Employees of Fidelity Investments took a sizable gamble on Senator Scott Brown, donating upward of $250,000 to his reelection campaign, more than employees from any other company.
They were betting that Brown could keep Elizabeth Warren, one of the biggest critics of the financial industry, out of Congress.
Now the financial services industry, Brown’s biggest donor group, has begun a careful and unlikely mission to thaw relations with Warren, even if its motives behind the scenes remain unclear.
Firms with a large presence in Massachusetts, including Fidelity, State Street, and MassMutual, argue that they have been more restrained in their investing practices than some of the big Wall Street banks that Warren, a Democrat set to take office in January, often criticizes for their risky behavior. Few Massachusetts firms focus on investment banking, which was at the center of the financial crisis.
The financial world has ample interest in Capitol Hill. Congress may continue to have influence on implementation of the financial overhaul known as Dodd-Frank, which does everything from creating a new agency to protect consumers to limiting the amount that banks can collect on debit card processing fees. In addition, Congress routinely writes new regulations that affect financial firms.
Many in the financial sector, which is critical to the Massachusetts economy, are making the case that the heated rhetoric of the election is over, and that the industry should not be painted with a broad brush. Fidelity says it wants to work with Warren to ensure that regulations are fair.
“We, of course, have a relationship with Senator-elect Warren and we expect to work with her on these key issues in the future,” Vincent G. Loporchio, Fidelity’s senior vice president, wrote in an e-mail.
“What we are hoping is that she gets to know the different segments of financial services,” said Tracey Flaherty, senior vice president of government affairs for Natixis Global Asset Management, a French-owned asset management firm based in Boston. “We don’t consider ourselves Wall Street, honestly.”
Warren, though attacked at times as an enemy of free enterprise, was known to meet with financial executives during two previous appointed stints in Washington, first as the head of a congressional committee that monitored the bank bailout, and then as an adviser to President Obama in establishing the Consumer Financial Protection Bureau as part of Dodd-Frank.
Her aides suggested she will continue to keep doors open, pointing out that she met in July with Abigail Johnson, the billionaire who is second in command at Fidelity, and other top players throughout the campaign. And the senior vice president of the New England Council, a business group with a large financial services contingent, said Wednesday that Warren responded quickly and enthusiastically after the election this month when she was asked to speak at a forum sometime early next year.
Warren declined an interview this week, and her aides have not been specific about how she expects those relationships to play out.
“For years, Elizabeth has pushed for clear rules that would benefit banks and other financial institutions that play fair and want to serve their customers,” Mindy Myers, Warren’s former campaign manager and current transition assistant, said in a prepared statement. “She has met many times with financial firms all across Massachusetts, including credit unions and community banks, that avoided the sorts of excesses that nearly brought our economy to its knees in 2008. She looks forward to working with local employers to create a level playing field and spur job growth.”
In Washington, there has been widespread speculation over whether Warren will be appointed to the Senate Banking Committee. While media reports have cited industry efforts to keep her off the panel, some specialists and insiders expect she will ultimately get a seat.
“I’m sure [some] people don’t want her to be on it,” said Representative Barney Frank, the retiring Newton Democrat who worked closely with Warren when he wrote Dodd-Frank.
But keeping her off “would be nuts,” he said. “She’s so obviously well-qualified.”
That expectation will force firms with state ties to strategize how to improve relations, said David D’Alessandro, former chief executive of John Hancock.
“They’ll do what big companies always do,” said D’Alessandro. “They’ll say, ‘The election’s over and what contortions do we have to perform to get on her good side?’ I’m sure they’re already figuring out which lobbyists might get in good with her, how to get their chief executives to have breakfast with her.”
D’Alessandro said corporations never expect someone like Warren, an activist, to win. But now, they will have little choice but to work with her for the next six years.
The public comments from several prominent firms have been tentative.
A spokeswoman for State Street, which employs 12,000 Massachusetts residents, said only that the company looks forward to working with Warren. Bank of America, the Charlotte, N.C.-based bank that has about 7,000 employees in Massachusetts, did not respond to a request for comment. Both companies are facing new regulations under Dodd-Frank, and Warren has spoken of her desire to bolster traditional banking and prevent bigger banks from engaging in risky investment activities while they benefit from government backing.
Frank said that during the campaign, many in the financial industry helped paint an inaccurate caricature of Warren.
“They went over the line of rationality,” he said. “They gambled on a very virulent attack on Democrats and now they’ve got to deal with it.”
Frank argues that it’s now in their interests to have all of Dodd-Frank’s regulations enacted quickly, so that they will have certainty in the rules they have to follow. Because each of the financial institutions is engaged in a variety of businesses, the regulatory concerns are different. Many of the big issues are no longer in front of Congress, but lawmakers may have some influence on regulators.
Frank said he believes new regulations to protect investors in money market funds, a potential concern for Fidelity and Boston-based Putnam Investments, will probably be resolved quickly by the Obama administration, without congressional input. Big insurance companies based in the state will not face many impacts from Dodd-Frank, he said.
But there is continued uncertainty over how the Volcker Rule, which restricts such banks as State Street and Bank of America from using their own money for risky investments, will be interpreted. Brown, both before and after the bill passed, advocated a looser rule.