The Irish Independent reports that amid all the gloom about the banks, it is easy to lose sight of the fact that an equally important sector of the economy and the stock exchange is doing well.
The newspaper was referring to the food sector, which has a bigger market capitalisation than the banks, employs more people and has an even greater fundamental importance than the banks -- you can't eat money, after all. That sector is in good health despite the recession, and things may improve further as the overvalued euro begins to slide once more, making agricultural exports to Britain competitive again. Farmers have been moaning about poor milk prices for some time now, and with justification, but the food stocks and co-ops many of these farmers own are performing very well on the stock exchange. Fyffes has risen 130pc in the past 12 months; Aryzta is up 51pc; Kerry 44pc; while Glanbia's rise has been just 3pc.
This growth is not limited to Ireland; food stocks elsewhere have also been performing well.
Stellar results like these, and the collapse of most other sectors of the economy, have shifted the focus back to the food industry and, in particular, the rationalisation of our dairy sector.
A strategic development plan for the Irish dairy processing sector was, when published in 2003, seen as laying out the only viable future for the industry. Among other things, it recommended that the number of dairy plants in Ireland be reduced from 17 to three.
Seven years on and our dairy industry hasn't budged an inch. While some feeble attempts have been made to get the dairy chiefs talking (ICOS, the country's co-op umbrella group, is now facilitating dairy industry talks) the main stumbling block remains: who will cough up the cash to pay for a massive restructuring of the industry?
Dairy chiefs will argue that they have spent two years subsidising poor milk prices and this has depleted their coffers.
And the Government, as we all know, simply doesn't have the money. Regardless, it's difficult to see the political will for something that will have huge social implications for rural Ireland and lead to thousands of jobs being lost.
But while massive change in in the industry is needed, is big really beautiful? If we have learned one lesson from the banking debacle, it is that we should not have companies that are too big to fail.
Will rationalisation be the panacea of all ills for the industry and the farmers who supply it? Not likely.
Ireland's product mix is still far too over-dependent on commodity products such as butter and skim milk powder, which leaves us at the whim of volumes coming in from the US and New Zealand.
The whole industry continues to pin its hopes on the emerging markets such as China and India developing the eating habits of the western world. China's middle class had developed a taste for yogurt and cheese, but the global recession put an end to that. It now appears that any returns from the market will remain supply-driven rather than demand-driven. This, in turn, goes against EU policy, where the plan is to raise the European-wide milk production ceiling by 1pc each year until quotas vanish altogether in 2015.
When the banks and the builders were booming during the last decade, the Government took its eye off the food sector. I'm not suggesting it can drive the economy on its own, but with the right investment and a government-led strategy for its future, it can play a positive part in rebuilding the economy by attracting investment from diverse areas.
The Government needs to remember the old adage: "Milk is good for you; it helps you grow strong." It's helping the markets, too.
The Irish Independent also reports that the Green Party began offering its members the chance to serve on state boards just months after entering Government -- despite previous promises to eliminate "crass cronyism" and "jobs for the boys".
The Irish Independent has seen a copy of a confidential email sent from the Green Party's head office after the party entered coalition with Fianna Fail in 2007.
It stated that the party's "medium- to long-term" objective was to reform the State's public appointments system.
"In the meantime, we are putting procedures in place to help us to nominate suitable persons as positions arise. We would be delighted to receive suggestions of persons who might be suitable for consideration,"it said.
Increase
The opposition has highlighted the increase in the number of Green Party members on state boards, which now stands at seven. The most recent addition is former Green Seanad candidate Martin Hogan, who was appointed to the board of Fas last month and will receive around €12,000 in annual fees.
Green Party member Caroline Burrell, who lost her council seat in last year's local elections, was recently appointed to the board of the National Disability Authority.
Green Party Junior Agriculture Minister Trevor Sargent set up a new state quango last year, the Foras Organach -- Organic Food Agency -- and appointed his own special adviser, and former Green Party general secretary, Stiofan Nutty, to it.
The Green Party headquarters email, dated December 13, 2007, said the people nominated "may or may not be politically affiliated" to the Green Party but had to be of the"highest character and integrity".
The confidential email mentioned the formation of a new party group to nominate Green Party members and non-party members to state boards.
Green Party senator Dan Boyle confirmed his party had set up such a group -- made up of a parliamentary party member, a national council member, a party worker and an outside management expert.
