In a move that may surprise a lot of folks, Wall Street reduced its political giving to just a few tiny drips in the first quarter of 2008. The total donations from employees at the top five banks receiving TARP capital was down 97% from the first quarter of 2007, according to an investigation by the Washington Independent.
Here’s the Independent’s chart showing the decline.
The reason for the decline isn’t clear. As Washington and Wall Street move into an ever tighter relationship, with many banks dependent on taxpayer funds for their survival, you might expect political giving to increase. The Independent raises three plausible explanations for the drop in donations.
- First, the recession has led to layoffs and paycuts on Wall Street, which leaves them with less money to contribute to politicians.
- Second, politicians may be hesitant to seek donations from TARP recepients, fearing a public backlash against perceived influence buying.
- Third, bankers who have been stung by the bonus backlash on Capitol Hill, may be giving the cold shoulder to lawmakers who threatened them with a 90% bonus tax.
The Independent compared first quarter 2009 giving to first quarter 2007 giving because both were the the beginings of there respective election cycles. Wall Streeters giving in 2007 were presumably donating in anticipation of the 2008 election, as those giving in 2009 were giving in anticipation of the 2010 elections. In an effort to make the comparisons more applicable, the Independent excludes donations given to presidential campaigns, as well as donations from state- and county-level political committees and company PACs.
We’d like to propose a fourth explanation for the end of Wall Street largesse to lawmakers: the influence of Capitol Hill is viewed as having declined precipitously over the past year. Where once the powerful heads of financial committees on Capitol Hill, such as Chris Dodd of the Senate banking committee, were viewed as extremely important, now they are viewed as being on the sidelines. The lawmakers delegated immense power to the Treasury Department and the White House, sidelining themselves. Why donate to the guys who just don’t matter so much anymore?
A less cynical possibility is that Wall Streeters are just not as interested in politics as they were in 2007, when anger about the Bush administration’s stumbles was at its height. Now that regime change has ben accomplshed on Pennsylvania Avenue and Capitol Hill, the impetus for giving may have diminished.