As Warren Gains in Race, Wall Street Sounds the Alarm

Yet, it’s also clear that Ms. Warren and her campaign see this fight as a political winner, one that can bolster her populist appeal. Indeed, a number of Democrats on Wall Street have dryly noted that every time their colleagues complain in the press, Ms. Warren picks up more votes in Iowa.

Even within the finance community, she has supporters — some of whom view Wall Street opposition as a thinly veiled attempt to fend off any policies that affect profits.

“The greed of Wall Street, of area code 212 types, has just gotten absolutely carried away, and it needs to be rolled back,” said Marc Cohodes, a longtime short-seller who bets against troubled companies. Of Ms. Warren, he said, “She would be great, I think she would be a breath of fresh air.”

Ms. Warren has already collected campaign donations from employees of JPMorgan Chase, Barclays, and the asset-management firm Point72, among others.

Wall Street’s allergy to regulation is nothing new. Throughout the 1990s and 2000s, despite the industry’s rampant risk taking, financial institutions successfully beat back proposed curbs on their leverage, lending and use of exotic financial instruments. Even in the aftermath of the recession, banks and financial firms battled the implementation of the 2010 Dodd-Frank act, which imposed broad restrictions on banks and trading.

Now, in ways big and small, Wall Street has begun bracing for a possible Warren administration.

Some money managers and traders are testing something they call the “Warren trade”: either a bet that U.S. stocks will fall next November on the news of her victory, or that certain stocks in areas she plans to regulate aggressively — like health care, energy, and finance — will fall during the period between now and late 2020.

Private equity executives — who believe the “Pretty Woman” video gives an outdated and inaccurate view of their business — have also begun extolling the virtues of their business, kicking off a kind of pre-emptive public relations effort. Their lobbying organization, the American Investment Council, is promoting the industry as a job creator in op-eds, interviews and a digital ad campaign.