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*Wall St. cash flow imperils Democrats*
By: Chris Frates and John Maggs
October 12, 2010 04:34 AM EDT

A shift in the flow of Wall Street money toward Republicans earlier this
year has become a torrent in the final weeks of the campaign, according to
lobbyists and business executives doling out the cash.

“Our target ratio for the 2010 cycle is 80-20 Republican,” said Karen Klugh,
spokeswoman for the American Financial Services Association.

It’s a striking departure from the 2008 cycle, when the association’s
members, representing a broad swath of the finance industry, split their
donations roughly evenly between Democrats and Republicans, she said.

The financial industry’s turn on the administration and its allies in
Congress sheds light on the tattered relationships left in the aftermath of
the economic meltdown and the government’s response to it. The vilification
of bankers, what one bank lobbyist called the “show trials” of congressional
hearings and especially the outcome of financial regulatory reform has
prompted an all-out effort to wrest Congress from Democratic control,
several financial industry insiders told POLITICO.

“AFSA contributes to candidates that we believe will foster an economic
environment that supports the sustainable growth of our members,” Klugh
said. “But much like the American electorate at large, our ratio this cycle
reflects our deep concerns with the work of the 111th Congress.”

Some Democratic lobbyists for the financial community said a shift in
donations was inevitable, given the industry’s longtime Republican leanings.
But the sheer volume of it could tip the scales in some races.

Take the case of Ohio Democratic Rep. Mary Jo Kilroy, a targeted freshman
who sits on the House Financial Services Committee — an appointment that
typically prompts a windfall of donations from Wall Street.

Kilroy is running against Steve Stivers, a former bank lobbyist who has
raised nearly four times as much money from the financial industry as the
incumbent, who sat on the conference committee that finalized the financial
regulatory reform law.

According to the Center for Responsive Politics, Kilroy has received about
$35,000 from banks, investors and others in the industry, compared with the
roughly $133,000 that has been donated to Stivers.
Kilroy’s camp has a simple explanation for the disparity: Stivers is one of
them.

“Career banking lobbyist Steve Stivers is being financed by big banks,
investment firms, millionaires and billionaires that want to repeal Wall
Street reform,” said Kilroy campaign spokesman Brad Bauman.

“That is the agenda he would bring to Washington. That is why they are so
eager to cut him checks.”
Stivers’s campaign spokesman, John Damschroder, counters that Kilroy “gets
her money from big labor union bosses, ambulance-chasing trial lawyers and
liberal special interests. Time and time again she has alienated the
business community in central Ohio with her job-killing, big-taxing,
mandate-supporting votes. That’s why there is a disparity.”

But Stivers is campaigning on a pledge to support changes in the law, a
position heartily embraced by the financial sector. “There’s an eagerness by
some in the industry to roll back Dodd-Frank ... and go after parts of it
before it takes root,” said a Democratic financial services lobbyist.

House Minority Leader John Boehner (R-Ohio) promised to do just that late
last spring when he met privately with Wall Street executives and lobbyists
and urged them to get behind Republican candidates. The pace of giving has
accelerated as the GOP prospects improved.

A lobbyist for one of the top five Wall Street investment banks said that he
couldn’t even think of the last corporate donation or fundraiser for a
Democrat in 2010. “I know there must be some,” he said, half in jest.

He said that overall donations to candidates are down sharply in 2010, in
part because the reform law has passed. But the drop has been most
pronounced for Democrats. “We feel betrayed,” the lobbyist said. “The
administration came to us [in early 2009] and said, ‘We want to work with
you,’ but when [Democrats in Congress] took over the process, they did
nothing.”

A lobbyist for another giant Wall Street bank said the company’s political
action committee had ceased donating to the Democratic campaign committees
for the House and Senate and that other Wall Street banks had done likewise.
He spoke ruefully about how important investment banks and their top
executives were to the Obama campaign and the Democratic Senatorial Campaign
Committee in 2008, when the DSCC was headed by Sen. Chuck Schumer (D-N.Y).

Corporate donations were probably close to 50-50 throughout 2009 and ran
about 60-40 in favor of Republicans earlier this year, but they have skewed
significantly more toward Republicans in the past few months, he said.

House Speaker Nancy Pelosi (D-Calif.) this week acknowledged that the huge
shift in campaign cash toward Republicans is actually the main reason that
Democrats are in danger of losing their House majority.

