Wall Street money rains on Schumer
Wall Street has showered nearly $11 million on the Senate since the beginning of the year, and more than 15 percent of it has gone to a single senator: Democrat Chuck Schumer of New York.
Schumer’s $1.65 million take from the financial services industry is nearly twice that of any other senator's — and more than five times what the industry gave to any single Republican senator.
While the industry has scaled back its political spending in the wake of last year’s economic collapse, data from the Center for Responsive Politics show that it’s still investing heavily in the Senate, where it’s likely to have its best shot at stopping — or at least shaping — the crackdown on Wall Street that President Barack Obama has proposed.
And it’s clearly looking to Democrats to do it.
Of the $10.6 million the industry has given to sitting senators this year, more than $7.7 million has gone to Democrats. Schumer got his $1.65 million; his New York colleague Kirsten Gillibrand took in $886,000; Senate Majority Leader Harry Reid of Nevada received $814,000; Senate Banking Committee Chairman Chris Dodd of Connecticut scored $603,000; Colorado freshman Michael Bennet got $401,000; and Agriculture Committee Chairman Blanche Lincoln of Arkansas— who will have a big say on the derivatives portion of regulatory reform — got $336,000.
“Democrats are holding the reins in Washington now with a Democratic-run White House and Congress,” said one financial services lobbyist. “It only makes sense that donors want to put their money into the coffers of those who are driving the agenda.”
Among Republicans, the biggest recipient of financial-industry money so far this year is Richard Shelby of Alabama. But although he’s the ranking Republican on the Banking Committee — ground zero for the regulatory reform bill in the Senate — he’s received just $313,000 from the industry this year.
That’s smaller than the haul for Bennet, the most junior Democrat on the Committee, or Lincoln, who isn’t even on it. And Shelby is the only Republican senator on the industry’s top-10 giving list.
The industry’s giving pattern this year may upend the traditional notion of Republicans as the bagmen for Wall Street. But it also reflects political reality: Democrats hold a commanding if not quite filibuster-proof majority in the upper chamber, and some of them may be willing to side with the financial industry on key aspects of the regulatory reform effort — even if that’s not immediately obvious from the Democrats’ populist rhetoric.
The Financial Services Roundtable, an industry association that gave almost $425,000 to members during the past election, says the issues — not the party — drive its donations.
“We support members that understand the issues facing our industry,” said Scott Talbott, the Rountable’s senior vice president of government affairs. “This is done on a case-by-case basis.”
Democrats insist that industry money doesn’t influence their votes.
“Contributions don’t really affect — my basis of decision making is whether it’s going to be beneficial to Arkansans,” said Lincoln, who noted that financial services firms aren’t among her biggest contributors.
Schumer spokesman Brian Fallon says his boss “calls the shots the way he sees them” — regardless of who’s giving him money.
“The financial services industry is a vital part of New York’s economy, but he doesn’t hesitate to go after the institutions when they are wrong, such as with credit cards, corporate governance and overdraft fees,” Fallon said.
To compare the $1.7 million he’s gotten from the so-called FIRE lobby — that’s finance, insurance that’s not health insurance and real estate — with his positions on key elements of reform, you might think his donors are suffering from Stockholm syndrome.
Schumer, No. 3 in the Senate Democratic leadership and the former chairman of the Democratic Senatorial Campaign Committee, has offered scads of proposals that the industry doesn’t like on issues from corporate governance to derivatives to the creation of a new consumer watchdog for the financial world.
But his top donors include insurance company New York Life Insurance, private equity firm Lightyear Capital, futures clearinghouse MBF Clearing Corp. and real estate companies Rudin Management and Related Companies.
Quite a few financial insiders express frustration with Schumer, feeling he’s thrown the industry under the bus now that it’s politically popular to do so — after having collected mountains of cash from the industry to help the Democrats build their 60-vote majority in the Senate.
Others contend that, despite his positions on the hot-button debates surrounding the financial reform effort, Schumer remains an important ally for Wall Street on the technical issues that aren’t grabbing headlines, such as systemic risk regulation and capital requirements for financial institutions.
And on regulatory reform, much of what’s most important to financial firms exists in those more technical shadow lands.
“In the end, he still understands the operation of the marketplace,” explained one financial services executive.
Schumer is also a player on securities and exchange issues, an important area for the securities and investment firms that call New York home and that have given Schumer almost half of his industry checks this cycle — far more than any other member.
The hedge funds and private equity firms included in that giving also see him as something of a champion for them. Private equity, hedge funds, and venture capital firms gave him more than $707,100 during the 2010 cycle, nearly double what the industry has donated to any other member. Their support can be traced back to a 2007 battle over the “carried interest” bill that would have more than doubled the taxes paid by investment managers.
The legislation passed the House, but momentum petered out in the Senate — a victory some financial services lobbyists attribute to Schumer.
Schumer threatened to introduce legislation that would increase the taxes on carried interests for all industries, not just investment managers. His bill would have hit a litany of partnerships in industries far beyond private equity, such as real estate, oil and gas, and venture capitalists — a poison pill for most lawmakers. By spreading the pain, Schumer made it difficult for any lawmaker to vote for the bill.
In addition to collecting money from Wall Street for himself, Schumer has helped Gillibrand, the state’s junior senator, get her share of industry dollars.
Earlier this year, Schumer was instrumental in helping Gillibrand fend off possible 2010 challengers. In March, he co-hosted a $4,800-per-head fundraiser for her. And he’s spent time introducing her to audiences across the state and donors in the financial services world.
Reid and Dodd need no introductions; the industry knows full well that it can use their help.
Dodd has collected millions from the financial industry since his last reelection in 2004. But the Connecticut Democrat — who’s in for the toughest reelection fight of his career — says there’s little conflict between the industry donations and his legislative goals. Efforts to reform the system, says Dodd, will help the industry — particularly smaller players like community banks.
“It strengthens these financial services,” he says. “People that work for these institutions know what has to be done, too.”
All told, 19 of the 22 senators on Dodd’s Banking Committee have received checks from the financial industry this year, and each of those up for reelection in 2010 has received at least $180,000.