Green Party leader and Environment Minister John Gormley last year appointed two former Green Party councillors, Vincent P Martin and Gene Feighery, to the Private Residential Tenancies Board, where they can receive up to €25,000 a year.
Mr Gormley also appointed Green Party Louth county councillor Mark Dearey as chairman of An Chomhairle Leabharlanna -- the Library Council -- although this position is worth just €5,000 a year.
Elizabeth Davidson, who ran for the party in last year's Dublin South by-election, was appointed to the Irish Film Classification Office in 2008.
Mr Boyle published a private members' bill when in opposition in 2007 to give an Oireachtas committee the power to vet state board appointments. He promised it would put an end to "crass cronyism" and "jobs for the boys". But when it was reintroduced in the Seanad last October by the opposition, Mr Boyle and his Green Party colleague Senator Deirdre de Burca voted against it -- and it was defeated by 25 votes to 23.
Fine Gael enterprise spokes-man Leo Varadkar said the Green Party had engaged in the most appalling acts of cronyism "which would bring shame to the sleaziest member of Fianna Fail".
The Irish Times reports that the International Monetary Fund (IMF) told Minister for Finance Brian Lenihan last April that the National Asset Management Agency (Nama) would not lead to a significant increase in lending by the banks.
The comments, which appear in internal Department of Finance documents released to The Irish Times under the Freedom of Information Act, were made by senior IMF official Steven Seelig who will join the board of Nama in May.
Minutes of a private meeting at the department between Mr Lenihan and IMF officials on April 29th last state that the“IMF (Mr Seelig) do not believe that Nama will result in significant increase in bank lending in Ireland”.
The meetings were held for the purposes of the IMF compiling its annual economic assessment on Ireland in the so-called Article IV report published last June.
The Government has maintained that Nama’s purchase of bad loans from the banks with State bonds would increase the flow of credit in the economy since the plan was unveiled last April.
Speaking at the publication of the Nama legislation last September, Mr Lenihan said Nama would “strengthen and improve” the funding positions of the banks “so that they can lend to viable businesses and households”. Taoiseach Brian Cowen had said the Government’s objective in restructuring the banks was to generate “more access to credit for Irish business at this critical time”.
The IMF endorsed the Government’s plan to recapitalise the banks and to clean up their balance sheets by establishing Nama.
In another internal document, the department repeats the IMF’s belief that Nama will not lead to significant lending, citing references to meetings with Ulster Bank and AIB for this conclusion.
While the IMF supported the policies on the banking sector and the public finances, it said the Government “faces a huge task that will take three to five years of very careful management”, according the minutes of the meeting with Mr Lenihan.
The IMF also expressed surprise at concerns raised by the EU Commission’s competition division over state aid rules, saying that it “did not agree that anti-competitive issues were as important as resolving the problem in the financial institutions”.
In a separate note on State-owned Anglo Irish Bank, the IMF queried the health of the bank’s non-land and development loans. However, the bank said the losses on these loans would be “nothing close” to those on the property and development loans.
In a briefing note on a meeting with the Irish Banking Federation, the IMF said it would encourage Nama “not to cave in to (sic) readily” to the banks on the haircuts on loans moving to Nama.
In an internal e-mail dated June 6th, 2009, sent in response to a draft copy of the IMF’s report on Ireland, senior department official Kevin Cardiff warned against making public any official estimate for the losses faced by the banks, saying that the department had not made this information public. “We naturally shared with the IMF team our informal views on the range of possibilities, but would be uneasy about seeing these formalised,” said Mr Cardiff, who has since been appointed secretary general of the department.
The IMF estimated in their published report the domestic banks would face losses of up to €35 billion, though the department pointed out this would be partly funded from operating profits and provisions already taken against some loan losses.
Mr Cardiff also said in his e-mail that the National Pension Reserve Fund, which was used to fund the €7 billion recapitalisation of AIB and Bank of Ireland, was “not necessarily the most appropriate structure for all recapitalisations”.
While supporting the creation of Nama, the IMF said taking over soured property loans was “not costless”. “It’s the only way you get through this thing – however, Nama may have to put money into assets to develop market interest in them,” the IMF said in its meeting with the Irish Banking Federation.
