Banks give richly to three Senate Democrats who backed deregulation
WASHINGTON — Banks aren't the only ones newly flush these days. They secured a big win Tuesday, May 22, on Capitol Hill as the House approved a rollback of banking regulations, sending it to President Donald Trump's desk.
The industry - which raked in a record $56 billion in profits during the first quarter of the year, up more than 27 percent from last year, the FDIC reported Tuesday - is sharing the wealth with Senate Democrats who lent crucial support to the package.
Specifically, three of the four top recipients of campaign cash from commercial banks this election cycle are Democrats on the Senate Banking Committee who worked with Republicans to forge the Dodd-Frank compromise. The three - Joe Donnelly, Ind., Heidi Heitkamp, N.D., and Jon Tester, Mont. - are all facing potentially tough reelection fights in the fall.
Through the first quarter of this year, bank employees and political action committees have handed those senators between $140,000 and $181,000 each, according to figures from the Center for Responsive Politics. That's more than twice as much as the senators together collected from the same sources over the same period in the past election cycle (when they weren't up for reelection).
More to the point, each has also collected about twice as much this cycle from those sources as Sen. Sherrod Brown, D-Ohio, the top Democrat on the Banking Committee, who is also running for reelection in a state Trump carried. But Brown has been an outspoken critic of the industry. When his talks with Banking Chair Mike Crapo, R-Idaho, on a regulatory relief measure broke down last fall, Crapo turned to Donnelly, Heitkamp and Tester, along with Sen. Mark R. Warner, D-Va.
At a minimum, the lopsided giving points to a schism in the party over how to approach the industry. The package could not have passed without the support of more moderate Democrats — first the four on the committee that helped write it, then 17 in the Senate who got it past the chamber's 60-vote threshold. In the House on Tuesday, 33 Democrats crossed party lines to back it. Supporters from both parties frame the measure as a set of tweaks to free up lending by regional and community banks. Liberal Democrats called it a reckless giveaway to some of the same firms that precipitated an economic crisis less than a decade ago.
Aides to the three Senate Democrats receiving the most from the sector say they draw a line between Wall Street banks and more mom-and-pop outfits in their home states. "Jon has received more than 12 times the amount of money from Montanans than what he's received from commercial banks," Tester campaign communications director Chris Meagher said in an emailed statement, adding there is "little question he's held Wall Street accountable."
Donnelly communications director Sarah Rothschild noted the Indiana Democrat has been working on the issue "since he began serving in the Senate in 2013, and for him this always has been about needed regulatory relief for Indiana's 154 credit unions and 103 main street community banks that have been inadvertently burdened by rules and regulations intended to hold Wall Street accountable." A Heitkamp representative similarly noted the senator has been "working to provide targeted relief for small community banks, mid-sized banks, and credit unions across North Dakota and rural America" since joining the Senate five years ago.
While the measure inflamed the left, it also left some on the right frustrated it didn't go further. House Financial Services Committee Chairman Jeb Hensarling, R-Texas, who advocated a more wholesale gutting of the post-crisis regulatory regime, held up the package for weeks as he sought to broaden its scope.
"The bill leaves major pieces of post-financial crisis rules in place, and it does not touch the Consumer Financial Protection Bureau, a watchdog agency created after the financial crisis," my colleagues Erica Werner and Renae Merle write. "Former House Representative Barney Frank, D-Mass., one of the 2010 measure's authors, said that, although he would have voted 'no' on the new plan, it does not undo the rules he helped pass. 'This is not a 'big number' on the bill," Frank said in an interview. 'It's a small number.' "
Capital Alpha's Ian Katz seconded that view in a Tuesday note. "We think the bill is positive for the small and mid-sized banks," he wrote. "It does almost nothing for the giant firms."
That said, the measure relaxes oversight for about two dozen firms with between $50 billion and $250 billion in assets, including SunTrust and American Express. And it exempts those with less than $10 billion from the Volcker Rule, which bars banks from making some risky bets with their own money. Pressure from an array of those firms helped dislodge the measure in the House. "This is what PACs are for," one banking lobbyist says. "They say, 'We're with you; we support you.' And they're saying it more loudly now for these senators because they went out there and did something big. They delivered."
This article was written by Tory Newmyer, a reporter for The Washington Post.