Wall Street Biden supporters have buyer’s remorse because of new regulation

Some Wall Street backers of U.S. President Joe Biden are holding back on supporting him in the 2024 race, citing rules proposed by his Securities and Exchange Commission that target the financial services industry, people familiar with the matter said.

While most of these donors are not yet jumping ship for Republican rivals, some say they may sit out this cycle — especially if the GOP candidate is Florida Governor Ron DeSantis, who runs a state many New York-based executives fled to during the pandemic.

Gary Gensler, the former Goldman Sachs partner running the SEC, has taken on everything from climate disclosure regulations to market-structure rewrites. In the first eight months of 2022, the agency proposed 26 rules, more than double what it floated in 2021 and more than in each of the previous five years, according to the agency’s inspector general.

For some in the finance world, that has left a sense of  “buyer’s remorse,” as one person close to big donors told Semafor. One executive, who helped raise more than $1 million for Biden in the 2020 election, said Gensler’s appointment was a big reason why, if the president runs again, he will wait to see who Biden’s opponent is to decide whether he will donate again.

Wall Street overwhelmingly backed Biden despite the Trump administration’s tax cuts and lighter touch on financial regulation. Employees in the securities and investment sector donated about $79 million to support Biden versus around $21 million to back Trump, according to OpenSecrets.

The industry was prepared to deal with possibly higher income taxes pitched by Biden as a candidate, but have been “beyond frustrated” with the policing of their sector, another person close to big financial services donors said. A lobbyist who works for the industry said they’ve responded to more SEC requests for comment on new rules during a single year under Gensler than they did through the entire Trump administration.

The SEC didn’t respond to a request for comment.

Biden built his career in corporate-welcoming Delaware and has been friendly with CEOs, despite his “Middle Class” Joe nickname. In 2020, Biden raised more money from the finance world than Barack Obama did in his two campaigns combined.

But appointing people who have the strong backing of Wall Street critic Elizabeth Warren, like Gensler and Federal Trade Commission Chair Lina Khan, who has stymied dealmaking, has strained those relations.

While those close to big Wall Street Democrats still expect most of the Hamptons set to eventually support the incumbent in 2024, the donations may be smaller and the complaints louder. “They want to be heard on the regulatory front,” one person connected to different Democratic donors said of their thinking.

And those on the fence may not be inclined to support what they view as a hostile regime. Take Doug Cifu, CEO of market-making firm Virtu Financial, who promised lawsuits from his entire industry if Gensler’s market structure rewrite was finalized.

Cifu gave $50,000 to the Democrats’ Senate political action committee in 2020 and supported both Hillary Clinton and Jeb Bush in the 2016 cycle, but largely sat out the recent midterms. A resident of Florida who co-owns a professional hockey team in DeSantis’s state, he is the type of donor Republicans could target as a potential flip this time around, one GOP strategist explained. (Virtu did not respond to requests for comment on Cifu’s plans for the upcoming election).

Biden’s decision to name Jeff Zients as his chief of staff at the beginning of the year helped bridge the gap between big business and his administration. A former consultant, Meta board member, and investment manager, Zients is well-connected in Greenwich and Sand Hill Road circles.

Billionaire Reid Hoffman isn’t a Wall Street power player. But the long-time Democratic superdonor and LinkedIn co-founder raised plenty of eyebrows in the donor world when Puck reported that he’s looking at ways to support DeSantis over Trump in the GOP primary.

While he plans to support Biden in the general election, DeSantis is not as terrifying to Hoffman, leaving Democratic fundraisers worried about soliciting donations if there is no bogeyman like Trump to fight.

• Gensler is fighting all sides to get his agenda through, Politico detailed last fall.