Once at Arm's Length, Wall Street is Bush's Biggest DonorOnce at Arm's Length, Wall Street Is Bush's Biggest Donor
By GLEN JUSTICE, New York Times
October 23, 2003
A day after a chilly reception at the United Nations last month, President Bush received a warmer greeting from a New York group that he had been keeping at arm's length: about a dozen leaders of the biggest firms on Wall Street.
That private meeting at the Waldorf-Astoria, to discuss the economy, is just one illustration of how the president and Wall Street seem to have grown on each other.
Two weeks before he was sworn into office, Mr. Bush held a business leaders forum in Texas with dozens of prominent executives, but with no chief executive from Wall Street. Likewise, such executives were absent from his economic summit in Waco, Tex., in August 2002.
"There was some `we're from Texas, we're not from Wall Street,' " said Senator Jon Corzine of New Jersey, a Democrat who served as co-chairman at Goldman Sachs before taking office. "To their credit, they've moved away from that."
After winning Congressional approval for cuts in taxes on dividends, capital gains and for certain business investments, and after navigating a raft of corporate accounting scandals that shook the investment community, President Bush seems to have won over many financial executives, who are now strongly supporting his re-election campaign.
A study to be released today shows that the financial community has surpassed all other groups, including lawyers and lobbyists, as the top industry among Mr. Bush's elite fund-raisers. The list of those generating $100,000 and $200,000 now includes chief executives like Henry M. Paulson of Goldman Sachs, John J. Mack of Credit Suisse First Boston and Stanley O'Neal of Merrill Lynch, whose firm has already raised twice the amount for Mr. Bush's re-election that it did during the entire 2000 campaign cycle.
"It's really a question of policy, that's what's driving this," said Marc Lackritz, president of the Securities Industry Association, which represents more than 650 securities firms. "It's a pro-investor policy."
Executives say the support is fed by patriotism and other factors, including the administration's actions to fight terrorism after the Sept. 11 attacks, which struck the country's financial nerve center. Financial executives are also providing money for the Republican convention, which is scheduled for New York next summer and will bring hundreds of business leaders to the city.
Finally, there is no clear leader among nine Democratic presidential candidates, some of whom have advocated repealing the administration's tax cuts, and Wall Street loves a winner.
Mr. Bush has long had support from the business community, but Wall Street has usually split its contributions between Democrats and Republicans and was supportive of President Bill Clinton and the presidential campaign of Al Gore. Whether the group will give as heavily to Democrats after a leader emerges from the primaries is yet to be seen.
A White House spokesman decline to characterize the president's relationship with Wall Street. But White House officials said that Mr. Bush had maintained regular contact with companies from all segments of the economy, from small businesses to the industrial sector, and that he had always appreciated Wall Street as an economic engine. When corporate scandals shook investor confidence, they noted, the president went to Wall Street to press for corporate accountability.
Campaign officials say the president has reached out to supporters nationwide, not just on Wall Street. "All of our volunteer fund-raisers are an important part of the campaign," said Scott Stanzel, a campaign spokesman.
Yet some executives say the early days of the Bush administration suggested a frosty relationship. When he took office, the markets were declining, and he chose few from the Wall Street world as top advisers.
His first Treasury secretary, Paul H. O'Neill, came from Alcoa and had a tempestuous relationship with the financial sector. The Bush administration may also have suffered from comparisons to the Clinton administration, which was known for its warm relations with Wall Street. The Bush administration was also rocked by several corporate scandals, including those at Enron and Worldcom.
Allen B. Morgan Jr., the chairman of Morgan Keegan & Company, a brokerage firm based in Memphis, said support from Wall Street executives had come in spite of Mr. Bush's decision to keep some distance from them.
"Bush has stayed clear of the big firms," said Mr. Morgan, a former chairman of the Securities Industry Association and a Bush fund-raiser. "But I think one of the reasons that people have raised money for him is they see him as a person who is cutting the size of government in the long run. They buy into that. And they think he can be re-elected."
Others like Mr. Lackritz say they never saw a problem, finding the administration "very receptive to ideas." Still others say it was Wall Street that woke up to Mr. Bush, not the other way around.
"Many people on Wall Street finally got it," said Steve Bartlett, a former member of Congress who is now president of the Financial Services Roundtable, which represents financial services companies. "The president hasn't changed," he said. "Wall Street has evolved to see that the president is doing what's right for the American people and the economy."
When Mr. Bush began raising money this year, one of his first stops was New York, where he collected $4 million at an event organized in part by Mr. Paulson and Mr. Mack. On Friday, a reception is scheduled on Ellis Island at which Vice President Dick Cheney will thank more than 200 donors.
The 2004 election is still more than a year away, but employees of securities and investment firms and their political action committees have contributed $3.8 million to the Bush campaign through September, just $159,000 less than they gave during the entire campaign cycle in 2000, according to the Center for Responsive Politics, which tracks campaign finance.
The president has raised more from the industry than all nine candidates in the Democratic field combined. While Senator John Kerry of Massachusetts counts the industry as his second-largest contributor, at about $1 million through September, others have not done as well. Howard Dean, the top fund-raiser in the field, raised about $302,000, and Senator Joseph I. Lieberman of Connecticut raised about $639,000.
"All these guys are totally in Bush's camp," said a politically active executive, adding that "people are not hedging their bets at this point. There's not a lot of fund-raising being done for Democrats right now."
Mr. O'Neal of Merrill Lynch sent a series of letters to the homes of a few hundred of the firm's most senior executives in June, asking them to contribute to a fund-raising dinner in support of Mr. Bush. James E. Cayne, chairman and chief executive of Bear Stearns & Company, also sent a letter asking his executives to donate to the campaign.
Joseph J. Grano, who runs the brokerage operations of UBS, the Swiss bank, has been an avid backer of President Bush and the Republican convention. Mr. Grano promised to raise at least $200,000 for the re-election campaign and to gather money for the convention, said executives at the firm, formerly known as UBS PaineWebber.
Mr. Paulson, of Goldman Sachs, was recruited by Gov. George E. Pataki of New York to collect cash from the Wall Street firms to finance the convention, an official at the firm said, and has gathered $5 million so far.
Part of Mr. Bush's fund-raising success on Wall Street can be attributed to the new campaign-finance law that doubled, to $2,000, the amount an individual can give to a primary campaign. Several industries have already matched what they gave in 2000.
Mr. Bush plans to raise a record-setting $170 million for next year's race. His largest fund-raisers are grouped as Pioneers, who raise at least $100,000, and Rangers, who raise at least $200,000. An increasing number in both programs are from the financial sector.
Texans for Public Justice, a group that tracks campaign money, examined Mr. Bush's fund-raising network and which industries it represents. Its study, to be released today, shows that 20 percent now come from the financial sector, up from 14 percent in the last presidential election. The industry - defined broadly to include banks, finance companies, securities and investment firms and accounting and tax service firms - has produced at least 38 new elite fund-raisers for the Bush campaign.
Executives who have signed on include Mr. Cayne of Bear Stearns; Stephen M. Lessing, managing director at Lehman Brothers Holdings; and Henry Kravis, founding partner at Kohlberg Kravis & Roberts.
Over all, more of Mr. Bush's top fund-raisers come from the financial sector than any other, a change from the last presidential election when lawyers and lobbyists topped the list.
"The New York City financial district is doing much more than it did earlier," said Craig McDonald, executive director of Texans for Public Justice. "Wall Street has surpassed K Street."