Campaigns Tap the Industry for $94M: Banks, Insurers, Securities Firms Give Lavishly but in Different Ways
Rehm, Barbara A., American Banker
With control of the White House and the House of Representatives on the line, the political parties are sparing no expense in the November elections, and their favorite source for campaign contributions is financial services firms, which donate more than any other industry sector.
Led by Goldman Sachs Group Inc., Citigroup Inc., and Bank of America Corp., financial services companies and their employees have contributed $94 million to presidential and congressional candidates so far in this two-year election cycle, according to Federal Election Commission data compiled for American Banker by the Center for Responsive Politics.
With two months to go until election day, that's already more than brokers, insurers, and bankers donated in the previous election cycle ($84.7 million) or in the 1995-96 cycle ($91.4 million) when the last presidential election occurred.
"This is truly a big election," said Larry Makinson, executive director of the Center for Responsive Politics. "We know we're going to have a change in administrations, we just don't know how radical a change it is going to be, and control over the House is at stake, too."
While financial services is putting more money behind Republicans and their nominee Texas Gov. George W. Bush, Mr. Makinson said its giving is more bipartisan than most other industries.
The drive for dollars has never been fiercer.
"Even I have to say the money has gotten so out of hand," said James J. Butera, a partner with Butera & Andrews who specializes in financial services law and has been raising money for politicians since 1972. "People expect it and need it because the campaigns are so expensive.
"I don't think you can be taken seriously if you are not giving major dollars as a company, as an industry, as an individual."
Securities firms and their executives are definitely taken seriously. They are solely responsible for the surge in donations by financial services firms during this election cycle.
Giving more than insurers and bankers combined, brokers had contributed $50.68 million as of Sept. 1. Insurance companies had chipped in $28.87 million while bankers had ponied up $14.4 million. Donations by securities firms are up 33.5% so far this election cycle compared to 1997-98 totals. However, insurers are 5.2% off their 1997-98 pace and bankers are off 11.5%.
But taken together, Mr. Makinson said the financial sector is the leading source of funds for federal candidates. "Financial services companies certainly understand the value of an investment and that's how they look at political contributions, as an investment," he said.
The Center for Responsive Politics is a nonpartisan, nonprofit group here that investigates the influence money has on politics. (See www.opensecrets.org.) The center breaks down corporate giving into three categories: money contributed by individuals affiliated with a firm, money contributed directly by a company, and money contributed by a company's political action committee.
Interestingly, brokers, insurers, and bankers each have a different preferred method of giving.
Goldman Sachs Group was the clear leader among securities firms with $2.45 million in campaign contributions, of which $1.81 million went to Democrats. In fact, the only top Goldman executives to donate to the Republicans are chairman and CEO Henry M. Paulson Jr., who gave $10,000, and vice chairman Robert J. Hurst, who gave $15,000, to the Republican National Committee.
While Bear Stearns and Lehman Brothers, like Goldman, leaned Democratic, the bulk of the brokerages favored Republicans.
After Goldman, the next five largest contributors among securities firms all gave more money to Republicans than Democrats. For example, Morgan Stanley, ranked second among brokers overall with $1.33 million in contributions. Of that, Republicans got $861,320. …