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What Wall Street wants from Obama in State of the Union address

President Obama has responded to recent setbacks by striking a more populist tone, and his primary target has been Wall Street. Bankers are hoping he takes a more inclusive line in his State of the Union address Wednesday.

By Ron SchererStaff writer / January 26, 2010

A television screen on the floor of the New York Stock Exchange shows President Barack Obama's address to a town hall meeting in Elyria, Ohio, Friday.

Richard Drew/AP

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Wall Street has its own wish list of what it would like President Obama to say in his State of the Union address Wednesday night. A good portion of it, however, may not go down well at the White House.

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If it were up to Wall Street, the president would strike a less confrontational posture toward the finance industry than what they've seen lately. Many would prefer that he unveil only a modest jobs stimulus package in the 2011 budget. And, although many market commentators expect some kind of tax hike on capital gains and dividends, they think any tax hike is a bad idea while the economy is still recovering from recession.

On the top of their wish list is a kinder, gentler tone.

Some Wall Street executives have cringed as Mr. Obama has adopted a more populist rhetoric. He has recently attacked Wall Street for its greed and bonuses, and he said he’s ready to “fight” bankers if they oppose a new tax he wants to impose on their industry.

Since the president has donned his boxing gloves, the stock market has had a tough time, falling about 5 percent.

“It suggested [that] the president is confrontational with business,” says Jeffrey Kleintop, chief market strategist at LPL Financial in Boston. "A tone that says he is open to working together, to bring the best minds together, would be welcome.”

Anger in the pinstripe set

Obama's attacks on the banking establishment rub many in the pinstripe set the wrong way. One is David Kotok, chairman of Cumberland Advisors, a Vineland, N,J., investment manager.

“I would like him to say he will stop vilifying bankers and Wall Streeters, and that he understands that many, many Americans are invested in US stocks and bonds in their 401(k)s. When he throws out mean-spirited commentary about the bankers, he is doing it to all those who are invested in them.”

Many on Wall Street expect Obama to seek another job stimulus package. But they don’t want to see another massive package similar to the $787 billion economic recovery package that Congress approved last February.

“Anything over $200 billion will be way too big, a waste of money,” says Mr. Kleintop, who suggests that the bond market would be happy with anything under $150 billion.

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