The IMF queried AIB selling some of its businesses during meetings last April, saying that the bank “assumed that the market already priced this in”. The bank has considered selling its stakes in the Polish bank Bank Zachodni and US bank MT as a way of generating cash for the business.
The Irish Times also reports that a third banking force to provide competition to AIB and Bank of Ireland should specialise in lending to small businesses and should include Bank of Scotland (Ireland), a report by the union Unite is expected to recommend.
A report prepared by FGS Consulting on behalf of Unite says a four-way merger between EBS Building Society, Irish Nationwide Building Society (INBS), Permanent TSB and Bank of Scotland (Ireland) (BoSI) would give the proposed third banking entity the necessary “heft” to compete with the Republic’s biggest banks.
The report commissioned by Unite, which represents staff at EBS Building Society and Bank of Scotland (Ireland) (BoSI), is expected to argue that the inclusion of BoSI would not place any additional demands on the Irish Exchequer, noting that BoSI complies with capital adequacy requirements. It has been suggested that BoSI’s high loans-to-deposit ratio could make its involvement in a marriage of Ireland’s financial institutions more problematic. Unite has commissioned the report to encourage BoSI’s long-term involvement in the Irish market.
The Unite report is expected to say that a “third force” bank that includes BoSI would be best-placed to support small businesses, given BoSI’s track record in the small and medium enterprise (SME) sector. A “new” bank with sufficient critical mass would provide more effective competition to the major banks, which are more likely to “cherry pick” from long-standing business clients during a recession, it will argue.
The so-called “third force” in banking, if it included all four banks, would have a combined loan book of €75 billion once transfers to the National Asset Management Agency (Nama) by EBS and INBS are taken into account. It would also have customer deposits of €33 billion.
The Government is instigating a merger between EBS and INBS. Irish Life Permanent has pressed the Government to include its banking arm, Permanent TSB, in the so-called “third force” once the merger of the two building societies is completed, while British-owned BoSI signalled last autumn that it wanted to be part of the proposed entity.
The Irish Examiner reports that cash-strapped local authorities have been told to crack down on defaulters as figures show more than €500 million is owed in development levies, rent and rates arrears and unpaid refuse charges.
As householders face hikes in rates, the figures show that the country’s largest local authority has arrears totalling €231m, including €73m owed by businesses in rates.
Included in this is a staggering €16m owed to Dublin City Council in refuse charges with approximately 9,500 customers in "serious arrears" (in excess of one year).
At the end of November last year, there were a total of 8,795 rent accounts in arrears for more than a month – totalling €22m.
More than €73m is owed in commercial rates, with €16m owed in commercial water charges.
Fingal County Council has arrears of over €204m, with over 70% of this figure made up of €146m in development levies.
The council is owed:
- €22.7m in commercial rates with 3,545 accounts in arrears.
- €4.2m in commercial water charges with more than 2,300 accounts behind in payments.
- €28m in Government capital work grants leaving Fingal County Council with debts of more than €28m.
In Dun Laoghaire-Rathdown County Council the total amount of arrears comes to almost €69m.
The local authority is owed almost €2m in unpaid housing rents with 1,550 accounts in arrears.
Although domestic water charges were scrapped in 1996, there is still €1.4m owed to the council.
The council is also owed a massive €21m in domestic refuse charges, with almost 11,500 accounts in arrears.
According to Dun Laoghaire-Rathdown council a number of householders "have agreed to pay their arrears by instalment. It is estimated that €14.6m may be waived when householders apply for waivers".
A statement issued by the Department of Environment, Heritage and Local Government acknowledged the level of arrears owed to local authorities but said charges and the collection of debts was a matter for each council.
The statement also added that Environment Minister John Gormley urged all local authorities "to collect all charges which are due to them in a timely and efficient manner".
The Financial Times reports that France, one of the most creditworthy members of the eurozone, seems a long way from the turmoil in Greece. But the crisis of confidence afflicting some of the bloc’s peripheral members is also having reverberations at its core.
At the very least, say analysts, the eurozone’s second-largest economy will come under intensifying scrutiny and pressure to show the fiscal discipline lacking for much of the past 30 years.
“The Greek situation – and it is not over – is a wake-up call for French policymakers,”said Charles Wyplosz, professor of economics at the Graduate Institute of International Studies in Geneva.“The fiscal crisis is a golden opportunity to do unpopular things.”
