During the 2014 election cycle, banks and financial companies were associated with almost half a billion dollars in campaign contributions to candidates for national office. (See AFR’s latest “Wall Street Money in Washington” report, drawing on data compiled by the Center for Responsive Politics.) That figure was more than twice the spending level of the next biggest business sector.
What do these institutions expect in return? Benefactors and beneficiaries alike almost always insist there’s no quid pro quo. But several weeks ago, insiders at Citigroup, JPMorgan Chase and BankofAmerica broke with that tradition, quietly acknowledging an effort to use their political spending for a very clear purpose: to get Senate Democrats to back away from calls by one of their leaders, Senator Elizabeth Warren (D-Mass.), for a breakup of the biggest banks.
In a December speech, Warren cited Citi as a bank that had grown dangerously large. “Instead of passing laws that create new bailout opportunities for Too-Big-To-Fail banks, let’s pass… something – anything – that would help break up these giant banks,” she said.
That statement, coupled with Warren’s growing influence among Senate Democrats, caused alarm on Wall Street and led to a discussions in which, Reuters reported, “representatives from Citigroup, JPMorgan, Goldman Sachs and Bank of America [debated] ways to urge Democrats, including Warren and Ohio Senator Sherrod Brown, to soften their party’s tone…”
Citi in particular, according to the Reuters article (citing “sources inside the bank”), “decided to withhold donations… to the Senate Democratic Campaign Committee over concerns that Senate Democrats could give Warren and lawmakers who share her views more power.” JPMorgan, the article added, has given Senate Democrats only a third of its usual amount this year, while its “representatives have met Democratic Party officials to emphasize the connection between its annual contribution and the need for a friendlier attitude toward the banks.”
All this led Ari Rabin-Havt of the American Prospect to ask: “Did one of the largest banks in the United States accidentally acknowledge an attempt to bribe members of Congress?” And: “Will JP Morgan face any investigation, let alone penalty, for their attempted bribe?”
“It would be naïve to think so,” Havt wrote, answering his own question. “Yet the only defense for this sort of corruption seems to be that it happens all the time.”
In the short run, at least, Wall Street’s efforts don’t seem to have had the intended effect. Warren, according to USA Today, “immediately seized on the report, using it in a defiant fundraising appeal for her network of supporters nationwide to make up the amount in contributions to the Senate campaign fund.”
“The big banks have thrown around money for years,” she wrote in an e-mail posted on her blog. “But they are moving out of the shadows. They have reached a new level of brazenness, demanding that Senate Democrats grovel before them.”
Another prominent Democrat responded by vowing not to accept any campaign donations from the megabanks. “Wall Street won’t be happy until Democrats stop listening to progressives like me and Elizabeth Warren – and instead carry out orders from the biggest banks in the world,” said Maryland Representative (and Senate candidate) Donna Edwards . And the chairman of Democracy for America, a group founded by former Democratic National Committee Chairman Howard Dean, urged candidates across the country to follow Edwards’ example if they “want to prove that they’re not owned by Wall Street bullies.”
— Jim Lardner