Saturday, February 2, 2008

The Connection between Wall Street and the White House

I came across an interesting story related to political donations by employees and executives of investment banks. Candidates from which party received more money from these firms....Republicans or Democrats?

A priori, I would have expected that the Republicans to get more from these firms, because of their penchant for lower income, dividend and capital gains taxes. Somewhat surprisingly, the Democratic candidates received almost twice as much money from these investment banks than the Republican candidates.

When viewing the following numbers, remember, that the maximum allowable donation per person is $4600.

Democratic candidates

Clinton and Obama collected half of the $7.4 million in donations to 15 major presidential candidates from these investment firms.

Breaking it down further, through Dec. 31...

Clinton- total $2 million from investment banks including $373,020 from Morgan Stanley workers, $316,001 from Goldman Sachs, $290,000 from Citicorp. workers.

Obama got $1.7 million from the same firms, $288,835 from Goldman Sachs employees, $242,395 UBS and $226,805 Lehman Brothers employees.


Romney $893,915 in donations from the firms, including $146,970 from employees of Merrill Lynch, $124,050 from Morgan Stanley workers, $121,950 from Lehman Brothers employees, and $120,000 from Goldman Sachs workers.

McCain, total $704,423, led by $145,715 from Merrill Lynch workers and $124,661 from Citicorp. employees.

Why did these employees give money to candidates who might RAISE taxes on them? Two possibilities come to mind (send comments if you think of more). 1) People value change and less involvement in the war in the Middle East more than their own pocketbooks (hopefully...that is a good sign for human nature). 2) These employees, who are into predicting markets all the time, predict that a democratic candidates has higher odds of winning the 2008 presidential election. Thus, they want to donate to these people so they can be "remembered" when Hillary or Obama is president, and hopefully, we get something in "return" for their good deed. I hope the first reason is true, because the 2nd just exemplifies the corruption and cronyism in Washington that has been present for decades.

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