Why banks are directing more political donations to Democrats
WASHINGTON — As pollsters see signs of an upcoming blue wave in the November election, Democratic candidates continue to receive a growing share of political donations from commercial bankers.
Echoing the 2016 presidential election, bankers are contributing more to Democratic candidate Joe Biden than Donald Trump. And while bankers are giving more to Republicans overall, as they did in 2016 and 2018, donations for the 2020 congressional races appear to be split more evenly across parties.
Observers say the donations reflect bankers’ interest in maintaining influence over the ruling party. Recent polls have placed Biden ahead of President Trump in key battleground states. And some foresee that the Democrats could take control of the Senate.
“Banks want power, banks want their money to make a difference,” said Ed Mierzwinski, senior director of the federal consumer program at the US Public Interest Research Group.
As of June 22, Republican candidates had received $12.5 million, or 40% more than Democrats’ $8.9 million. In 2018, the difference was nearly 80% and 82.6% in 2016. (Data on political donations is provided by the Center for Responsive Politics, as of June 22.)
The June data includes donations from political action committees at banks or industry trade groups as well as individuals at banks who donate at least $200.
Industry officials say bank donations tend to reflect shifts in the balance of power in Congress, not the other way around.
Paul Merski, group executive vice president for congressional relations and strategy at Independent Community Bankers of America, said trade group donations are generally “bipartisan and reflect the makeup of Congress in most cases.” .
“If Congress is split, 60-40 Republican-Democrat, the PAC will reflect that,” Merski said. “Or if it’s 50-50 Republican-Democrat, our contributions generally reflect the composition of Congress.”
“In the industry as a whole, regardless of who controls the administration or the major banking committees … the contributions tend to go to the controlling individuals,” he added. “That naturally makes sense if we’re looking for regulatory relief.”
Of course, a more even distribution is not an entirely new trend. The gap in donations to the banking sector between Democrats and Republicans has been narrowing in recent years. In the 2012 and 2014 cycles, as regulators implemented the tough Dodd-Frank rules, bankers’ contributions to GOP candidates were more than double those of Democrats.
Some observers have suggested there is a sizable electoral bloc within the industry that may lean towards supporting Democratic candidates on issues other than banking.
“There are a lot of people on Wall Street and around Wall Street … in all areas who can be supportive of certain Republican policies, especially in economic policy, but in social policy, foreign policy, other issues that can sway their vote and their campaign contributions, so they can split from the Republicans and can support the Democrats,” said KBW analyst Brian Gardner. “The idea of the fiscally conservative, socially liberal voter finds its home on Wall Street.”
During the current election cycle, Biden has received more than $832,000 from commercial banks, compared to $649,000 for Trump at the end of June, according to data from the Center for Responsive Politics. In 2016, Democratic candidate Hillary Clinton received more than $2.8 million in donations from commercial banks, compared to about $403,000 for Trump.
For the 2020 Senate races, the incumbents receiving the most money from commercial banks are Sens. Thom Tillis, RN.C. ($273,780); Mitch McConnell, R-Ky. ($184,422); David Perdue, R-Ga. ($148,417); Tina Smith, D-Minn. ($142,372); and Gary Peters, D-Mich. ($136,674), according to CRP data.
McConnell, the Senate Majority Leader, faces a re-election challenge from Democrat Amy McGrath.
Both Smith and Perdue sit on the banking committee and race competitively, but are favorites to win. Peters backed the Banking Regulatory Relief Act of 2018 and is seeking re-election in a state Trump passed in 2016
Banks “tend to… [support] incumbents who should win,” said Ed Mills, policy analyst at Raymond James. “The industry doesn’t want to be on the losing side.”
According to Cook Political Report and Sabato’s Crystal Ball, Tillis, a member of the Senate Banking Committee, is in a particularly tight race considered a draw.
Tillis notably supported banks’ push against a new accounting standard known as Current Expected Credit Losses, or CECL, and helped stir up Republican opposition to Nellie Liang’s nomination to the Federal Reserve Board of Governors. due to industry fears that it will hamper deregulation efforts. .
“Charlotte, North Carolina is of course a major financial center and so it makes sense that [banks] would be a fundraising angle for Tillis,” said Kyle Kondik, editor of Sabato’s Crystal Ball from the University of Virginia Center for Politics. “I kind of see North Carolina as a must win for both teams. I have a feeling whoever wins the Senate seat in North Carolina could very well be the majority party in the next Senate.
Mierzwinski added that banks will tend to support Republicans who are in danger of losing their seats.
“Obviously the Senate is always up for grabs, they will tend to support incumbents and they will tend to support at-risk Republicans,” Mierzwinski said.
Despite the split in the Senate, commercial banks are still a big contributor to House Republicans. The top four House candidates receiving donations for the industry are: Rep. Patrick McHenry, RN.C., with $262,299; Blaine Luetkemeyer, R-Mo., with $200,050; Andy Barr, R-Ky., with $140,225; and Kevin McCarthy, R-California, with $137,347.
McHenry is the top Republican on the House Financial Services Committee. Luetkemeyer and Barr are senior committee members. McCarthy is the House Republican leader.
Rep. Joyce Beatty of Ohio is the only Democrat among the top 15 House candidates to receive funds from commercial banks, ranking fifth with nearly $137,000, according to CRP data.
Mierzwinski said the donations to House Republicans were an attempt to neutralize the majority of House Democrats.
“Banks are hoping the power of the House of Democrats is diluted,” Mierzwinski said. “And maybe they hope the Republicans will take control of the House. … At the wholesale level, I think they’re hoping the House becomes a lot more divided in power, rather than the Democrats sweeping.
Meanwhile, the five banks that gave the most to June 22 — Wells Fargo, Bank of America, JPMorgan Chase, Citigroup and Truist Financial — evenly split their support between Democrats and Republicans. Just over half of their combined $6.8 million in contributions goes to Democrats.
Of the top five Senate candidates receiving money from mortgage bankers, Sen. Mark Warner of Virginia, who helped broker the 2018 regulatory relief bill, is the only Democrat, coming in fourth with just over 42 $000, according to CRP data. In the House, McHenry, Rep. Lacy Clay, D-Mo., McCarthy, House Financial Services Committee Chair Maxine Waters, D-Calif., and Barr are the top candidates receiving donations from mortgage bankers.
Payday lenders appear to be dividing their donations in the House and the Senate. According to CRP data, seven of the top 10 House of Representatives candidates receiving money from payday lenders are Democrats, while none of the top 10 Senate candidates receiving money from payday lenders in the 2020 election n is a Democrat.
While donations are important to campaign operations, they don’t necessarily paint a picture of who will win in November.
In 2018, four of the top five Senate incumbents bankers contributed to ultimately lost their seats in Congress.
Mills said vulnerable candidates sometimes get positions on the banking committee to help them gain a fundraising advantage, but that doesn’t make them any less vulnerable.
“Money is a factor… but it’s not the only factor,” he said.