If you had any doubt, you can now stop wondering what the financial industry thinks of President Obama.
One day after learning of Obama's re-election, stock prices are trading sharply lower at blue-chip companies across the board. As of 2:40 p.m. EST, the Dow Jones Industrial Average (INDEX: ^DJI ) is down a whopping 289 points, making this one of the worst days of the year for equities.
Make no mistake about it: This is evidence of an "us versus them" type of mindset. Pitched on one side is a president who has made no secret of his feelings about Wall Street and the central role it played in the financial crisis. In a 2009 interview on 60 Minutes, Obama said:
I did not run for office to be helping out a bunch of fat cat bankers on Wall Street. They're still puzzled why it is that people are mad at the banks. You guys are drawing down $10 million, $20 million bonuses after America went through the worst economic year that it's gone through in decades, and you guys caused the problem.
In the opposing camp are the so-called "fat-cat bankers." As my colleague Amanda Alix pointed out on the eve of the election, the top corporate contributors to the Romney campaign were none other than Goldman Sachs (NYSE: GS ) , Bank of America (NYSE: BAC ) , Morgan Stanley (NYSE: MS ) , and JPMorgan Chase (NYSE: JPM ) . And this is to name only the top four. The remainder of the roll continues on like a Who's Who list of Wall Street financial institutions.
Although there are any number of observations and witty comments one could make about this, I'll limit myself to two of the former.
In the first case, from the perspective of a citizen and individual investor, the president's point is hard to dispute. Anyone who has studied the financial crisis knows that its epicenter was not on Main Street, as Wall Street would like you to believe, but rather on the southern tip of Manhattan. Countless traders and investment bankers amassed fortunes knowingly selling products that fueled both the housing bubble and its subsequent deflation. While many of them continue to live large on the arguably ill-gotten gains, the rest of the country continues to suffer from underwater mortgages and high unemployment.
Yet, at the same time, the financial barons in New York City have a point as well. Despite saving the financial system and the majority of its participants -- Lehman Brothers aside, thanks ostensibly to Dick Fuld's arrogance and irreverence -- the Federal Reserve under Chairman Bernanke has begun to squeeze the industry. Namely, since the end of last year, it has set its sights on driving down the long-term interest rates that many financial institutions rely on to make money.
In addition, the central bank has lent considerable credibility to a wave of new laws and regulations impacting the industry. In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is aimed at preventing another crisis. And more recently it has supported moves to increase the capital requirements at banks and other so-called "systematically important" financial institutions. It's for these reasons, in turn, that financial companies like Bank of America and JPMorgan Chase are leading the market lower today.
The Foolish bottom line
Earlier today, I urged investors to avoid making impulsive decisions with their portfolios in light of the market's performance today. And given the fact that the Dow is currently down more than 280 points, I think it's worth nothing again.
To quote my colleague Dan Caplinger's point about trading in the aftermath of Hurricane Sandy (emphasis added): "Whether you're in an area affected by Hurricane Sandy or are simply watching from the sidelines, think twice before you invest based on its impact. Before you know it, Wall Street will have forgotten about the storm, and you'll be left with positions that may not have much appeal after the bad weather dies down."
The same rule applies here.
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