FORTUNE -- Democrats staring down steep midterm election losses got a fresh reminder of a worrisome trend this week when the Center for Responsive Politics reported that Wall Street donors, once a reliable ATM for the party, have stepped up their increasingly strong support for Republicans.
The flip comes in the wake of the successful Democratic push to overhaul Wall Street regulations, and it is dramatic. The group found that in June, politically active financiers gave the GOP about $7 of every $10 they handed out, after starting 2009 by favoring Democrats with $6 of every $10.
Democrats have enjoyed a fundraising advantage over Republicans from the securities and investment sector since the 2006 cycle, when the GOP still controlled the White House and both chambers of Congress. For most of the ten years prior to 2006, Democrats managed to keep pace in the securities and investment sector, even as Republicans slightly edged them out.
Democratic leaders and strategists have watched the flight of Wall Street support nervously as it has escalated this year. Some continue to believe that many executives in the financial services industry are fellow travelers -- and that they will come back to the fold after sitting out this election cycle in protest of Democratic legislative and rhetorical attacks on their business. Others aren't so bullish. "We're going to have to make an effort to get these guys back on board," one Democratic lobbyist says.
But for Democrats, a more troubling consideration looms.
A losing gamble
The party tackled Wall Street reform thinking it was a rare legislative opportunity: both necessary on the merits and a can't-miss political winner. Leaders understood that the push, and the messaging used to sell it -- President Obama dusted off some antique populism in December, blasting "fat-cat bankers on Wall Street" -- would mean the loss of some fundraising support from the sector. They calculated that the political payoff would more than compensate for the foregone dollars, whose only purpose, after all, is to shore up votes.
Today, three weeks after Obama signed the Wall Street reform bill into law, there is little evidence of a bump for the party in power. In fact, Democratic fortunes appear to be getting even dimmer. The Real Clear Politics average of the generic Congressional ballot shows that since the bill's signing, Republicans have widened their lead over Democrats by three points -- to six. And a Wall Street Journal/NBC News poll out yesterday finds that a combined 60% of respondents say that Congress is "either below average or one of the worst in history" -- the worst marks for the institution in the history of the poll.
Democrats aren't done trying. House Democratic leaders are urging their rank-and-file on the campaign trail to focus their events on consumer protections -- including those embedded in the Wall Street reform bill.
But Stu Rothenberg, editor of the non-partisan Rothenberg Political Report, says as long as dismal economic conditions persist, Democrats are going to have a hard time selling their record.
"Democrats are going to go out from now until the Election Day to sell their accomplishments, and they're going to make the case that this has been a productive Congress and that they've dealt with the big issues the American people wanted them to deal with," he says. "But if people are worried about jobs and a double dip recession, then talking about accomplishments on Capitol Hill is meaningless. How do you tell people they should feel better off? People don't think that way. They don't think, 'It could be worse.' They think, 'It should be better.'"
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