The Financial Services Industry: When your side loses
The publicly available data shows that the financial services industry heavily weighted its campaign contributions toward Governor Romney and the Republicans. A couple of days ago, I wrote that the industry would expect a big return on their investment if its candidate won. Alas, the bet did not work. What now?
The business section of the New York Times carried an interesting story yesterday showing that the stock performance of companies that are heavily involved in making campaign contributions tend to underperform companies that stay out of politics. However, the article points out that this conclusion may not apply to heavily regulated industries like finance. It also noted that corporate political activity may have more to do with enhancing the political interest of executives than the company.
|Trying to Cooperate (1999)|
Obviously, a great deal of money was bet on the wrong horse. Governor Romney will not be in a position to reward the financial services industry through the tax code or regulatory process. However, all is not lost. The industry wisely hedged its bets. The coffers of the Democratic Senate Campaign Committee, and the key members of the Senate Finance Committee, Banking, Housing, and Urban Affairs Committee probably received the requisite support. Moreover, the campaign accounts of the New York, Connecticut, and New Jersey senators and house members have been amply funded irrespective of party. Before the month is out, there will be new opportunities to attend fund-raisers for the 2014 campaign cycle and create new political capital in Washington.
In addition, the President’s campaign accounts aren’t closed, and I expect we’ll see some hefty checks written before Thanksgiving. Next January, there’s an inaugural event that will require funding, and Wall Street will help pay for it. So the financial services industry may find itself playing a bit more defense as a result of the election, but their political position hasn’t been lost because they bet on the wrong horse. Even if their entire $2 billion campaign investment had to be written off, they still have plenty of money. The rules of the game haven’t changed. Money continues to buy a lot more than access.