Obama's former campaign funders on Wall Street turn against him

The president's fundraising difficulties speak to his contentious relationship with the financial community.

By Nathaniel Popper, Los Angeles Times

September 30, 2011
Reporting from New York— The race is on to tap one of the most vital sources of campaign cash — Wall Street — and the early results are not looking good for President Obama.

The president's campaign struggled this week to sell out a fundraising dinner Friday at Manhattan's gilded Four Seasons restaurant despite its being hosted by America's No. 1 capitalist, Warren Buffett, according to people close to the campaign who were not authorized to speak publicly. The dinner for 100 was also a relative bargain at $10,000 a plate; recent fundraisers in Hollywood and New York have gone for $35,800 a pop.

The episode highlights a worrying trend for the Obama campaign. Wall Street, a key contributor to Obama in 2008, seems to be switching allegiances.

"His record has been one of reform and that has been an uncomfortable process for some of the major sources of political cash," said Sheila Krumholz, executive director of the Center for Responsive Politics, which tracks political fundraising.

Or as one big-ticket Wall Street fundraiser for Obama put it: "It's more difficult this time around."

The race is far from over, but Obama's difficulties speak to his contentious relationship with the financial community. After raising $43 million from the industry in 2008, he has spent much of his first term railing against Wall Street's excesses. Pushing for financial reform, he made a reference to "fat cat bankers" that still has executives smarting.

Obama has made three campaign swings through Manhattan in the past few months, raising money from financial industry leaders on each visit. He wants the banking industry's support. The question is whether the bankers still want him.

Wall Street appears to be lining up behind Republican Mitt Romney, who became Massachusetts governor after founding private-equity firm Bain Capital. He held a sold-out breakfast fundraiser at the exclusive Essex House hotel Tuesday. That was preceded by a breakfast with one of the biggest names on Wall Street, JPMorgan Chase & Co. CEO Jamie Dimon.

Dimon, a Chicagoan who at one point was rumored to be in contention for Obama's pick as Treasury secretary, has not made any donations this year. His private breakfast with Romney was viewed as a defection of sorts and a natural outgrowth of his recent criticism of the Obama administration's push for regulation.

The candidates have been canvassing New York aggressively before Friday's deadline for reporting campaign contributions in the third quarter — a milepost that will provide important signals about the strengths of the candidates.

In previous quarters, Obama handily outraised all Republican contenders. But in the narrow but crucial confines of the finance industry — responsible for more donations in the 2008 campaign than any other sector — Romney has been king.

Seen as an early frontrunner for the Republican nod, Romney raised $4.9 million before June 30 of this year, nearly twice what Obama gathered and far surpassing any of his Republican rivals, according to an analysis of campaign data by the Center for Responsive Politics. It was a stark reversal from 2008 when Obama handily outraised all opponents, even New York's hometown favorite, Hillary Clinton.

Obama's performance has been particularly poor in some marquee corners of the street such as Goldman Sachs, a frequent target of criticism from politicians. Employees at the firm, which swung heavily for Obama in 2008, gave more than six times as much money to Romney as Obama in the donations reported so far.

The story in New York is not all gloom and doom for the president. He has hosted a string of sold-out fundraisers with financiers in the city. Most recently, on the evening of Sept. 19, he packed the Park Avenue apartment of Ralph Schlosstein, the CEO of investment bank Evercore Partners, and his wife, Jane Hartley, CEO of consulting firm Observatory Group.

With the couple's 20-year-old black cat wandering among the tables, Obama told the guests, "I can only do it with the help of all of you."

He spent most of his time talking about his efforts to create jobs for those less well off, but he noted that the faltering economy would hit even the affluent: "It's not going to be good for those of us who have done incredibly well in this society."

One person who was there who was not authorized to speak publicly said the president showed no signs of being discouraged: "The president was relaxed — he was ready to go."

Obama steered clear of hot-button issues for bankers, such as the Dodd-Frank financial reform and his recently proposed tax on millionaires. The 60 millionaires in attendance, meanwhile, asked few questions about issues that would directly hit them and showed more interest in broader problems with the economy and foreign affairs, according to attendees.

Romney, on the other hand, has tailored his campaign more directly to the interests of Wall Street, calling repeatedly for a repeal of the financial reform bill.

That has helped him win over a number of bankers and hedge fund managers who gave to Obama in 2008. Anthony Scaramucci, a hedge fund executive who has been one of the most vocal defectors to Romney, said he has been turned off by what he sees as Obama's attempts to stir up "class warfare."

"I have found incredible success in raising money for Gov. Romney," Scaramucci said earlier this summer. "We are raising the guy a fortune from people who are disaffected by what the president is doing."

Ben LaBolt, a spokesman for the Obama campaign, said Romney's efforts to win over the finance industry are not unexpected.

"It's no surprise that the Romney campaign is raising money from Wall Street by saying they want to repeal consumer protections and allow Wall Street to write its own rules," LaBolt said.

For his part, Obama has taken a number of steps to smooth relations with the financial community. In January, he hired a JPMorgan executive, William Daley, to be his chief of staff. A few months later, top executives from several firms were invited to the White House for a conversation with the president.

These efforts have not always played well with ordinary voters, many of whom harbor a distrust of Wall Street and its influence in Washington. Steven Brandstetter, an Obama supporter in New York who has led protests against Wall Street, said he doesn't like to see Obama's New York fundraising push.

"I don't necessarily agree with it, but I don't see him not doing it," said Brandstetter. "If he doesn't go after that money the other side will."