Wall Street firms are quietly preparing to resume political giving in the next few months, marking an end to a freeze that many corporations vowed to impose after rioters stormed the U.S. Capitol in January to disrupt congressional certification of Donald Trump’s loss to President Joe Biden.
The pause on political action committee contributions, touted by major financial companies like JPMorgan Chase & Co., Goldman Sachs Group Inc. and BlackRock Inc., alarmed lawmakers in both parties at the time, given how much of their campaigns are bankrolled by deep-pocketed corporate donors.
Yet it was never meant to be a shutdown of the Wall Street money machine, which contributed $787 million to the 2020 election, people familiar with the matter said. Instead, it was about publicly showing customers and stockholders that they were disgusted with the armed insurrection and the Republicans who directly or indirectly backed the effort.
Some of the 147 members of Congress who voted against certifying the election for Biden will remain on what’s been dubbed the “no-fly list,” a likely permanent ban on corporate PAC donations, like Missouri Senator Josh Hawley or Representative Marjorie Taylor Greene of Georgia.
Craig Engle, a political lawyer at the Arent Fox law firm in Washington, says he expects PACs to resume donations in earnest next month, but the memory of the insurrection will make it difficult to resume giving to some of the 147 senators and representatives and senators.
“That is truly a case-by-case, corporation-by-corporation or group-by-group decision,” he said. “There is no general rule that is going to emerge.”
And big banks, hedge funds and asset managers have always had other ways to keep the dollars flowing to members of Congress, including fundraising events that can bring in much more money than a PAC can donate. Wall Street firms also took advantage of a natural lull in the first few months after an election.
There is sparse data available on corporate giving so far this year, with some company PACs not scheduled to report to the Federal Election Commission until July 31.
But interviews with more than a dozen executives, lobbyists, and campaign finance lawyers show that the flurry of corporate announcements wasn’t part of any strategy for firms to take their money out of politics. And most had plenty of back-up for making sure they maintained influence in Washington.
Charles Schwab Corp. was the only large brokerage that actually got rid of its PAC after the riot. It promised in a January statement to donate the remaining proceeds to the Boys & Girls Clubs of America and historically Black colleges and universities.
Notably excluded from the new policy were individual employees, including Charles Schwab himself, one of the firm’s founders and chairman and one of the biggest political donors in the country. Over the past two years, he and his wife, Helen, made $18.7 million in contributions to Republicans, largesse that dwarfed the roughly $500,000 that the company’s political action committee doled out to federal candidates and committees, according to the Center for Responsive Politics, which tracks campaign finance
The entire episode of publicly pulling donations could pose additional risk for Wall Street by alienating Republicans who traditionally have been the industry’s biggest supporters.
The move was a “huge miscalculation,” said Sam Geduldig, who used to lobby for Goldman, coming at a time when Republicans are becoming more populist and anti-big bank. Many Democrats feel the same way, he pointed out.
“Is there a better position in 2021 than for a politician of either party to say, ‘Goldman Sachs won’t give me money and I don’t want it anyway?”’ he asked. “Now they can run as martyrs.”
Executives at Goldman Sachs and JPMorgan, for example, regularly host get-togethers with lawmakers who travel to New York looking to fill their campaign coffers. Though the practice has been suspended during the pandemic, Goldman Sachs partners held events in 2019 for Senator Gary Peters, a Michigan Democrat, as well as Republican senators Thom Tillis of North Carolina, Dan Sullivan of Alaska and David Perdue, who lost his Georgia Senate seat in January.
Those meetings can be more lucrative for the lawmaker than a corporate PAC check. A PAC typically can give a maximum of $20,000 to members of Congress: $5,000 for the primary, $5,000 for the general election and $5,000 per year to a member’s leadership PAC. But a dinner with 10 finance executives, each bringing the maximum $5,800, can net $58,000.
The violence at the Capitol prompted dozens of corporations to announce they were re-evaluating how they make political donations. The halt fell into two broad categories: companies that put a hold on all giving and others that stopped contributing to the 147 GOP lawmakers who objected on the day of the riot to at least one state’s certification of Biden’s Electoral College victory.
Many lawmakers weren’t pleased. Democrats complained they were being punished for the other party’s sins, while a number of Republicans argued that they were being singled out for what they said was taking a stand against voter fraud.
As each company is reviewing contributions, executives and lobbyists say they are all looking to see what the competition is doing. Nobody really wants to be the first to crank up the money machine. One consensus, they said, is to move slowly. That likely entails starting up the PACs some time in the second quarter with donations mainly to non-controversial members of Congress.
The floodgates, most predicted, will open once Democrats start to craft legislation, on taxes for example, that targets businesses and wealthy individuals, which the Biden administration has said it’s considering.
Ultimately, some of the 147 Republicans will get donations again, executives said, but there will be exceptions. If Hawley remains on the “no fly list,” it could affect his ability to raise money for a possible 2024 presidential run.
The Republican objectors also included still-powerful lawmakers with great sway over business, especially House Minority Leader Kevin McCarthy of California and his deputy Steve Scalise of Louisiana. Most PACs will eventually continue to support them, as well as 13 Republicans on the House Financial Services Committee who also voted against certification, the executives said.
Underscoring the potential danger for financial companies, senior Financial Services member Blaine Luetkemeyer of Missouri, a Republican, recently told donors that if corporations were going to put him on an enemies list, he would create a list of his own, said a person who attended the meeting.
Chad Ramey, Luetkemeyer’s chief of staff, said that while he couldn’t discuss the specifics of any meeting, “the congressman has never referred to anyone as an enemy.”
“While he certainly doesn’t agree with some of the decisions, the congressman has maintained that PACs have the right to support whoever they choose, be they Republicans like Congressman Luetkemeyer who support economic growth and responsible regulation or others who take a different posture on policies impacting the financial sector,” Ramey said.
PACs, which rely on voluntary donations from employees, are used by in-house lobbyists to buy access to a politician’s fundraising breakfast, dinner or ski trip to Vail. Many, like Schwab’s former PAC, balance donations between Republicans and Democrats.
Their bipartisan nature makes PACs less controversial inside companies where people’s politics and party affiliation vary. However, with the polarization of the Trump era, that’s become a tougher sell.
“There was a feeling that companies need to take a stand, and that was probably met with a concern about the brand,” said Sheila Krumholz, executive director of the Center for Responsive Politics. “If companies so quickly and easily backtrack on the PAC suspension, it will prove to be a P.R. move.”
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