The demonisation of the financial industry is not limited to the US. It's a global phenomenon. In the US, the need to bail out the banking industry was a very difficult political decision for Democrats in particular. The entire country was suffering in the recession.
There was the notion that people across America were losing their homes and the government couldn't help them. That the government could put $800 billion into the financial industry became a very difficult political issue. As a result, there was a reaction that we can't allow this to happen again and we have to demonstrate that we're dealing with the banks in a harsh manner.
So I think that the politics of doing the right thing at the time, the necessary thing, which was to basically save the world economy by federal government intervention, ended up having a series of consequences, one of which was a strained relationship between the administration and Wall Street.
The leaders of Wall Street have made it clear to the President that they will support revenue increases.
Out of that came the Occupy Wall Street movement and the general divide between Wall Street and the average American. Meanwhile, the people on Wall Street who were struggling to stabilise their own institutions and get the global economy going again felt under-appreciated. They were very concerned about an over-reaction on the legislative and regulatory fronts with Dodd-Frank and other interventions, as well as the rhetoric about Big Bad Banks. Nobody likes to be on the defensive. But they all maintained a solid working relationship with the administration throughout the process in terms of the negotiation of the Dodd-Frank legislation (Dodd-Frank The Wall Street Reform and Consumer Protection Act), and during the subsequent regulatory process. The industry generally felt that Dodd-Frank ended up for the most part being a legislation they could live with. They certainly have a strong working relationship with (US Treasury) Secretary Timothy Geithner.
I think the problem was that the politics of the presidential and congressional election campaign came hard on the heels of Dodd-Frank and that created an atmosphere of the public blaming the banks and the banks getting defensive. It became Wall Street versus the Main Street. Because the economy was slow to recover, the Democrats had to remind the American electorate of how we got into this mess. Banks were the focal point of the argument that it was Wall Street, as opposed to the government, that was responsible. To some extent they pointed to the previous George Bush administration for not having been tough on the banks.
Wall Street firms generally hedge their bets and contribute to both sides. President Barack Obama came to New York many times and raised a lot of (campaign) money on Wall Street but the numbers show that contributions were weighted on the side of (former Massachusetts governor and Republican presidential candidate) Mitt Romney.
But there is no doubt that Wall Street is eager to work collaboratively with the President and his administration. It is in their interest and certainly in the country's interest that our financial industry is working closely with the administration going forward. The alternative is self-destructive for both the President and the financial industry. They need each other.
Our co-chairman Kenneth Chenault, the head of American Express, was in the first group of CEOs the President invited to the White House (after his re-election) on how we can work together. So the President has reached out. The frustration has been that all of Washington DC-the Congress and the administration-are very absorbed in a political agenda that often doesn't take into consideration the economic needs of this country. What we're looking for in 2013 is that Congress and the administration are able to get beyond the partisan activity associated with running for election and really focus on shared interests.
With the elections behind us and with the President having won a clear victory, the divisive language is behind us and there will be a close working relationship going forward. The demonisation of Wall Street has been hard to take. The financial industry is proud of its contribution; it's an industry that has really powered America's success as leader of the global economy. But the contributions of the industry have been forgotten during this period. They obviously made some mistakes but they feel they're taking outsized responsibility for problems that should be more broadly shared. I think the rhetoric and demonisation have been a very sore point. Hopefully, we're going to get beyond that.
Here, in New York, we just went through a bad storm Sandy with a lot of people killed, and a lot of destruction. Hopefully we recognise the need to build an infrastructure that deals with climate change that heals some of the wounds that were created by the politics around the financial crisis. [New York City] Mayor Mike Bloomberg took the opportunity to endorse President Obama for re-election in the context of his feeling that the President was going to lead us to some solutions for the climate change problem.
Experiences like the storm and like the fiscal crisis will have us focus more on what unites us than what divides us. The leaders of Wall Street have made it clear to the President that they will support revenue increases, including a sunset on Bush tax cuts on high earners, as part of an overall package to reduce the country's debt by $4 trillion. They are simply asking that we solve our long-term problems by cutting spending and by reform of Medicare, and not simply keep raising taxes because we can't raise enough taxes to fix our debt problem.
Wall Street firms are going to do everything it takes to be perceived as part of the solution. They have increased their small business lending, they are working with homeowners to avoid foreclosure, and they're standing ready to invest in upgrading our infrastructure. So I anticipate and have seen Wall Street be extremely aggressive in trying to help America solve the problems before us and not be cast as a villain. I think the President is likely to welcome that and I think he can take some credit for it.
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