Fundraising Signals Uncertainty in Senate, Status Quo in House

The midterm elections may be five months away, but top members of committees with oversight of the financial sector have already amassed sizable donations from industry. Politicians getting campaign money is nothing new, but the spending totals can signal where the biggest players in the sector think power is headed.

A review of fundraising among lawmakers with power in the financial industry so far reveals two trends in this campaign cycle. First is that companies and associations are giving more in the aggregate to House Republicans, signaling that industry isn’t expecting a change of party or panel leadership in the House. But spending figures on the Senate side indicate that such certainty is far from clear in the upper chamber.

The second trend is an increase in spending from financial firms outside the banking industry in the past two years, according to figures compiled by the Center for Responsive Politics. That shift is most evident on the House side, and it coincides with stepped up regulation for the nonbank institutions, particularly insurers.

In the House, Financial Services Committee Chairman Jeb Hensarling had his highest fundraising totals in the lead-up to the 2012 elections, when he was running to succeed Rep. Spencer Bachus as chairman of the House Financial Services Committee. The two-year courtship with Hensarling, from both the financial industry and individuals, resulted in more than $4 million in contributions to the Texas Republican’s re-election campaign and his political action committee, known as the Jobs, Economy and Budget Fund.

From 2011 through 2012, securities and investment firms topped Hensarling’s donation list with $446,750 in contributions. As regulators began implementing the 2010 Dodd-Frank law, the biggest donors were JPMorgan Chase & Co., at $48,500, and Goldman Sachs Group Inc., with $40,500.

Since taking the committee helm in January 2013, financial support for Hensarling has slowed, and this time around his biggest donors aren’t exactly household names. London Bay Capital LLC, a San Francisco-based investment firm, sits atop the donors list with $25,500, followed by the Washington lobbying firm Clark Geduldig Cranford & Nielsen LLC at $22,850. Both amounts are through March 31 of this year.

Still, other top contributors are more well known – Koch Industries and the American Financial Services Association – and Hensarling’s overall haul of $3.01 million is still well above the average of about $1.2 million for his fellow House members.

This time around, the insurance industry, bolstered by companies such as MetLife Inc., has been the biggest campaign contributor to Hensarling. Insurers have contributed $289,304 to the chairman for the current election cycle, which began in January 2013.

Securities and investment firms have been bumped from their top spot and are now third on the list, with commercial banks in second place. The Independent Insurance Agents and Brokers of America are the biggest insurance trade group making contributions to Hensarling, earning them the No. 7 spot.

The increase in insurance funding coincides with a tense regulatory environment for the industry. Last year, the firms were put on high alert when the Financial Stability Oversight Council labeled American International Group Inc. and Prudential Financial Inc. as systemically important financial institutions, meaning they’re now subject to regulation by the Federal Reserve.

Republicans on the Financial Services Committee have been critical of FSOC’s regulatory jurisdiction, and several GOP lawmakers on the panel have introduced legislation that would declare a temporary moratorium on initiating oversight of other insurers.

Insurers don’t just want Republican support, though. The industry was the No. 1 contributor to the campaign committee and PAC, People Helping People, for the panel’s ranking member, Rep. Maxine Waters of California, with $67,750 in donations through May 14 of this year. In the previous election cycle, insurance companies were 13th on the list, at $16,750.

Overall, Hensarling has received 1,079 campaign contributions, totaling $1.14 million, whereas Waters received $190,350 from 241 contributions, suggesting that donors, like most campaign-watchers, see Republicans maintaining control of the House in the November midterm elections.

Such certainty is absent on the Senate, where both control of the chamber and of the Banking Committee dais are in play. With Sen. Tim Johnson (D-SD) set to retire at the end of the year, the race to replace him as chairman of the Banking, Housing and Urban Affairs Committee is underway.

Jack Reed is next in line by seniority, but the Rhode Island Democrat is in a similar position on the Armed Forces Committee, where Chairman Carl Levin (D-MI) is retiring at the end of this year. That leaves open the possibility of Sen. Charles Schumer (D-N.Y.), who’s right behind Reed, or Sen. Sherrod Brown (D-Ohio) succeeding Johnson. Sen. Robert Menendez is in between Schumer and Brown, but the New Jersey Democrat is already chairman of the Foreign Relations Committee.

Through the end of April, Schumer’s Impact PAC brought in $667,339 for the 2013-2014 election cycle. Contributions from the securities and investment industry topped the list of donors at $46,000, while the PAC’s biggest contributions came from Aetna Inc., Google Inc. and the National Association of Realtors, with each giving $10,000.

The Center for Responsive Politics does not separate out campaign committee contributions for the 2013-2014 period for senators.

Brown’s America Works PAC received $461,000 during the same time period, with the biggest contributions coming from the real estate industry, at $44,000. Seven companies and organizations, ranging from the American Institute of CPAs to the Independent Community Bankers of America, contributed $10,000.

Reed’s PAC, Narragansett Bay, has received only $183,300 this two-year election cycle through March of this year, and the defense electronics industry is the contributor at $20,000.

Mike Crapo, the current ranking member on the banking panel, is not up for re-election in his home state of Idaho. If the Republicans retake the Senate he could be the committee’s next chairman.

His main PAC, the Freedom Fund, has brought in $921,070 through April this election cycle. The top industry contributors were insurance, followed by securities and investment and commercial banks.

GOP control of the Senate would likely set off a game of musical chairs, though, since former Banking Committee chairman Richard Shelby (R-AL) is allowed to serve two more years as head or ranking member of that panel. His Defend America PAC had brought in $738,659 through the end of April, with defense industries comprising the top two donor spots. Shelby is the No. 2 GOP member of the Appropriations Committee, where Thad Cochran of Mississippi is the top Republican.

Morning Consult