“Absent this, we were really pretty confident about winning the election,”
Pelosi told the Huffington Post. “We still are. But this makes it harder,”
she said.

Pelosi went on to say that Democrats would gain ground in the next month by
tying corporate cash to the Republicans receiving it.

“Whenever you get hit with an overwhelming weight, you have to jujitsu it.
So we want to turn it against them. ... Big Oil, big banks, big health
insurance: We’re going to tattoo you with that, so it’s like doggy-doo stuck
on your shoe,” she said.

That tactic was on display this week in Washington state, where state
Democrats attacked Senate GOP challenger Dino Rossi for his close
association with hedge fund manager Paul Singer, who gave more than $1
million to Karl Rove’s American Crossroads effort to funnel large amounts in
independent expenditures to Republican campaigns.

Rossi, who is trying to unseat Sen. Patty Murray, is one of very few
Republicans who have come out in favor of repealing the new financial reform
law — a position Democrats say runs counter to opinion polls that show the
legislation is supported by about 60 percent of the public.

But Rossi doesn’t seem worried about any damage that might come from his
close ties to and heavy support from Wall Street.

On Sept. 30, he was one of seven GOP Senate challengers feted at a
fundraiser in New York put on by Singer, along with fellow billionaire
Steven Cohen and former George W. Bush Ranger Sam Fox.


On Tue, Oct 12, 2010 at 10:50 AM, <tedkaufman@comcast.net> wrote:

