Almost since the day Barack Obama was sworn in, Wall Street has been warning about the catastrophic consequences of his presidency on its industry and, by implication, on the economy and society beyond. Last year, their house organ, the editorial page of The Wall Street Journal, called the president “a determined man of the left whose goal is to redistribute much larger levels of income across society.” Steven Schwartzman of the Blackstone Group compared his efforts to raise taxes on private equity firms to Hitler’s invasion of Poland in 1939. And if the president wins re-election this fall, “we might as well leave the country,” one billionaire hedge funder proclaimed on CNBC earlier this year.
But Wall Street likes nothing if not winners, and now that Mr. Obama seems more of a favorite in November and the sharpest GOP strategists caution that taking over the Senate remains a longshot, attention among the titans of finance has turned to their last bulwark against runaway regulation: the House of Representatives.
The crux of the concern is the House Committee on Financial Services, through which some of the most critical regulatory legislation, including Sarbanes-Oxley and Dodd-Frank, has passed over the past decade. Because even if Republicans retake the White House, or snatch the Senate away from Democratic hands, it may not matter much for Wall Street if the House flips from Republican to Democrat and the House Banking Committee ends up in the hands of Maxine Waters, the 17-term Democrat from South-Central Los Angeles.
Wall Streeters say that the prospect of Ms. Waters at the helm of the Financial Services Committee could actually make them regret chasing Barney Frank—who was slated to retake the committee before he abruptly announced his retirement this year—out of Congress.
“Just the name,” said one financial industry lobbyist, “sends shivers up the spine.”
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