Banks Get the Cold Shoulder
Frank, Dodd Will No Longer Take Their PAC Checks
Battered on Capitol Hill and skewered by the public, banks that took federal bailout dollars now face another obstacle: They cant make political action committee contributions to the chairmen of the Senate Banking, Housing and Urban Affairs Committee and House Financial Services Committee.
I wont take any PAC money from banks that took TARP funds, nor would I take it from the top executive, Financial Services Chairman Barney Frank (D-Mass.) said in an interview.
The decision is an about-face for the powerful lawmaker who was instrumental in crafting the financial rescue package.
Frank has long counted on financial institutions and their employees as key campaign contributors.
He received $63,250 from banks that testified before his committee in the 2008 election cycle, according to the Center for Responsive Politics.
Since 1989, JPMorgan Chase has been Franks most prolific campaign contributor, giving Frank more money than any other company, union or organization.
The Massachusetts Democrat will, however, continue to take campaign contributions from other employees at the banks.
I have people who live in my district who work for Bank of America. Its insulting to say no to those people, Frank said, noting that Bank of America has taken over several banks that used to be part of separate Massachusetts financial institutions.
Frank, who is just starting to ramp up his fundraising efforts for the 2010 cycle, said he hasnt done any fundraising since the November election and a few weeks ago gave his political staff the directive to not accept money from banks receiving Troubled Assets Relief Program aid.
It is unclear whether other members of the House Financial Services Committee will follow suit.
Bryan DeAngelis, a spokesperson for Senate Banking, Housing and Urban Affairs Chairman Chris Dodd (D-Conn.), said Dodd was no longer accepting PAC contributions from companies that received TARP money. But its not clear whether hes accepting money from banking executives.
Banking institutions have long used campaign contributions as a way to curry favor with lawmakers. Franks decision to reject contributions from TARP recipients is yet another signal to the industry that it is no longer business as usual for financial services companies, lobbyists said.
The eroding housing and economic crisis have made the industry radioactive on Capitol Hill.
The industry really has fallen off a cliff in terms of where its support is, one financial services lobbyist said. The banking industry is public enemy No. 1.
Several lobbyists likened the environment for financial services companies to that of tobacco or pharmaceutical companies. Still, that hasnt stopped the industry from trying to influence how the government is trying to regulate it.
In fact, the industry is doing more with less.
With both Fannie Mae and Freddie Mac no longer lobbying Congress and the decimation of financial institutions such as Lehman Brothers, there is a noticeable drop in the number of financial services lobbyists on Capitol Hill.
Richard Hunt, former top lobbyist for the Securities Industry and Financial Markets Association, said that despite the rhetoric, banking lobbyists are still essential.
Obviously, its not the best of times for financial services lobbyists given the environment, but youve seen some real good factual efforts being made, said Hunt, of Hunt Group DC.
That effort is all the more difficult because Hill staff are often leery of trusting the same companies that they perceive as causing the financial crisis.
Certainly more questions are being asked, Hunt said. I would not say that there is a sense of mistrust. There is more of a sense of trust but verify.
With certain issues such as executive compensation, companies are hoping industry trade groups such as SIFMA will lead the charge.
There has also been a shift from chief executive officer involvement on the lobbying to bringing in experts on specific issues to meet with staff.
SIFMA is trying to help lawmakers understand the intricacies of TARP.
Weve tried to make sure there is a thorough understanding of whats being done and how the markets would react to certain structural changes of the programs, said Scott DeFife, SIFMAs senior managing director of government affairs.