> Good read - article in today's politico about wall street $ pouring into
> republican congressional races.
>
> Sent from my Verizon Wireless BlackBerry
> ------------------------------
> *From: * BB <261penn@gmail.com>
> *Date: *Mon, 11 Oct 2010 20:42:12 -0400
> *To: *ted kaufman<tedkaufman@comcast.net>; Biden Hunter<
> hbiden@rosemontseneca.com>; Alexander Snyder-Mackler<smacklera@gmail.com>
> *Subject: *Worth the read below
>
> [image: The New York Times] <http://www.nytimes.com/>
>
> ------------------------------
> October 11, 2010
> The States vs. Wall St. By MICHAEL POWELL<http://topics.nytimes.com/top/reference/timestopics/people/p/michael_powell/index.html?inline=nyt-per>
>
> COLUMBUS, Ohio — Back East, at the corner of Broad and Wall Streets, the
> view is swell. The Dow is soaring, and bankers look pleased.
>
> But here on East Broad Street, the mood is gloomier. At least 90,000
> residential and commercial foreclosure notices will be filed in Ohio this
> year. Pension funds for teachers, secretaries and janitors have suffered
> grave losses. And multitudes of the unemployed in Ohio now speak of turning
> to prayer.
>
> Ohio’s attorney general, Richard Cordray, might be seen as their pinstriped
> avenger.
>
> “There’s a belief here that Wall Street is a fixed casino and it’s back in
> business, and we’re left holding the bag,” said Mr. Cordray, whose office
> overlooks East Broad. “It’s important for us to show we’ll go after a
> company that does wrong.”
>
> Mr. Cordray in two years in office has demonstrated a willingness to sue
> early and often, filing lawsuits against global financial houses, rating
> agencies, subprime lenders and foreclosure scammers. He has wrested about $2
> billion so far, a string of gilded pelts: a $475 million Merrill Lynch<http://topics.nytimes.com/top/news/business/companies/merrill_lynch_and_company/index.html?inline=nyt-org>settlement, $400 million from Marsh
> & McLennan<http://topics.nytimes.com/top/news/business/companies/marsh_and_mclennan_companies/index.html?inline=nyt-org>and $725 million from the American
> International Group<http://topics.nytimes.com/top/news/business/companies/american_international_group/index.html?inline=nyt-org>.
>
>
> Last week, he filed suit against GMAC<http://topics.nytimes.com/top/news/business/companies/gmac-llc/index.html?inline=nyt-org>Mortgage, accusing the loan servicer of filing fraudulent affidavits in
> hundreds of Ohio foreclosures.
>
> His office has returned money to investors, pension funds, schools and
> cities. And he has directed millions to agencies fighting foreclosure.
>
> “We see what Washington doesn’t: the houses lying vacant, the eyesore
> stripped for copper piping with mattresses out back,” Mr. Cordray says. “We
> bailed out irresponsible banks, but we forgot about everyone else.”
>
> It speaks to this political age that such words are more rarely heard from
> federal regulators, who walk quietly and carry big bailout checks. Instead
> state attorneys general, in this case, a sandy-haired 51-year-old Democrat
> who sits about 400 miles from Washington, are giving full throat to popular
> outrage.
>
> If Eliot Spitzer<http://topics.nytimes.com/top/reference/timestopics/people/s/eliot_l_spitzer/index.html?inline=nyt-per>,
> the former New York attorney general, was the prototype of this breed, a
> handful of current ones, like Mr. Cordray, Martha Coakley<http://topics.nytimes.com/top/reference/timestopics/people/c/martha_m_coakley/index.html?inline=nyt-per>of Massachusetts, Lisa
> Madigan<http://topics.nytimes.com/top/reference/timestopics/people/m/lisa_madigan/index.html?inline=nyt-per>of Illinois, Tom Miller of Iowa and Roy Cooper of North Carolina, lay claim
> to his mantle. Like recessionary scouts, they spot trouble, like a rapacious
> foreclosure-rescue operator, a predatory credit card company or a financial
> firm draining a pension fund.
>
> Ms. Coakley secured millions of dollars in mortgage modifications from Countrywide
> Financial<http://topics.nytimes.com/top/news/business/companies/countrywide_financial_corporation/index.html?inline=nyt-org>and reached a $102 million settlement with Morgan
> Stanley<http://topics.nytimes.com/top/news/business/companies/morgan_stanley/index.html?inline=nyt-org>over its role in financing the subprime loans that fed the housing crash in
> Massachusetts.
>
> “We were the first to go after predatory loans — we’re not waiting for
> federal agencies to act,” Ms. Coakley said.
>
> Some express skepticism, suggesting that such lawsuits are emotionally
> pleasing but economically destructive. Former Senator Michael DeWine, a
> Republican who is running against Mr. Cordray, a Democrat, in the November
> election, has implied that Mr. Cordray wields an antibusiness cudgel. Better
> to rely on federal regulators, others argue, to constrain global
> corporations.
>
> That strikes James E. Tierney, director of the National State Attorneys
> General Program at Columbia, as a bit beside the point.
>
> “Is state action as effective as a federal regulator going after these
> companies? Absolutely not,” says Mr. Tierney, a former state attorney
> general for Maine. “But when regulators are too worried about giving
> offense, there’s no reason an enterprising attorney general can’t go in
> there,”
>
> Born in Grove City, Ohio, Mr. Cordray was educated at Michigan State,
> Oxford and the University of Chicago<http://topics.nytimes.com/top/reference/timestopics/organizations/u/university_of_chicago/index.html?inline=nyt-org>Law School. A Supreme
> Court<http://topics.nytimes.com/top/reference/timestopics/organizations/s/supreme_court/index.html?inline=nyt-org>clerk, he also argued cases before the court. In 1987, he enjoyed a run as a
> five-time winner on the television show “Jeopardy!”
>
> Somewhere along the way, he hankered for more. His father ran a program for
