The Best Plutocracy Money Can Buy
Banker Plan Would Fund Super-PACs to Sway Senate Races
by Robert Schmidt and Phil Mattingly
Bloomberg (September 05 2012)
A banking trade group is preparing to set up a political fund that would allow members to funnel money anonymously to pro-industry candidates in the final months of the US elections.
The American Bankers Association board is set to vote tomorrow on a plan to create a nonprofit that would donate to super-political action committees, or super-PACs, that can spend unlimited amounts on TV ads and other campaign activities.
ABA officials, during a conference call yesterday to brief member firms, said they intend to raise several million dollars in the next few weeks and concentrate their contributions on six to twelve fiercely contested US Senate races. Attempts in the Republican-controlled House to roll back regulation of the financial industry, particularly the 2010 Dodd-Frank Act, have so far run aground in the Democratic-controlled Senate.
The ABA’s effort comes only two months before elections for president and Congress. Craig Holman, a lobbyist for Public Citizen, which tracks the influence of money on politics, said donations from the nonprofit could affect some races.
“They still have plenty of time to roll out a giant campaign”, Holman said. “They can set this up overnight and tap into any number of sources in the financial services industry”.
A series of court decisions and regulatory changes in 2010 unraveled previous federal limits on political donations. The donors pool their money in nonprofits, which keep contributor names secret, and super-PACs, which have amassed $350 million through the end of July.
The ABA’s proposed fund would be a nonprofit, or 501(c)(4), which would allow the organization to disburse money into key Senate races and fund advocacy efforts.
The financial industry has so far kept a low profile in the 2012 campaign, in part because banks remain targets for both political parties for their role in the 2008 financial crisis. While Wall Street banks and their employees have given millions to presidential and congressional campaigns, some of the largest banks have stayed away from overt political activities like funding the parties’ conventions.
The ABA is led by former Oklahoma Governor Frank Keating, a Republican. The Washington-based trade group represents about 5,000 banks of all sizes, from community lenders to large Wall Street firms like JPMorgan Chase & Company (JPM) The association also donates money to candidates through a more stringently regulated political action committee that has given more than $2.8 million so far this election cycle to candidates of both parties.
ABA Chief Operating Officer Michael Hunter confirmed the plans and said that, if approved, the nonprofit’s activities will be decided by its board. Not all ABA members are expected to take part.
“It’s not like we’re going to be opening the cash spigots and influencing races across the country”, Hunter said in an interview. He noted that other trade groups fund similar advocacy-focused nonprofits.
On the conference call, Dawn Causey, the ABA’s general counsel, said she couldn’t promise that the Internal Revenue Service or another agency wouldn’t craft rules that would require nonprofit funds to reveal their donors.
“Today, we’re okay; tomorrow, I don’t know”, she said. “There is a risk”.
ABA officials on the briefing call, led by James Ballentine, executive vice president of congressional relations and political affairs, didn’t specify which Senate races they would seek to influence.
Democrats, who control the chamber by a narrow margin, are on the defensive in the 2012 races, trying to hold on to 23 seats while Republicans are only defending ten.
The Rothenberg Political Report, a non-partisan publication that follows elections, listed five Senate races as “pure toss- ups” on September 3, three of which are held by Democrats. A sixth seat, held by retiring Nebraska Senator Ben Nelson, is listed as “Republican favored” and another, the seat held by retiring Wisconsin Senator Herb Kohl, is rated as a toss-up that “tilts Republican”.
Included in the list of “pure toss-ups” is the race in Massachusetts where Senator Scott Brown, a Republican, is facing off against Elizabeth Warren, the Harvard professor whose brainchild, the Consumer Financial Protection Bureau, drew fierce opposition from the banking industry in 2010.
“The real battle when it comes to Congress is the Senate”, said Holman, who noted that the ABA would likely target senators that have stood in the way of changes to the Dodd-Frank financial regulatory overhaul.
Ballentine said the requested donation varies depending on the size of the bank. Large firms, with $11 billion or more in assets, are being asked for a minimum of $10,000. Medium-sized banks were asked to give at least $5,000 and the smallest $1,000.
Foreign banks could only make donations via one of theirUS-domiciled subsidiaries, staff said on the call.
Hunter said that if all the trade group’s members contributed at the minimum level the fund would have a war chest of about $6 million. A more likely scenario, he said, was that forty percent or fifty percent would give money. Some members also expressed a willingness to give more than the minimum, he said on the call.
In accord with federal rules, ABA staff members said that the fund would spend 51 percent of its money on “public issue advocacy”, such as research, policy papers and media campaigns. The other 49 percent would be used for so-called independent expenditures that aren’t coordinated with campaigns and can be used to promote the candidates, often through advertising. In practice, they said, much of that money would be donated super- PACs that share the ABA’s electoral goals.
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