Losing Gordon Gekko: Wall Street has gone over to the Democrats. Should conservatives miss it?(Essay)

IN the sweating-bullets world of venture capital, start-ups live or die by The Pitch--the one-shot better-get-this-right opportunity an entrepreneur has to sell his idea to the people who have the money to make it happen. Barack Obama, the most successful start-up in modern American politics, made his pitch to 20-odd gorilla-league hedge-fund barons and Wall Street money managers early in the Democratic primary season. He wasn't yet the front runner, and the room wasn't necessarily ready to be impressed. New York money was already invested in the presidential aspirations of home-state senator Hillary Clinton, and Chuck Schumer, who had been merciless in his campaign to wring money out of Wall Street for the Democratic Senatorial Campaign Committee, was backing her. So were the CEOs of JPMorgan Chase, Goldman Sachs, and Morgan Stanley. Obama's net assets: one famous speech.

Pitching Wall Street, Obama didn't chew through his usual mouthful of Hope and Change. This was a room full of George Soros--level players, not the sort of people who get a buzz from inhaling the heady vapors of Obama's pharmaceutical-grade oratory. Instead of his usual homily, Obama delivered what one insider describes as a "blistering attack" on the American public-school bureaucracy in general and on teachers' unions in particular. Busting chops--that got Wall Street's attention. He said he was close--"this close"--to supporting vouchers, an almost unthinkably heterodox position for a Democrat seeking the keys to the executive suite. But hedge-fund guys spend good coin sending their precious bundles to Choate and Greenwich Country Day School, and they like the idea of education reform. Obama must have been convincing: Nearly three-fourths of the hedge-fund and buyout-firm money that found its way into the two major 2008 presidential candidates' campaigns went to Obama. He'd taken $2,000 from Tony Rezko and a loan from a Chicago Cadillac dealer and turned it into a $750 million political enterprise. Never mind Colin Powell, the Republicans had lost Gordon Gekko, and the Goldman Sachs Democrats were back in business.

Not that they'd ever gone away.

The Democrats--the party of George Soros and dodgy cattle futures--have long profited by denouncing Republicans as the party of Wall Street, a raggedy front for a gang of amoral money-runners pulling the strings of their puppets in Washington. It's a useful narrative for Democrats, but it isn't true. Wall Street may have a few more pachyderms roaming around than the rest of Manhattan, but the world of bulls and bears is also a world of donkeys.

GOLDMAN SACHS is one firm that's learned that politics matters: The sinking investment bank received some $12 billion in bailout funds while its competitor, Lehman Brothers, was allowed to go bankrupt. Goldman operators move easily between government and the private sector and have played key roles in both Democratic and Republican administrations. But like the rest of Wall Street, they have tilted heavily Democratic of late. Goldman Sachs was the biggest business donor to Democrats in 2008, according to a Center for Responsive Politics report. Some 73 percent of Goldman Sachs's millions in 2006-08 donations went to Democrats, but its outlook has been informed by bipartisan pragmatism: The banking bailout came from a Republican administration and was marketed by Goldman Sachs alumnus Hank Paulson, who literally begged, on bended knee, for the money. It was managed by assistant treasury secretary and former Goldman Sachs foot soldier Neel Kashkari and was politically nudged along by Bush's chief of staff, Josh Bolton, another Goldman veteran. With Democrats now controlling the elected branches in Washington, Goldman has an even stronger hand: Former chairman Robert Rubin is the dean of the Goldman Sachs Democrats, the group that ran economic policy under the Clinton administration and is doing the same under Obama. Rubin acolytes Larry Summers, Timothy Geithner, and Peter Orszag already are filling key economic-policy positions, and Rubin's son, Jamie, is raising money on Wall Street for Democrats and acting as a talent scout for the Obama administration. The elder Rubin is sure to have the ear of all the major players. Geithner, hurt in the ruckus over his unpaid taxes, has turned to the bank for a reliable loyalist, hiring former Goldman lobbyist Mark Patterson as his top aide. And Geithner's replacement at the New York Fed? William C. Dudley, former managing director of Goldman Sachs.

Other major nodes on the Goldman-Democratic nexus include Al Gore's London-based private-equity firm, Generation Investment Management, which was founded with assistance from former Goldman boss Paulson and includes in its ranks a half dozen prominent Goldman veterans. Former Goldman Sachs Asset Management CEO David Blood is its CEO, earning the firm its nickname, "Blood and Gore." Goldman Sachs is a significant investor in E+Co, Blue Source, and APX, all firms positioned to profit from the cap-and-trade schemes that are at the heart of Gore's global-warming crusade.

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