Off message: Finance and politics – from back-stabbing to back-slapping

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The relationship between finance and politics might look fraught today, but it has always been more nuanced than you might realise.

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Years ago I attended a charity cocktail party in Manhattan in the company of a senior bank executive. As we walked into the gathering we found ourselves face-to-face with a well-known US congressman who had built his reputation on bank-bashing. Over the years, he had generated tonnes of coverage for his criticism of big banks for everything from onerous credit card rates to excessive executive compensation.

I thought at first this was going to be a very awkward moment. Instead, the two men greeted each other warmly, asked about each other’s families and carried on as long lost friends.

When the congressman walked away I turned to the banker and told him how amazed I was at how well he got along with someone who was so clearly a vociferous opponent of banks.

"The thing you have to understand about bankers and politicians is that we don’t care what they say, only what they do. And as vocal as he is, we can always count on his vote for the important stuff."

Thus is found the strange nature of the relationship between those who govern, and those who control the world of finance.

For more recent evidence of how strange these bedfellows are, consider the case of Hillary Clinton, who has announced her candidacy for the US presidency.

The answer, I suppose, can be found in the notion
that Wall Street places much more of a premium
on effectiveness than it does on philosophy

In a recent campaign appearance in Boston, Clinton engaged in some good old-fashioned bank-bashing herself, telling the audience that she was pleased that the people who caused the financial crisis of 2008 were now coming in for criticism of their own. To take it a step further, she reminded those in attendance that trickle-down economics has failed in a spectacular manner.

You would think those kind of remarks would rankle with Wall Street. But that’s simply not the case. They love her. Hillary makes a reported $200,000 for the speeches she gives before Goldman Sachs customers and is very close to its CEO Lloyd Blankfein.

But as you would expect from someone like Hillary, she doesn’t put all her eggs in one basket. She has also close relationships with James Gorman, CEO of Morgan Stanley, Jamie Dimon at JPMorgan Chase and Brian Moynihan at Bank of America.

So how does that work? How can someone from the party of the left that is traditionally in favour of higher taxes and more regulation start her campaign knowing there’s going to be no shortage of funds coming from the bastions of finance in America?

The answer, I suppose, can be found in the notion that Wall Street places much more of a premium on effectiveness than it does on philosophy. They obviously see Hillary, with her track record in the US Senate and at the State Department, as nothing if not effective.

One Wall Street executive sums it up this way: "I think people are very excited about Hillary. Most people in New York on the finance side view her as being very pragmatic. They have confidence that she understands how things work and that she’s not a populist."

Teflon man

Several months ago, I wrote about what a good job Santander did in introducing to the world its new executive chairman, Ana Botín. It’s becoming a common task at bank group PR level. 

At the end of this month, Bill Winters will take over from Peter Sands as CEO of Standard Chartered. The former head of the investment bank at JPMorgan Chase will be faced with some challenges, among them determining the future of SC’s investment bank and whether the firm should move its headquarters to Asia.

Further reading
Ana Botin2-large
Off message: Introducing Ana,
the new chair of Santander…

Winters has been deemed a bit of a Teflon man in some quarters but that’s not really fair. From all accounts, he’s a genuinely decent individual with the ability to run investment banking and trading operations within the parameters of sound risk management.

My hunch is that he will build on his already decent contacts among the senior members of the UK financial press to get the right message out at the right time without sticking his head above the parapet too much. Don’t look for any flash press launches; instead he will let his actions do the talking at the right place and the right time.

And in July, we will see Tidjane Thiam take over from Brady Dougan as CEO of Credit Suisse. He will be the one to watch. A proven executive who did a great job as head of the insurer Prudential, the naming of Thiam sent shock waves through the trading floor and investment banking suites at CS. To have someone in charge whose background suggests a greater comfort level with the asset management side of the business accounted for no small share of anxiety among the bankers and traders.

Unlike Winters, Thiam doesn’t have the connectivity with the UK investment banking writers. He does, however, have a savvy communications team at his disposal that will get him plugged into all the right places. 

I would not expect however to see much of a public profile for Thiam until he has made some tough decisions on raising capital and shrinking the investment bank.