Troubled banks still donate to campaigns

Firms receiving billions of dollars in government bailout money have continued to contribute large sums to political campaigns.

The eight largest banks’ political action committees (PACs) spent roughly $225,000, not including operating expenses, between Nov. 25 and the end of January, according to a review of year-end and February filings with the Federal Election Commission.

{mosads}Those same eight banks have received $170 billion of the government’s $700 billion financial rescue package, passed in October and currently being reworked by President Obama’s administration.

PACs of other banks receiving more than $1 billion in bailout money spent roughly $75,000 over that same period. The firms spent more money at the end of 2008 than the beginning of 2009.

Meanwhile, the PACs of General Motors Corp. and Chrysler LLC, the ailing automakers that requested more than $20 billion in additional bailout money last month, spent roughly $67,000 in the period. Most of that money — $62,500 — came from Chrysler’s PAC in December.

The expenditures range widely, covering local, state and federal politicians, state and federal campaign committees, other PACs and 527 organizations. The financial-services industry has always spent heavily on political campaigns, but the latest contributions come at a time when lawmakers in Washington are slamming the bailout package and calling for new restrictions on how the money can be used. Some banks have been scolded for throwing lavish parties and giving out corporate perks while receiving government help.

Sen. John Kerry (D-Mass.) introduced a bill last week restricting bailed-out firms from “hosting, sponsoring or paying for conferences, holiday parties and entertainment events.” Sens. Dianne Feinstein (D-Calif.) and Olympia Snowe (R-Maine) want to ban funds from the Troubled Asset Relief Program (TARP), as the bailout is formally known, from being used for lobbying expenses. Reps. Carolyn Maloney (D-N.Y.) and Pete King (R-N.Y.) introduced a bill to demand a central database of how TARP funds are being spent.

Some lawmakers, including House Financial Services Committee Chairman Barney Frank (D-Mass.) and Senate Banking Committee Chairman Chris Dodd (D-Conn.), have said they will no longer take campaign contributions from company PACs representing bailed-out firms. Most lawmakers and campaign committees have not said they will refuse the firms’ contributions.

“We think overall it was not appropriate and did not give a good appearance to receive PAC money at this time from institutions that receive TARP money,” said Jim Segel, special counsel to Frank.

Frank will also not receive personal contributions from the top five executives at the eight financial firms receiving the bulk of the TARP money, Segel said.

Dodd’s Friends of Chris Dodd PAC received two contributions from Goldman Sachs’s PAC in December and January worth a combined $4,500, as well as a $2,000 contribution from U.S. Bancorp’s PAC in January. The contributions are for his 2010 Senate reelection campaign. Dodd has returned two of the contributions and is due to return the third, according to an aide.

“Sen. Dodd’s campaign decided in September, when the TARP program was being created, that it will not accept PAC contributions from companies that have received TARP funds,” Dodd spokesman Bryan DeAngelis said.

JPMorgan Chase & Co., which received $25 billion in bailout money last fall, was the largest bank contributor in the last two periods. The firm’s PAC spent roughly $87,000 since Nov. 25, including $5,000 to former Sen. Norm Coleman (R-Minn.), $5,000 for debt retirement to Sen. Mark Warner (D-Va.), $15,000 to the National Republican Senatorial Committee and $5,000 to the New Democrat Coalition PAC.

“We operate our PAC so employees at every level can increase their civic engagement and participation in the electoral process if they want to. One hundred percent of our PAC money comes from more than 5,000 voluntary employee donations, out of their own pockets,” said Jennifer Zuccarelli, spokeswoman for JPMorgan Chase.

Wells Fargo’s PAC also gave Coleman a $5,000 PAC contribution on Dec. 23 for his Senate Recount Fund. Huntington Bancshares, an Ohio-based bank, gave $5,000 to the leadership PAC of House Minority Leader John Boehner (R-Ohio) on Jan. 15. KeyCorp, another Ohio-based bank, gave $7,670 to Ohio Democratic Gov. Ted Strickland in January.

Chrysler’s PAC made $62,500 in campaign contributions in December, including $25,000 to the Democratic Governors Association, $12,500 to the National Conference of Democratic Mayors and $25,000 to the Republican Governors Association. Chrysler has received $4 billion in TARP money. Chrysler Financial, a lending arm, has received another $1.5 billion.

“PAC funds are voluntarily contributed by Chrysler managers consistent with federal law for political purposes. We have not and will not use corporate money for political purposes,” a Chrysler spokeswoman said.

The government extended $17.4 billion to GM and Chrysler in December to prop up the ailing carmakers. In February, the two firms presented plans to the Treasury Department requesting another $21.6 billion in government aid.

But critics said that it was inappropriate for companies that have received government money to be turning around and contributing to political campaigns.

“Businesses that are receiving huge amounts of public funds to help salvage themselves from themselves ought to operate as semi-publicly owned entities and should not be making expenditures for influence-peddling on Capitol Hill that includes campaign contributions and lobbying expenditures,” said Craig Holman of Public Citizen.

Some firms’ PACs have spent nothing or very little during the period. Morgan Stanley’s PAC, for example, did not spend any money between Nov. 25 and the end of January.

Some of the leading trade associations representing the financial industry also have given hundreds of thousands since mid-November. The American Bankers Association PAC spent $132,000, and the Independent Community Bankers Association spent $106,000. The Securities Industry and Financial Markets Association PAC spent only $1,000, and the Financial Service Roundtable PAC spent roughly $17,000.