> mentally disabled people; his mother, a social worker, founded an
> organization of foster grandparents; and he wanted to enter the public
> sphere. Mr. Cordray began running for office.
>
> His yearning often went unrequited; voters, he noted with a hike of the
> eyebrows, elected him state representative but rejected his run for Congress
> and an early attempt at state attorney general.
>
> He shrugs.
>
> “I really got my head pounded in over the years in politics,” Mr. Cordray
> says. “My wife thought I was nuts.”
>
> Eventually, he downsized his ambitions and ran successfully for Franklin
> County treasurer. And in 2008, he won a special election for attorney
> general.
>
> Mr. Cordray is no William Jennings Bryan inveighing against the evils of
> monopoly capital. He can be eloquent about corporate misbehavior, in an
> eyes-downcast and soft-spoken fashion. (His language reads hotter on the
> page than it sounds in person.)
>
> He is, however, tapping a populist tradition in Ohio. This is where
> politicians mounted challenges to the Standard Oil monopoly of John
> Rockefeller and where Senator John Sherman led a late 19th-century campaign
> to pass the Sherman Antitrust Act, which was the first law to require the
> federal government to investigate companies suspected of running cartels and
> monopolies.
>
> Mr. Cordray carefully describes his allegiance to capitalism, although he
> says the financial crisis<http://topics.nytimes.com/top/reference/timestopics/subjects/c/credit_crisis/index.html?inline=nyt-classifier>should explode forever the efficient-markets theory, popular with
> economists, that the best market is a self-correcting one. (Adam Smith’s
> “Wealth of Nations” shares space on his office bookshelf with books by the
> urbane Keynesian John Kenneth Galbraith<http://topics.nytimes.com/top/reference/timestopics/people/g/john_kenneth_galbraith/index.html?inline=nyt-per>.)
>
>
> “The notion that banks will just get things right over time is perhaps
> true,” Mr. Cordray says. “But over what time period, and at what terrible
> cost to the individual American?”
>
> Certainly, he has not minced words in pursuing a steady stream of cases
> against corporations.
>
> He accused Marsh & McLennan of conspiring to eliminate competition in the
> insurance business by generating fictitious quotes. He denounced three
> credit rating firms, Fitch Ratings<http://topics.nytimes.com/top/news/business/companies/fitch_ratings_inc/index.html?inline=nyt-org>,
> Moody’s<http://topics.nytimes.com/top/news/business/companies/moodys_corporation/index.html?inline=nyt-org>Investor Services and Standard
> & Poor’s<http://topics.nytimes.com/top/news/business/companies/standard_and_poors/index.html?inline=nyt-org>,
> for giving inflated ratings to packages of troubled mortgages put together
> by the big investment houses. He says that Ohio pension funds lost close to
> half a billion dollars by investing in those triple-A rated securities.
>
> And last October, he accused Bank of America<http://topics.nytimes.com/top/news/business/companies/bank_of_america_corporation/index.html?inline=nyt-org>officials of concealing critical facts in the acquisition of Merrill Lynch,
> even as that firm careened toward insolvency. Top bankers, he said, had not
> come remotely clean about the extent of the losses at Merrill and its
> bonuses.
>
> The lawsuit against Bank of America was the first of its kind, although Mr.
> Cordray’s actions drew rather less press than a lawsuit filed months later
> by Attorney General Andrew M. Cuomo<http://topics.nytimes.com/top/reference/timestopics/people/c/andrew_m_cuomo/index.html?inline=nyt-per>of New York. Mr. Cuomo, whose skill with the tactical leak, news release and
> the lawsuit is considerable, tends not to work closely with his fellow state
> attorneys general, say two officials from states other than Ohio.
>
> Attorneys general are perhaps more successful at extracting large sums of
> money than in changing corporate behavior. A Goldman Sachs<http://topics.nytimes.com/top/news/business/companies/goldman_sachs_group_inc/index.html?inline=nyt-org>or Marsh & McLennan, to this view, tends to see such settlements as a cost
> of doing business.
>
> “The settlements are large, but the changes in behavior don’t seem to be
> that large,” said Daniel C. Richman, a former federal prosecutor and
> professor at Columbia Law School. “These targets have massive amounts of
> money to pay off and continue on their merry way.”
>
> Raise this criticism to Mr. Cordray and he nods in agreement.
>
> “In an ideal world, if the S.E.C. had done its job, that would be much
> better,” he said. “Our settlements make up for the losses fractionally.”
>
> As it happens, Mr. Cordray now faces a more existential threat. Legal
> challenges to corporate misbehavior are not proven electoral gold. This
> year, Ms. Coakley, a Democrat, fell to Republican Scott Brown<http://topics.nytimes.com/top/reference/timestopics/people/b/scott_p_brown/index.html?inline=nyt-per>in a race to fill the Senate seat of Edward
> M. Kennedy<http://topics.nytimes.com/top/reference/timestopics/people/k/edward_m_kennedy/index.html?inline=nyt-per>.
>
>
> And polls show Mr. Cordray running behind in his race with Mr. DeWine. He’s
> no natural glad-hander — he apologizes when he realizes he has automatically
> extended his hand at a luncheon. More paradoxical, he finds himself at risk
> of being identified with “them,” which is to say the establishment that Ohio
> residents view as having failed them.
>
> Again, he shrugs. He is not inclined to blame voters for his troubles.
>
> “Politicians are kind of like adolescents, always looking in the mirror and
> assuming that’s what people see,” he says. “But there’s a great anxiety out
> there, a great unease about our future. Most people are hurting, and they
> don’t have the time to pay attention to us.”
>
>


--

Alexander Snyder-Mackler
(302) 598-867