Apparently convinced in recent weeks that voters would be prepared to accept further welfare reform, President Nicolas Sarkozy seems increasingly determined to overhaul France’s costly pay-as-you-go pension system.
Calls for France to adopt a German-style medium-term budgetary balance law are also becoming louder within the governing UMP party. “We can no longer spend as we did in the past,” Xavier Bertrand, UMP leader, said on Sunday in support of a mandatory deficit cap.
France expects a public deficit of 8.2 per cent of gross domestic product this year after 7.9 per cent in 2007. The deterioration in its public finances has not been as dramatic as in some other large economies, notably the US, UK or Spain.
But the French situation is nonetheless worrying policymakers, since it has less leeway than other countries – because taxation as a share of national output is already among the highest in the the Organisation for Economic Co-operation and Development.
France’s long-term record on fiscal discipline is poor. It has recorded deficits of at least 1.5 per cent of GDP every year since 1980.
Successive governments have been caught in a now familiar pattern: public spending has increased with each economic slowdown because the subsequent recovery is too weak, and ministers too ill-disciplined, to restore public expenditure as a share of GDP to pre-recession levels.
Successive governments have put off serious corrective measures by gambling on unrealistic longer-term assumptions about growth.
Mr Sarkozy’s government maintains a similar optimism. It has promised the European Commission that it will reduce its deficit to 3 per cent of GDP by 2013 on the basis of growth of 2.5 per cent per annum from 2011-13, which will be difficult to reach. The International Monetary Fund expects the economy to grow by 1.7 per cent next year.
François Fillon, prime minister, has said France will meet its promise by cancelling some of the €70bn a year spent on tax breaks and by limiting real-terms growth of total public spending to less than 1 per cent a year from 2011.
Since 2007, the government has been relatively restrained on central government spending, but profligate with tax cuts. Now it wants to extend the same restraint to local governments and to the pay-as-you go social security system, which provides healthcare, pensions and unemployment insurance.
Social security faces a total deficit of €30bn this year. According to Mr Fillon, the annual deficit for pensions alone would, if unreformed, widen to €100bn by mid-century.
Mr Sarkozy and his ministers sound bullish about tackling pensions – an issue that defeated and in effect finished off the last reformist centre-right government in 1995.
To raise the legal retirement age (at which you can draw a minimum pension) from 60 and to increase the contribution period for a full pension from 40½ years are on the cards. Even his senior advisers admit that is probably the easy bit, since pain is deferred and reform will have little instant impact on domestic consumption, upon which the French economy relies.
“[France’s problem] is that there is now a beauty contest in Europe,” says Gilles Moëc, senior European economist at Deutsche Bank.“Everyone is coming out with tough measures to please the markets. The more specific they are, the more credible they are.”
The FT also reports that David Cameron’s opinion poll lead over Labour again fell below 10 points on Sunday, heightening fears in the government bond market that the coming election could produce a hung parliament.
Markets like certainty and, to most analysts and traders, a hung parliament means delays in cutting Britain’s mounting debt burden. The Sunday Telegraph/ICM survey is the latest poll suggesting the Tories could fall short of an overall majority.
UK bonds have sharply underperformed those of Germany – the European benchmark – since late November, when the first opinion poll of 2009 pointed to a hung parliament. One important explanation has been worries about the end to the emergency stimulus that has underpinned the market. The policy of flooding the markets with cheap money was put on hold by the Bank of England last week.
UK bond yields have also risen because of economic data suggesting the incipient recovery can be maintained. Yet strategists say worries about a hung parliament have also played a big part. Bond yields, which have an inverse relationship with prices, have risen nearly a percentage point since the end of November. German bond yields, by contrast, have hardly moved.
“If a new government does not act swiftly to cut the budget deficit, there is a real danger the markets will sell off,” said Steven Major, head of global fixed income research at HSBC.
It is often said that Mr Cameron needs a 10-point lead over Labour to be confident of a Commons majority, because the Tory vote is widely dispersed across the country. However, local factors such as the popularity of a sitting MP and the level of support for smaller parties complicate the picture. The Tories could gain the 117 seats they need to win an outright majority without such a big lead in the popular vote, especially if they continue to outperform national polls in key marginals in the south and West Midlands.
