December 7, 2011 6:40 pm

Romney to pitch a doubtful Wall Street

When Mitt Romney heads to Manhattan next week for back-to-back fundraisers hosted by some of the biggest names on Wall Street, he will be fêted by his former colleagues as the candidate best placed to rescue the US from its economic peril.

Mr Romney, the co-founder of Bain Capital, will be mingling with his own at a party in the Park Avenue apartment of Steve Schwarzman, chairman of Blackstone Group, and at another hosted by four JPMorgan Chase executives, led by Jimmy Lee, vice-chairman.

Mr Schwarzman, head of the world’s largest private-equity firm, recently lauded Mr Romney as “a natural leader”.

Despite Mr Schwarzman’s endorsement, there is a noted lack of enthusiasm on Wall Street for the crop of candidates seeking the Republican nomination a nd the financial sector’s infatuation with President Barack Obama ended long ago.

The Democratic president enjoyed strong support when he ran for election in 2008, raising $42m from the financial sector. But many who backed him then now voice real concern about his record and say they will not support him automatically this time around.

Many financial sector insiders also say they are unimpressed by the Republican candidates, sharing the party base’s misgivings about Mr Romney and regarding Newt Gingrich, the bombastic former speaker of the House of Representatives, as too volatile.

Anthony Scaramucci, head of SkyBridge, a fund of hedge funds who describes himself as “probably among the top five fundraisers for Romney”, says that New York Republicans have “donor fatigue”.

To get around this, Mr Scaramucci plans to engage and energise 25- to 45-year-olds “to create a whole new list of donors”.

Paul Singer, founder of the hedge fund Elliot Associates and a prominent Republican fundraiser, said Mr Romney was someone who had “proven skill and talent, who embod[ies] integrity, and whose agenda is anchored in and draws strength from American ideals”.

But some financial industry players voice concern that private equity firms could face increased scrutiny if Mr Romney were to become the nominee.

The most controversial tax break of them all – on carried interest – is the driving factor in private equity captains’ wealth accumulation.

It has allowed many private equity industry executives to pay only 15 per cent tax on the vast majority of their income over the past 30 years, and they are terrified that they will lose this tax break as Washington considers ways to solve its budget problems.

Mr Gingrich’s surge to the top of the Republican pack – he has a large lead in latest surveys in Iowa, and a Gallup national poll – has cast doubt on the widely held assumption that Mr Romney would be the inevitable nominee.

Like many Republicans, Mr Scaramucci said he would ultimately fall in behind Mr Gingrich were he to get the nomination, believing in an “anybody but Obama” candidate.

Mr Obama has fallen out of favour among many previous supporters in the financial industry, partly due to his administration’s new regulations on the sector and also because of his implicit encouragement of the Occupy Wall Street movement.

So far this election cycle, the president has raised $4.1m from the financial sector, while Mr Romney has raised $7.7m, according to the Center for Responsive Politics.

One senior Wall Street executive who supported Mr Obama last time said he would not do so in 2012, citing what he saw as a failure of leadership from the White House.

A senior executive at a different bank, who also supported Mr Obama, said he had become disillusioned with the “class warfare” he saw perpetrated by the president.

An habitual supporter of the Democrats, this executive cited a scathing open letter sent to Mr Obama recently by Leon Cooperman, the head of Omega Advisers, alleging the president had worsened divisions in society.

Mr Cooperman criticised Mr Obama “and your minions’ role in setting the tenor of the rancorous debate now roiling us that smacks of what so many have characterised as ‘class warfare’”.

One of Mr Obama’s supporters conceded that the president was not doing as well on Wall Street as in his first election campaign.

“A very high percentage of the Democrats [who supported Mr Obama last time] are staying with him, but those Republicans who went with him are probably less supportive than before,” he said. “As for independents, my view is that a lot of them are on the fence right now.”

Indeed, while Mr Schwarzman is supporting Mr Romney, Tony James, Blackstone’s president, has supported Mr Obama, and other previous Obama supporters are standing by him.

Ralph Schlosstein, chief executive of Evercore, the investment bank, and Roger Altman, its chairman, are among the large donors who have attended Obama fundraisers in recent weeks.

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