Why banks are steering more political donations to Democrats
WASHINGTON — As pollsters see signs of an upcoming blue wave in the November elections, Democratic candidates continue to receive an increasing share of political donations from commercial bankers.
In an echo of the 2016 presidential election, bankers are contributing more to the Democratic candidate, Joe Biden, than to Donald Trump. And while bankers are giving more overall to Republicans, as they did in 2016 and 2018, donations for 2020 congressional races appear to be spread more evenly between the parties.
Observers say that the donations reflect bankers’ interest in maintaining influence over the party in power. Recent polls have Biden ahead of President Trump in key battleground states. And some are projecting that 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 U.S. Public Interest Research Group.
As of June 22, Republican candidates received $12.5 million, 40% more than Democrats' $8.9 million. In 2018, the difference was nearly 80%, and was 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 by political action committees at banks or industry trade groups as well as individuals at banks who give at least $200.
Industry representatives say banks' 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 the Independent Community Bankers of America, said the trade group’s donations are typically “bipartisan and mirror the composition of Congress in most cases.”
“If the Congress is split, 60-40 Republican-Democrat, the PAC will reflect that,” Merski said. “Or if it’s 50-50 Republican-Democrat, our contributions typically reflect the makeup of Congress.”
“Industrywide, whoever is in control of the administration or the key banking committees ... contributions tend to flow to individuals that are in control,” he added. “It just naturally makes sense if we are looking for regulatory relief.”
To be sure, a more even distribution is not an entirely new trend. The gap in banking industry donations between Democrats and Republicans has been narrowing for a few years. In both the 2012 and 2014 cycles, as regulators were implementing the rigorous Dodd-Frank Act rules, bankers' contributions to GOP candidates were more than double those to Democrats.
Some observers suggested there is a sizable voting bloc within the industry who may lean toward supporting Democratic candidates for issues beyond banking.
“There are plenty of people in and around Wall Street … across the board who can be sympathetic to some Republican policies especially on economic policy, but when it comes to social policy, foreign policy, other issues that can influence their vote and their campaign contributions, then they can split with Republicans and can support Democrats,” said Brian Gardner, an analyst at KBW. "The idea of the fiscally conservative, socially liberal voter finds a home on Wall Street.”
In the current election cycle, Biden has received more than $832,000 from commercial banks, compared with Trump’s $649,000 as of late June, according to data from the Center for Responsive Politics. In 2016, Democratic nominee Hillary Clinton received more than $2.8 million in donations from commercial banks, compared with Trump’s roughly $403,000.
For the 2020 Senate races, the incumbents receiving the most money from commercial banks are Sens. Thom Tillis, R-N.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 data from the CRP.
McConnell, the Senate majority leader, is facing a reelection challenge from Democrat Amy McGrath.
Smith and Perdue both sit on the Banking Committee and are in competitive races, but they are favored to win. Peters supported the 2018 bank regulatory relief law, and is trying to win reelection in a state Trump carried in 2016
Banks “tend to ... [support] incumbents who are expected to win,” said Ed Mills, policy analyst at Raymond James. “The industry does not want to be on the losing side."
According to Cook Political Report and Sabato’s Crystal Ball, Tillis, a Senate Banking Committee member, is in a particularly tight race viewed as a tossup.
Tillis has been notably supportive of banks’ push against a new accounting standard known as Current Expected Credit Losses, or CECL, and helped garner Republican opposition to Nellie Liang’s nomination to the Federal Reserve Board of Governors over the industry’s concern that she would impede deregulatory efforts.
"Charlotte, N.C., is of course a major financial center and so it sort of makes some sense that [banks] would be a fundraising angle for Tillis,” said Kyle Kondik, managing editor at University of Virginia Center for Politics’ Sabato’s Crystal Ball. “I kind of look at North Carolina as almost a must-win for both sides. I feel like whoever wins the Senate seat in North Carolina may 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 still up for grabs, they will tend to support incumbents and they will tend to support Republicans at risk,” Mierzwinski said.
Despite the split in the Senate, commercial banks are still largely contributing to House Republicans. The top four House candidates getting donations for the industry are: Reps. Patrick McHenry, R-N.C., with $262,299; Blaine Luetkemeyer, R-Mo., with $200,050; Andy Barr, R-Ky., with $140,225; and Kevin McCarthy, R-Calif., with $137,347.
McHenry is the top Republican on the House Financial Services Committee. Luetkemeyer and Barr are senior members of the committee. McCarthy is the Republican leader in the House.
Rep. Joyce Beatty of Ohio is the only Democrat among the top 15 House candidates receiving funds from commercial banks, coming in fifth with almost $137,000, according to data from CRP.
Mierzwinski said the donations to House Republicans are an attempt to neuter Democrats’ majority in the chamber.
“The banks are hoping that the House power of the Democrats is diluted,” Mierzwinski said. “And maybe they hope that the Republicans will take over the House. … On a wholesale level, I think they are hoping that the House becomes much more divided in power, rather than that the Democrats sweep.”
Meanwhile, the five banks donating the most as of June 22 — Wells Fargo, Bank of America, JPMorgan Chase, Citigroup and Truist Financial — are also spreading their supporting between Democrats and Republicans. Just over half of their $6.8 million in combined contributions are going to Democrats.
Of the top five Senate candidates receiving money from mortgage bankers, Sen. Mark Warner of Virginia, who helped negotiate the 2018 regulatory relief law, is the only Democrat, coming in fourth with just over $42,000, according to data from CRP. 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 splitting their donations in the House and Senate. Seven of the top House 10 candidates receiving funds from payday lenders are Democrats, according to data from CRP, while none of the top 10 Senate candidates receiving money from payday lenders in the 2020 elections are Democrats.
While the donations are important for campaign operations, they don’t necessarily paint a picture of who is going to win in November.
In 2018, four out of the top five Senate incumbents that bankers were contributing to ultimately lost their seats in Congress.
Mills said candidates who are vulnerable sometimes get posts on the Banking Committee to help then gain a fundraising edge, but that doesn't make them any less vulnerable.
“Money is a factor … but it isn’t the only factor,” he said.