Pimco, one of the world’s biggest bond funds, has been among the most vocal advocates of cutting exposure to UK debt markets. Last month Bill Gross, the fund’s managing director, said the gilts market had nitroglycerine under it because of the UK economy’s vast debt burden.
“The end of QE is likely to push yields higher because you now need private buyers to fill the gap left by the Bank of England, which is no longer buying gilts,”says Mike Amey, portfolio manager at Pimco. “But the worry over a hung parliament is a big, big concern too.”
Richard Batty, investment director of strategy at Standard Life Investments, says the UK’s budget deficit needs to be reduced.“The simple fact is a hung parliament will delay that.”
It is the combination of concerns over the dire fiscal position of the economy and the threat of a political standstill at Westminster that alarms other investors.
“An indecisive government suggests that the most austere measures to cut public spending may not be implemented,”says Alan Wilde, head of fixed income and currency at Baring Asset Management.
“I think most investors would want to see the Conservatives win a majority, as they would more likely implement the most draconian measures that are necessary to reduce debt levels. But the most important thing is a decisive victory.”
Both Standard Life Investments and Baring reduced their exposure to gilts in the fourth quarter of last year.
But it is not just the bond markets that could lose patience with the politicians in the event of deadlock in the House of Commons. Moody’s, Standard & Poor’s and Fitch, the world’s three leading credit rating agencies, have warned the UK government that it faces the prospect of losing its top-notch triple A status unless it reduces its debt. This would spell disaster for the UK as it would prompt a sell-off in gilts prices and sterling as international investors took flight because of serious questions over the credibility of the UK economy.
Pierre Cailleteau, chief economist for sovereigns at Moody’s, says:“I do not expect the UK will be downgraded because of the strength of its economy and institutions and its ability to deal with financial shocks.”
The New York Times reports that President Obama said Sunday that he would convene a half-day bipartisan health care session at the White House to be televised live this month, a high-profile gambit that will allow Americans to watch as Democrats and Republicans try to break their political impasse.
Mr. Obama made the announcement in an interview on CBS during the Super Bowl pre-game show, capitalizing on a vast television audience. He set out a plan that would put Republicans on the spot to offer their own ideas on health care and show whether both sides are willing to work together.
“I want to come back and have a large meeting, Republicans and Democrats, to go through systematically all the best ideas that are out there and move it forward,”Mr. Obama said in the interview from the White House Library.
Mr. Obama challenged Republicans to attend the meeting with their plans for lowering the cost of health insurance and expanding coverage to more than 30 million uninsured Americans. Republican leaders said they welcomed the opportunity and called on Democrats to start the debate from scratch, which the president said he would not do.
The move by Mr. Obama comes after weeks in which the administration has appeared uncertain about how to proceed on his top domestic priority since Republicans captured the Senate seat previously held by Senator Edward M. Kennedy. House and Senate Democrats had been increasingly at odds over what the bill should say, how to move ahead tactically and, in some cases, whether to continue at all.
The idea for the bipartisan meeting, set for Feb. 25, was reached in recent weeks, aides said, as part of the White House strategy to intensify its push to engage Congressional Republicans in policy negotiations, share the burden of governing and put more scrutiny on Republican initiatives.
Mr. Obama’s announcement came after he surprised his rivals in late January by requesting that a session with House Republicans be open to cameras. That meeting produced a spirited 90-minute question-and-answer session with the president that many in the White House viewed as a critical success for Mr. Obama.
In making the gesture on Sunday, Mr. Obama is in effect calling the hand of Republicans who had chastised him for not honoring a campaign pledge to hold health care deliberations in the open, broadcast by C-Span, and for not allowing Republicans at the bargaining table.
Nancy-Ann DeParle, the director of the White House Office for Health Reform, briefed Democratic Congressional staff members in a conference call ahead of the interview, with Katie Couric.
Separately, some Congressional staff members expressed concern that Mr. Obama’s meeting would simply prolong an already tortuous process. And Democrats still face steep challenges in reconciling the differences between the House and Senate bills.
Some House Democrats are firmly opposed to a proposed tax on high-cost employer-sponsored insurance policies, which they think will hit some middle-class workers and violate Mr. Obama’s campaign promise not to raise taxes on Americans earning less than $250,000 a year.
The president offered a number of questions that his party would have for the Republicans.
