Democrats have said they will differ from Republicans by being tougher watchdogs of corporate wrongdoing and government spending, recomending heightened scrutiny of sectors such as hedge funds, pharmaceuticals and defense spending.
The Democrats will want to distinguish themselves from the Republicans early on, but this may not be good for their prospects on Wall Street as leading hedge funds have been making major contributions to the Democratic Party heading up to the midterm elections.
Democrats are promoting an economic agenda that would put more money in the pockets of ordinary citizens and government, while leading to greater oversight of big business.
The Center on Responsive Politics says about two thirds of the money the top 50 hedge funds have given this election cycle has gone to Democrats. According to politicalmoneyline.com, the DSCC has raised about $25 million more this election cycle than its Republican counterpart. Joe Schocken, a prominent Democratic fundraiser says not just hedge funds, but private equity and other alternative investment groups are giving more.
Nevertheless, according to Wachovia Securities economist Mark Vitner,”there are not going to be wholesale changes in economic policy” because neither party has an overwhelming majority in either the House or Senate and this may explain the stock market’s recent strength.