Jamie Dimon’s testimony before Congress today appears to be a watershed moment in the rehabilitation of Wall Street. The industry has emerged from the financial crisis feeling its oats and fully realigned as a conservative political force.
In the years before the financial crisis, Wall Street took on a bipartisan hue, for the simple reason that neither party posed any serious threat to its business model. Republicans offered them lower tax rates, but Democrats offered them more congenial social positions that may have allowed them to hold their heads up high in rarified social circles as progressive businessmen.
The financial crisis ushered in a kind of transition period. Americans were in a purple-faced rage at an industry they more or less correctly perceive as having first destroyed the economy, then received a generous bailout and resumed making obscene money while the rest of the country suffered. The rage was strong enough to make politicians of all stripes leery of appearing close to the industry. That hesitation is what allowed liberals to pass the Dodd-Frank law — just enough Republicans and moderate Democrats were frightened to be seen as carrying Wall Street water to force them to support a potentially serious reform.
But Wall Street was slowly building up a rage against the public that it resented it, a rage it blamed primarily on President Obama and the Democrats. (Gabriel Sherman and Alec MacGillis have captured Wall Street’s bizarre feeling of persecution and entitlement.) Wall Street now tilts overwhelmingly Republican in its political orientation — the industry, reports Politico today, is directing nearly eight times as much money to Romney as to Obama.
And that new partisan orientation was on full display in Jamie Dimon’s testimony before the Senate today. It’s not that the Democrats were uniformly hostile — several of them treated Dimon rather deferentially. It’s that the only source of skepticism came from Democrats, especially liberal ones. Republicans tripped over themselves to display ideological solidarity with Dimon. The sense that Wall Street was more suspect than other businesses, for its systemic risks or having received a bailout, was completely gone. Dimon was just another Job Creator threatened by bureaucrats and red tape:
“What would you do to make our system safer?” Sen. Bob Corker (R-Tenn.) asked Dimon.
“What should the function of regulators be?” asked Sen. Mike Crapo (R-Ida.).
“How much have regulation costs increased?” asked Sen. Mike Johanns (R-Neb.).
“We’re honestly looking for some ideas as we look over [Dodd-Frank] in the next year,” Sen. Jim DeMint (R-S.C.) told him.
Even some of the Democrats sought out Dimon’s advice: Sen. Michael Bennett (D-Colo.), for instance, asked for his thoughts on solving the country’s long-term deficit crisis.
The politics of Wall Street have come to center now on the implementation of Dodd-Frank, which liberals want to strengthen and Republicans want to repeal altogether. Wall Street has emerged from the crisis as an industry like oil or tobacco. It faces the threat of regulation from liberals which it seeks to ward off by courting an alliance with the whole of the Republican Party, along with a crucial handful of “pro-business” Democrats. It has a bit of a bad odor with the public. But Republicans have no doubt calculated that the stench has weakened to the point where they’re better off taking Wall Street’s vast resources than posturing against it. And they are probably right, at least until the next crisis.