President Obama has raised more campaign finance from Wall Street than the total raised by the seven Republican candidates - click here. Even though Wall Street is disaffected with Obama (see previous post), it is still backing him. Why? The answer may be that he is Wall Street's puppet. After all, many of the policies implemented by the Obama administration have been favourable to (and even devised on) Wall Street. In addition, Obama has not sought retribution from Wall Street for the financial and economic mess they have created. Conclusion - Obama is Wall Street's man, and this means he is likely to be re-elected.
Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne...