure, their arrogance and sense of entitlement haven’t changed a whit.
Which is not to say that the overall climate isn’t different, or that Wall Street will escape this election completely unscathed. Wall Street turned against Obama, spent hundreds of millions to beat him, and got crushed. The president certainly doesn’t owe the bankers anything. There’s no great systemic crisis looming over the world, forcing the White House to summon all hands on deck to keep the financial sector afloat. In the Senate, Massachusetts Republican Scott Brown, a man who was instrumental in significantly weakening the Dodd-Frank bank reform act at the last possible moment, has been traded for Elizabeth Warren, a woman who can be counted on to do everything in her power to strengthen oversight and regulation of the banking industry. Mitt Romney’s accession to power would have resulted in the gutting of Dodd-Frank, lower taxes on corporations and the wealthy, and a White House inhabited by one of Wall Street’s very own. Today, all those tantalizing potential gains are as dust. Very, very expensive dust.
But let’s not get too excited. What’s money to Wall Street? The $400 million or so spent by Wall Street in support of Romney is a rounding error for the financial sector. If anything, the amount Wall Street spends on lobbying is likely to rise in the next few months, as the battle to finalize Dodd-Frank’s rules hits the home stretch.
That’s right, Dodd-Frank, signed into law by President Obama more than two years ago, is still unfinished. Hundreds of rules have yet to be finalized — including those related to the all-important Volcker rule — the provision of Dodd-Frank that would prevent banks from making proprietary trades with taxpayer-insured capital. Even worse, hundreds of necessary Dodd-Frank rules haven’t even been proposed.
A Romney win wouldn’t have stopped those rules from getting hammered out, although the people making the critical decisions would change, and could be expected to be more receptive to Wall Street “concerns.” The point is, Wall Street is likely to spend even more cash now to lobby the rule-makers than it would have before, despite the hundreds of millions wasted during the campaign. The spigot remains on.