David Callahan's book Fortunes of Change: The Rise of the Liberal Rich and the Remaking of America puts a lot of analytical weight on the 2008 election. The chapter entitled "What's the Matter with Connecticut?" in particular reads much into the lopsided amount of cash that poured from hedge funds and other financial firms into the coffers of Obama's campaign and those of other Democrats. From this Callahan concludes that the hedge-fund elite are different from their historic counterparts, who would fund only candidates and parties that supported their narrowly defined economic interest.
In a response earlier this month to the book, I warned that we should not "read too much into the 2008 election." Now comes evidence that the Democrat-hedge fund love affair is already over, in the form of this somewhat buried fact from a Saturday New York Times story :
"Generally Democrats have been favored by Wall Street, getting 70 percent of donations from the securities and investment sector just 18 months ago. But by the time Congress took up the financial regulations legislation this June, Republicans were getting 68 percent of the donations, according to an analysis by the Center for Responsive Politics, a nonpartisan research group."
That is a 180-degree turnaround in less than one electoral cycle which, if not unprecedented, is certainly rare. Comparing the Center's 2009-10 chart with the comparable 2008 chart in Callahan's book, you see that one Greenwich-based quant fund, AQR Capital , which was not in the top ten contributors in 2008, now has given more than $200,000 to the Republicans, and zero to Democrats. Perhaps more interesting is Steve Cohen's SAC Capital , which split its 2008 contributions 80-20 in favor of Democrats, but has since flipped its giving ratio to 93-7 in favor of Republicans.
Actually, if you remove contributions to Chuck Schumer of New York—a Democrat in name, but for years Capitol Hill's best friend to the finance industry—the numbers would be even more lopsided in favor of the GOP. Seems to me hedge funds are regressing to the historical mean, and probably funding some pretty mean campaigns in the process.