Karen Petrou: How Big Banks Play Politics for Keeps
A lot of questions I’ve gotten of late about the presidential election are premised on a false assumption: financial firms are Republican and the shift at the top of the Democratic ticket and better electoral odds has thus sent a shiver down many well-tailored spines. But, major financial companies are for the most part brutally pragmatic about pretty much everything and this applies with particular force when it comes to playing politics in a tightly-fought election. This year’s presidential politics are more than lively, but it’s still absolutely no different when it comes to big financial companies and the sides they take. Here’s why.
First, let me make clear which big financial companies I’m talking about. Hedge funds and some private-equity companies are branded as much by their leaders as by what they actually return to investors. The higher the profile of the manager, the bigger the impact they imply they make on Wall Street and the bigger the implied impact they make on national policies, the bigger a role some investors think these leaders play on the Street. This is an image-dependent financial-market and political feedback loop, and it often works astonishingly well. Playing big in politics or, at least, giving more or less big in highly-publicized ways burnishes a “big foot” image and, even when some investors disagree, they often stay put – see Bill Ackman.
Big financial companies answerable to powerful regulators and diverse shareholders cannot afford big political profiles on candidates or hot-button issues. When CEOs …