When you think of Wall Street (WS), what images comes to your mind, a powerful market predator like Gordon Gekko or a morally conscious broker like Seth Davis in the Boiler Room? A realistic answer would be in front of the Senate Banking Committee (SBC) or more acutely firms’ lobbying and political records! Since 2008, WS has done a poor job in the public relations domain to establish an image of confidence and trust. In the 2012 American Values Survey, 72% agree that, “Wall Street only cares about making money for itself.”serves as a case-in-point as to why that is.
The problem lies in the quid pro quo relationship between the political class and the WS elite due to the modern legal system becoming what Frederic Bastiat called, a perversion of the law. While WS’s nature seems to be the epitome of capitalism, in practice it’s more akin to a system of plutarchy and corporatocracy. If it were running a corporate public relations campaign (personified), it might as well be looking for another. While just over a majority, 58% polled agree that,
Wall Street makes an important contribution to the economy.”
So where does the other 42% go? This past week Jamie Dimon sat before the SBC which was more like a kumbaya event rather than a Congressional hearing (not that I have it out for Dimon). While some like Mark Calabria, from the CATO Institute gave him praise for his performance some looked past this horse-and-pony show to’s lobbying efforts and political contributions, the reality of WS’s image.
Dwight Fettig: Current SBC staffer; former lobbyist for financial services reform in 2009
Naomi Camper: 2001–2004 aide to SBC Chairman, Timothy Johnson D-SD
Kate Childress: Former Charles Schumer D-NY aide; Member of both Senate Banking and Finance Committees
Steven Patterson: Former SBC Staff Director for Economic Policy
Nate Gatten: Former Fannie Mae lobbyist; Banking aide to former Senator Robert Bennett R-Utah, who also sat on the committee
• Spent $7.6M+ on lobbying efforts in 2011, according to the Center for Responsive Politics
• Largest campaign contributor to Richard Shelby R-AL (leading Republican on the SBC) and the second largest campaign contributor to Senator Johnson over the past 20 years, according to American Banker Employee contribution totaled $80K+ since 1998 to Senator Johnson and $136K+ to Senator Shelby since 1990
• Only 6 of 22 members have received no campaign money from PAC’s or employees in recent election cycles
With now the number one WS firm with over $2 trillion of total assets, forget about the $2 billion loss, in percentage terms it’s immaterial. Besides, congress has no real business in that which they don’t understand the nature of the subject and it’s not even an enumerated power to hold private entities in a type of judicial scrutiny.
That aside, how does this information affect your perception of WS? It does make me think, if this type of relationship has been one of the root causes of the current moral hazard issue and the too big too fail system. If you were Jamie Dimon, what would you do to change ’s image or would you?
Sources: Pew Research, ProPublica, and Politico, June 2012