Look out: Your fund manager and your stockbroker are turning blue.
Politically speaking, at least.
Once upon a time, the Republican Party was the political wing of Wall Street. No longer. Presidential candidates have just revealed how much they raised, and from whom, during the first quarter. Among the notable facts in this early and high-octane race is that Democrats edged out the Republicans on Wall Street by $4.5 million to $4.1 million.
Even more noteworthy: This is becoming a trend. Wall Street has been turning away from the GOP for a decade.
The figures come from the Center for Responsive Politics, the Washington, D.C., think tank that tracks money in politics.
So far this year, 88% of money donated from people working for asset-management giant
has gone to Democrats. The figure at
is 60%. Yes, these are early days -- but so is the fundraising. And both firms gave much more money to Republicans in past elections.
But maybe the most interesting is Boston-based mutual fund giant
. It has, historically, been an overwhelming supporter of Republicans. And this time around you would expect the bias to be even greater, as the GOP field includes local boy Mitt Romney -- a former venture capitalist who is part of the Boston business world and the former governor of Fidelity's home state of Massachusetts.
Yet Democrats have even grabbed 44% of the early money from Fidelity. After Romney, nearly all the rest went to New York Sen. Hillary Clinton and Illinois Sen. Barack Obama.
And this is not a one-off phenomenon.
In 1996, just after Newt Gingrich's free-market Republican radicals took power in Congress, the GOP collected a thumping 58% of campaign donations from Wall Street.
As recently as the 2000 election, Republicans got 55%.
Since then, the figure has been in sharp decline, plunging to just 45% in the last election.
What's going on?
A lot of it has to do with the individual candidates. Two Democratic candidates --Clinton and Connecticut Sen. Chris Dodd -- enjoy unusually strong ties with Wall Street and the investment world. (On the other hand, so too do Republicans Romney and Rudy Giuliani, the former New York mayor.)
You expect incumbents to have the advantage. But Wall Street money started abandoning the GOP before the party lost power on Capitol Hill. And right now we are looking at presidential contributions, not those for Congress. No one running is an incumbent.
It doesn't take a hedge-fund genius to realize that this is not your father's Republican party. While Wall Street cheers Bush administration policies such as tax cuts and free trade, investment managers are horrified, for example, by the shocking federal deficits. "We've got a situation where the party of fiscal probity and balanced trade hasn't provided either since Dwight Eisenhower," says Harvard politics professor Richard Parker.
And there are cultural issues, too. The so-called "Southern strategy" launched by Richard Nixon 40 years ago has seen the old party of Lincoln turn itself into the modern Dixiecrats. But as the GOP rolls up support among Southern whites and rural "cultural conservatives," it's hardly a surprise if it starts alienating the more secular and cosmopolitan city crowd. "God, gays and guns" opens few checkbooks in Manhattan or Greenwich, Conn.
In the old GOP, Mitt Romney would be running on his genuinely impressive business record. Today he's running around claiming to be a "lifelong hunter." Boston, Massachusetts? He's barely heard of the place.
Parker also notes that if the Republican party has changed, so, too, has Wall Street. The old white-shoe world ruled by WASPs -- such as President Bush's grandfather, Prescott Bush -- has given way to one of ethnic and gender diversity. And professionals across the board have been voting increasingly Democratic, a trend that goes back decades.
What makes this potentially a dangerous development for the GOP is that in a political world where money is becoming more and more important, the law and the Street are the two most important sources of donations, and Democrats now enjoy a distinct edge in both.
Romney led the field on Wall Street, raising $1.72 million from people in the securities and investment industry in the first quarter. Clinton ran a close second with $1.69 million. Giuliani came third with $1.59 million.
Most remarkable: Obama. Unlike the top three, he started with no special network on the Street. Yet in the first three months he came hard on their heels, raising $1.32 million.
Most of these donations come from big investment banks such as Morgan Stanley,
and UBS. Curiously, big mutual fund companies tend to be less prominent in political donations than the Wall Street investment houses. Alongside Fidelity, the other big players are
. So far, their employees have only given a few thousand dollars, almost all of it to Democrats.
One minor exception is
Affiliated Managers Group
a little-known company based just outside Boston that owns stakes in a variety of mutual fund companies, including Marty Whitman's
. Employees from AMG gave $47,900 to Romney.
The inside dish: AMG is closely tied in with the remnants of the Massachusetts Republican Party. The CEO, Sean Healey, is husband of Romney's former lieutenant governor, Kerry Healey. She lost her race to succeed him in November but might be expected to land a posh job in D.C. if he wins the White House.
Dodd may be a long-shot presidential candidate, but he has the great advantage of all those hedge funds based in his state. Out of the $4 million he has raised so far, $202,000, or 5%, came from just one source: the legendary Steven Cohen's elite hedge fund
In keeping with TSC's editorial policy, Brett Arends doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Arends takes a critical look inside mutual funds and the personal finance industry in a twice-weekly column that ranges from investment advice for the general reader to the industry's latest scoop. Prior to joining TheStreet.com in 2006, he worked for more than two years at the Boston Herald, where he revived the paper's well-known 'On State Street' finance column and was part of a team that won two SABEW awards in 2005. He had previously written for the Daily Telegraph and Daily Mail newspapers in London, the magazine Private Eye, and for Global Agenda, the official magazine of the World Economic Summit in Davos, Switzerland. Arends has also written a book on sports 'futures' betting.