Political contributions by the nation`s biggest banks have increased 15 times faster than overall campaign donations by political action committees since 1985 as the banking industry pushed to influence lawmakers on proposals that would dramatically restructure the industry.
The sharp rise in bank contributions-up 74 percent over the last three congressional election cycles-came despite an industry recession and reflects a conclusion by bankers that they were late in using compaign donations to sway Congress.
A report issued Wednesday by a consumer coalition, based on records on file with the Federal Election Commission, said the political action committees (PACs) associated with the 50 largest bank holding companies spent $5.3 million in calendar years 1985-86, $7.8 million in 1987-88 and $9.3 million in 1989-90.
They include three Illinois companies: First Chicago Corp., which spent $411,953 during the six years; Continental Bank Corp., $355,140; and Harris Bankcorp, $82,525.
”Political contributions are the lever America`s biggest, least efficient and least stable banks are using to remake the industry in their own image,” said Kate Head, head of the Financial Democracy Campaign, an alliance of groups that includes labor unions, the Consumer Federation of America, the U.S. Conference of Mayors and Ralph Nader`s Public Citizen organization.
The alliance opposes the Bush administration plan to alter regulations dealing with banking and other financial service businesses. It would be the biggest change since the Depression. Last week the House Banking Committee endorsed most of the administration package, which allows banks to broaden their investment and interstate branching power.
The increase in banking contributions came as spending by PACs overall leveled off in the last election after they came under increasing criticism for the influence they wielded in political campaigns.
Reacting to the ”Keating Five” scandal, in which five senators faced ethics charges that contributions from savings-and-loan kingpin Charles Keating influenced their actions, some members of Congress now refuse to take PAC money.
Nevertheless, ”there was a feeling in the (banking) industry that they had not been as involved in the political process as they needed to be,” said Ed Yingling, executive director of government relations for the American Bankers Association, the industry`s main trade group.
”For an industry so highly regulated and with so many issues before Congress, they were slow in getting active in this,” he said.
House and Senate banking committee members, who have the most influence on the legislation, were the biggest beneficiaries of the contributions.
Rep. Stephen Neal (D-N.C.) was the top recipient of bank PAC money in 1989-90, receiving $101,300 or 24 percent of his total PAC contributions. His spokesman, William Connelly, said that the Financial Democracy Campaign has its own agenda, adding, ”If you don`t vote their way, they smear you.”
The top Senate recipient was Sen. Phil Gramm (R-Tex.), who received $95,425 from bank PACs, 6.6 percent of his PAC total.
Larry Neal, Gramm`s spokesman, said that PAC contributions made up only 15 percent of all the money Gramm raised in his 1990 re-election bid. Neal also questioned the group`s motives, charging it is ”largely a left-wing Democratic group.”
Sen. Alan Dixon (D-Ill.), who is up for re-election next year, took $50,000 from bank PACs in 1989-90, 13 percent of his total take from PACs.
”Those who contribute to my campaign do so knowing that they will only receive one thing in return: good government,” said a statement from Dixon.
Bank PAC donations to Rep. Frank Annunzio (D-Ill.), chairman of the House Banking Subcommittee on Financial Institutions, totaled $26,750, or 5.7 percent of his total PAC receipts, in 1988-90. He could not be reached for comment.
The top contributor over the six-year period was Citicorp, the nation`s largest bank holding company, which spent nearly $1.7 million.
But in terms of donations proportionate to its size, Barnett Banks Inc., a relatively small company that operates only in Florida and Georgia, made the biggest effort. Indeed, in the 1990 election, the bank gave more than Citicorp to lead the entire industry in contributions, shelling out $702,592.
The Jacksonville, Fla.-based firm is thrilled about its No. 1 ranking.
”We raise a tremendous amount of money,” said Marty Farmer, Barnett`s executive director of government relations. ”It`s a source of institutional pride here.”
Another reason why contributions by big banks leaped substantially is that many of the institutions have grown larger themselves.
For instance, NCNB Corp., a Charlotte, N.C.-based bank, doled out $553,207 to candidates in the 1990 election, four times its donations in 1986 contests. Over the same period, NCNB`s assets tripled to $66 billion as the company branched out over seven states to become a ”super-regional” bank.
