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New lawmakers landing seats on congressional committees overseeing the banking industry are finding a ready source of campaign dollars.
Some of the largest consumer banks this year contributed tens of thousands of dollars to new Republicans and Democrats on the congressional committees responsible for regulating them during a particularly tumultuous time for the industry. The donations illustrate the degree to which banks have turned their attention to Washington as lawmakers probe the recent failure of mid-sized institutions.
Multiple hearings are set for this week over whether expanded regulation and more oversight is needed to avert a broader banking crisis, moves that would prove costly for financial institutions.
Political action committees linked to some of the largest banks in the country — including Wells Fargo & Co., Bank of America Corp., and Prudential — as well as advocates for lenders big and small chipped in six figures cumulatively in the first three months of 2023 to new members of Congress on the Senate Banking Committee and the House Financial Services Committee. Only a third of those same groups donated to those lawmakers the entire two years prior, according to a Bloomberg Government analysis of campaign finance filings.
Saurav Ghosh, the director of federal campaign finance reform at the nonpartisan Campaign Legal Center, said the donations could motivate lawmakers to oppose new regulations and create the appearance of a conflict of interest that can give constituents the impression their interests are taking a backseat to those of industry.
“It’s a worst kept secret in Washington,” Ghosh said. “When you’re serving on a committee that regulates an industry, you’re suddenly going to see a lot of interest and money flowing in from that industry.”
The political contributions, which were disclosed in federal filings last month, represent only a small part of the amount of money lawmakers raised from donors, colleagues, and other PACs in their first three months in office. Outside groups funded by financial services and other industries will spend far more if they face competitive re-election races next year.
Donations by the groups are often bipartisan. That was the case last quarter by Vanguard Group Inc., Fifth Third Bank, the Independent Community Bankers of America, and the Investment Company Institute. An ICI spokesperson said the trade association’s PAC “supports the campaigns of members of Congress who demonstrate an interest in policy issues affecting registered funds and their shareholders.”
But new Republicans on the two panels got the lion’s share of the donations compared to Democrats. The American Bankers Association, Ally Financial Inc., US Bancorp, and the American Financial Services Association focused their giving this quarter on those GOP members as the party took control of the House of Representatives.
Sen. Katie Britt (R-Ala.) received about $20,000 from banking PACs in the first three months of her tenure. So too did Reps. Mike Lawler (R-N.Y.), Erin Houchin (R-Ind.), and Zach Nunn (R-Iowa).
Britt’s nine donations from banks’ PACs included household names like Morgan Stanleyand Truist.
Kyle Tarrance, Truist’s director of public affairs, said its PAC “supports candidates who drive policies to help financial institutions continue to innovate, serve our communities, and advance the success and prosperity of our client,” regardless of party affiliation.
Houchin’s haul came from the likes of Fidelity International, a US-based PAC for Toronto-Dominion Bank, Huntington Bancshares and the Consumer Bankers Association.
All The Help They Can Get
Some of the newest members of the Financial Services Committee will face some of the most competitive races in the country next fall and will likely need to raise millions to hold their seats.
Lawler, a Republican defending one of the most Democratic districts in the Republican conference, among his donations was $1,000 each from the North America branch of British-based bank HSBC and the Securities Industry and Financial Markets Association.
Lawler in an interview said he is prioritizing possible legislation to stabilize regional banks. He also said he’s looking at a proposal to increase the amount of deposits that are insured by the Federal Deposit Insurance Corporation.
“I will always do what I think is right, regardless of who supports me and my campaign efforts,” Lawler said.
Rep. Wiley Nickel (D) — whose Raleigh, N.C. constituents include Silicon Valley Bank buyer First Citizens — also got over $12,000 from banking PACs as he took his seat on the House Financial Services Committee. Donors included fundraising vehicles for American affiliates of BMO Financial Group and Nomura Group.
Nickel in a phone interview said he sought a Financial Services Committee spot because banking “is such an important industry for my district.”
“I think anytime you’re running in a 50-50 seat like mine, you want to get as much support as you can from everybody,” Nickel said.
Lawmakers in safer seats likewise got support from the sector, including Rep. Monica De La Cruz (R-Texas). Rep. Brittany Pettersen (D-Colo.) got a handful of donations from banks and trade associations like the Online Lenders Alliance.
Key players in recent bank failures didn’t miss out. UBS PAC, shortly after the global firm announced it was purchasing the teetering Credit Suisse Group AG, also supported Nickel and Pettersen’s campaigns. Flagstar Bank likewise chipped in to Lawler and Nickel around the time the New York Community Bancorp purchased Signature Bank.
Sen. J.D. Vance (Ohio), the other new Republican on the Banking Committee, got far less in lenders’ donations than Britt. But he benefited from the largesse of groups who gave to multiple lawmakers, including Regions Financial Corp., the Commercial Real Estate Finance Council, and the Mortgage Bankers Association.
“I don’t think that anybody would look at my voting record or my public statements and say I’m beholden to any industry, especially by the standards of the average Republican,” Vance said in a hallway interview.
Alexander Cohen in Washington also contributed to this story.
To contact the reporter on this story: Zach C. Cohen in Washington at firstname.lastname@example.org