“How do you guys want to lower costs? How do you guys intend to reform the insurance market so that people with pre-existing conditions, for example, can get health care?” he said. “How do you want to make sure that the 30 million people who don’t have health insurance can get it? What are your ideas specifically?”
The question for Mr. Obama is how much — if at all — he is willing to give on some of the concepts Democrats have already agreed on, or if he is using the meeting to lay the groundwork for another effort by Democrats to push the legislation through without Republican votes.
Mr. Obama did not indicate what he was willing to give up in the negotiations, nor did he chart a specific legislative strategy for moving a bill through Congress. Democrats in the House and Senate were hoping to resolve their differences in the bill, aides said, and present a unified health care plan in time for the meeting.
Senator Mitch McConnell of Kentucky, the Republican leader, said in a statement that he welcomed the bipartisan meeting on health care and called on the president to begin the dialogue “by shelving the current health spending bill.”
“The fact is Senate Republicans held hundreds of town halls and met with their constituents across the country last year on the need for health care reform, outlining ideas for the step-by-step approach that Americans have asked for,”Mr. McConnell said. “And we know there are a number of issues with bipartisan support that we can start with when the 2,700-page bill is put on the shelf.”
When asked by Ms. Couric if he would agree to discard the bill and start over, the president said he would not. The starting point, aides said, would be with the proposals that passed the House and Senate.
It remained an open question whether the meeting could lead to real consensus on health care, or whether it would serve only to allow Democrats to frame a political argument against the Republicans going into the midterm campaign.
Republicans were involved in the health care discussions for months last year in the Senate Finance Committee, but differences with Democrats were never resolved.
The bipartisan meeting on health care could give Mr. Obama an opportunity to display the command on health care issues he showed at the meeting with Republicans. The administration believes that the public is supportive of many of the provisions in the bill — particularly taking away the insurance bans for pre-existing conditions — but that the debate was overshadowed by a messy legislative process.
Representative John A. Boehner of Ohio, the Republican leader, said he was looking forward to the bipartisan discussion. But he joined Mr. McConnell in calling for a fresh start to the health care debate.
“The problem with the Democrats’ health care bills is not that the American people don’t understand them — the American people do understand them, and they don’t like them,”Mr. Boehner said in a statement. “The best way to start on real, bipartisan reform would be to scrap those bills and focus on the kind of step-by-step improvements that will lower health care costs and expand access.”
In the interview on Sunday, Mr. Obama said he did not regret pursuing health care in the first year of his presidency, even though he intends to place a higher priority on job creation this year.
“It was the right thing to do then,” Mr. Obama. “It continues to be the right thing.”
The NYT also reports that if the Democratic Party has a stronghold on Wall Street, it is JPMorgan Chase.
Its chief executive, Jamie Dimon, is a friend of President Obama’s from Chicago, a frequent White House guest and a big Democratic donor. Its vice chairman, William M. Daley, a former Clinton administration cabinet official and Obama transition adviser, comes from Chicago’s Democratic dynasty.
But this year Chase’s political action committee is sending the Democrats a pointed message. While it has contributed to some individual Democrats and state organizations, it has rebuffed solicitations from the national Democratic House and Senate campaign committees. Instead, it gave $30,000 to their Republican counterparts.
The shift reflects the hard political edge to the industry’s campaign to thwart Mr. Obama’s proposals for tighter financial regulations.
Just two years after Mr. Obama helped his party pull in record Wall Street contributions — $89 million from the securities and investment business, according to the nonpartisan Center for Responsive Politics — some of his biggest supporters, like Mr. Dimon, have become the industry’s chief lobbyists against his regulatory agenda.
Republicans are rushing to capitalize on what they call Wall Street’s “buyer’s remorse” with the Democrats. And industry executives and lobbyists are warning Democrats that if Mr. Obama keeps attacking Wall Street “fat cats,” they may fight back by withholding their cash.
“If the president doesn’t become a little more balanced and centrist in his approach, then he will likely lose that support,” said Kelly S. King, the chairman and chief executive of BB&T. Mr. King is a board member of the Financial Services Roundtable, which lobbies for the biggest banks, and last month he helped represent the industry at a private dinner at the Treasury Department.
“I understand the public outcry,” he continued.“We have a 17 percent real unemployment rate, people are hurting, and they want to see punishment. But the political rhetoric just incites more animosity and gets people riled up.”
