Obama vs. Blankfein and Dimon

by Derek Loosvelt | May 24, 2010

This week’s New York magazine cover story, “Obama Is From Mars, Wall Street Is From Venus,” outlines how Lloyd Blankfein, Jamie Dimon and other Wall Street head honchos fell out of love with the president and his administration, moving rather quickly from being Barack backers to Barack haters.

It's also a crash course in how Obama has been dealing with the financial crisis, touching on the thinking behind appointing Timmy Geithner to succeed Hank Paulson, how the Treasury Secretary has been faring in his new job and how the administration passed financial reform bills in the House and Senate. So if you haven't been paying attention to financial news headlines as of late, here's your chance to catch up.

However, if you're too busy trying to figure out what J.J. Abrams and gang were attempting to communicate last night through the series finale of "Lost" and don't have the time to read the entire 6,500-word cover story, here are a few choice quotes (which should give you the gist):

But one of the city’s most successful hedge-fund hotshots offers a different surmise: “The majority of Wall Street thinks, ‘Hey, you [the U.S. government] lent us money. We did a trade. We paid you back. When you had me down, you could have crushed me, you could have done whatever you wanted. You didn’t do it! So stop your bitching and stop telling me I owe you, because I already paid you everything! The fact that I’m making money now is because I’m smarter than you!’ I think that’s where you’ve got this massive disconnect. In simple human terms, the government is saying, ‘I saved your life, and all you did was thank me once. You should be calling me every day: Thank you. Thank you.’ The guy who saved the life expects more. And the guy whose life is saved says, ‘I already thanked you!’?”

Blankfein and Dimon share the crown warily, uneasily. At a recent industry event in Washington, Dimon was giving a presentation and struggling with his laptop when Blankfein cracked from the audience, “I’m feeling a bit better about my competitive position”—to which Dimon cheekily shot back, “Just doing God’s work up here, Lloyd.”

One day in the winter of 2009, [Rahm] Emanuel was meeting with a senior Goldman executive and offered some Rahmian advice. “You don’t f[*&^]ing get it!” he said. “You’re making $600,000 a year and you think you’re a f[*&^]ing saint—because you were making $50 million before. But as far as the guy across the street thinks, you’re still a f[*&^]ing pig! Reduce it to zero and he’ll love you!”

But the announcement of the Volcker Rule wound up providing an addedpolitical boost. For the banks and the Republicans, the core of theirlegislative strategy had been to try to stall out the clock until November.But together with the bank tax, the Volcker Rule had the effect of ringingthe industry’s bell, of elevating the issue and making the oppositionrealize that the White House was picking up momentum. More than that, itsplit the industry between those directly affected by Volcker and those whowere not.

And yet, for a brief moment in the middle of April, it appeared that theRepublicans were coalescing (or trying to coalesce) around the same kind oflockstep opposition to financial reform that they employed in thehealth-care fight. Then came the filing by the SEC of civil-fraud chargesagainst Goldman. At that moment, any real chance that financial reform would somehow be derailed vanished into the ether.

At Goldman and elsewhere, the belief is strong that the case against WallStreet’s most storied firm was politically motivated; lately, Blankfein hastaken to trashing Obama to his friends in unusually brutal personal terms.Dimon—who is fond of declaring, “I’m a patriot!” in meetings with WhiteHouse officials—recently described himself publicly as “a waveringDemocrat.”

And even those less bruised than them have found the experiencetraumatizing. “They’re not accustomed to being engaged in politics thisway,” says a private-equity investor. “Their skin isn’t toughened. Theyactually take [the attacks by Obama] personally. This is a profession with alot of smart people, but who aren’t necessarily terribly introspective. Theythink they actually deserve to make all this money. So any attack on theirlivelihood is, ahem, unpleasant.”

Filed Under: Finance


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