According to a Reuters analysis of data compiled by the Center for Responsive Politics (CRP) and more than a half-dozen industry officials and lobbyists, US banks are giving far less to federal candidates this election cycle and increasing the proportion they are giving to Democrats.
According to Reuters, with less than a month until the mid-term elections that will determine control of Congress, commercial banks’ political action committees (PACs) have given roughly $7.4 million to federal candidates, a 43% decrease from the 2020 election cycle and a 39% decrease from the average election spend in the previous decade.
Following the 2007-09 financial crisis, when Democrats cracked down on banks, lenders have traditionally looked to business-friendly Republicans in Congress for support.
Despite receiving less money overall, Democrats have increased their share of the pie to 40% this cycle, their highest proportion since the 2010 cycle. In addition, ten of the top twenty congressional recipients of bank PAC donations this cycle are Democrats, compared to six in 2020, three in 2018, and one in 2016. The CRP data is based on information released by the Federal Election Commission on September 22.
The shift in giving patterns demonstrates how banks are reconsidering their allegiances in the face of increased political partisanship. A key turning point was the Jan. 6, 2021 attack on the Capitol when supporters of Republican former President Donald Trump forcefully prevent Congress from certifying Democratic President Joe Biden’s election win. Hours later, 147 Republicans voted to overturn Biden’s victory, which Trump falsely claimed was tainted by fraud.
It also suggests that the industry is attempting to court more Democrats as Republicans become enraged with lenders for supporting what they perceive to be liberal causes.
“The election vote really caused people to open their eyes a little bit more…to do a closer evaluation of individuals that a PAC may have supported just because they supported [the industry] in the past,” said James Ballentine, CEO of government relations firm Ballentine Strategies and, until April, a top lobbyist for the American Bankers Association, which runs the largest industry PAC.
To be sure, the ruling party frequently sees an increase in donations, and banks are also hedging their bets ahead of a tightening race, according to Ballentine and the other sources.
According to pollster FiveThirtyEight.com, Republicans have a 70% chance of winning the House, while Democrats are favorites to keep control of the Senate.
According to the sources, since January 6, many lenders have felt pressure from employees who fund the PACs to reduce their donations to Republicans.
Several banks, including JPMorgan Chase, Citigroup, Bank of America, and Morgan Stanley, paused some or all PAC donations while they reviewed their strategies, which likely contributes to the overall spend decrease.
For the first time in over a decade, Bank of America and Morgan Stanley have donated more to Democrats than Republicans this cycle. For the first time, Citigroup’s contributions are evenly split. JPMorgan is still giving more to Republicans, but at the smallest margin in over a decade.
According to several sources, lenders are also under pressure from staff and shareholders to support lawmakers working on issues other than finance, such as closing the racial wealth gap and improving education.
Joyce Beatty, the chair of the House Financial Services panel’s subcommittee on diversity and inclusion, for example, is the top Democratic congressional recipient of bank PAC money.
This trend, combined with some banks’ refusal to accept election objectors, has resulted in the industry having fewer Republican allies overall, a dynamic that was on display last month when CEOs of the nation’s largest banks testified before Congress. Some Republicans chastised them for doing business with gun manufacturers and operating in China.
Nonetheless, banks continue to court Republicans. Republicans account for nine of the top ten recipients of industry donations, including Representative Patrick McHenry, who will likely chair the House Finance Committee if Republicans win control of the House.
“Banks that are active contributors to political campaigns are hedging their bets,” said Camden Fine, a political consultant and former head of the Independent Community Bankers of America trade group.