A spokesman for JPMorgan Chase declined to comment on its political action committee’s contributions or relations with the Democrats. But many Wall Street lobbyists and executives said they, too, were rethinking their giving.
“The expectation in Washington is that ‘We can kick you around, and you are still going to give us money,’ ” said a top official at a major Wall Street firm, speaking on the condition of anonymity for fear of alienating the White House.“We are not going to play that game anymore.”
Wall Street fund-raisers for the Democrats say they are feeling under attack from all sides. The president is lashing out at their “arrogance and greed.” Republican friends are saying “I told you so.” And contributors are wishing they had their money back.
“I am a big fan of the president,” said Thomas R. Nides, a prominent Democrat who is also a Morgan Stanley executive and chairman of a major Wall Street trade group, the Securities and Financial Markets Association.“But even if you are a big fan, when you are the piñata at the party, it doesn’t really feel good.”
Roger C. Altman, a former Clinton administration Treasury official who founded the Wall Street boutique Evercore Partners, called the Wall Street backlash against Mr. Obama “a constant topic of conversation.” Many bankers, he said, failed to appreciate the “white hot anger” at Wall Street for the financial crisis. (Mr. Altman said he personally supported “the substance” of the president’s recent proposals, though he questioned their feasibility and declined to comment at all on what he called “the rhetoric.”)
Mr. Obama’s fight with Wall Street began last year with his proposals for greater oversight of compensation and a consumer financial protection commission. It escalated with verbal attacks this year on what he called Wall Street’s “obscene bonuses.” And it reached a new level in his calls for policies Wall Street finds even more infuriating: a “financial crisis responsibility” tax aimed only at the biggest banks, and a restriction on “proprietary trading” that banks do with their own money for their own profit.
“If the president wanted to turn every Democrat on Wall Street into a Republican,” one industry lobbyist said,“he is doing everything right.”
Though Wall Street has long been a major source of Democratic campaign money (alongside Hollywood and Silicon Valley), Mr. Obama built unusually direct ties to his contributors there. He is the first president since Richard M. Nixon whose campaign relied solely on private donations, not public financing.
Wall Street lobbyists say the financial industry’s big Democratic donors help ensure that their arguments reach the ears of the president and Congress. White House visitors’ logs show dozens of meetings with big Wall Street fund-raisers, including Gary D. Cohn, a president of Goldman Sachs; Mr. Dimon of JPMorgan Chase; and Robert Wolf, the chief of the American division of the Swiss bank UBS, who has also played golf, had lunch and watched July 4 fireworks with the president.
Lobbyists say they routinely brief top executives on policy talking points before they meet with the president or others in the administration. Mr. Wolf, in particular, also serves on the Presidential Economic Recovery Advisory Board led by the former Federal Reserve Chairman Paul A. Volcker.
Mr. Wolf was the only Wall Street executive on the panel and became the board’s leading opponent of what became known as the Volcker rule against so-called proprietary trading, according to participants. Such trading did nothing to cause the crisis, Mr. Wolf argued, as the industry lobbyists do now. (The panel concluded that the crisis established a precedent for government rescue that could enable big banks to speculate for their own gain while taxpayers took the biggest risks.)
Mr. Wolf and Mr. Dimon, who was in Washington last week for meetings on Capitol Hill and lunch with the president, have both pressed the industry’s arguments against other proposed regulations and the bank tax as well — saying the rules could cramp needed lending and send business abroad, according to lobbyists.
Both men are said to remain personally supportive of the president. But UBS’s political action committee has shifted its contributions, according to the Center for Responsive Politics. After dividing its money evenly between the parties for 2008, it has given about 56 percent to Republicans this cycle.
Most of its biggest contributions, of $10,000 each, went to five Republican opponents of Mr. Obama’s regulatory proposals, including Senator Richard C. Shelby of Alabama, the ranking minority member of the Banking Committee.
The Democratic campaign committees declined to comment on Wall Street money. But their Republican rivals are actively courting it.
Senator John Cornyn of Texas, chairman of the National Republican Senatorial Committee, said he visited New York about twice a month to try to tap into Wall Street’s “buyers’ remorse.”
“I just don’t know how long you can expect people to contribute money to a political party whose main plank of their platform is to punish you,” Mr. Cornyn said.
