Risk & Compliance

Studies: Bailout Backers Got More Bank Donations

Two reports measure how much campaign money House members of both parties received from financial institutions, and find sharply higher average amo...
Kate PlourdSeptember 30, 2008

In the wake of the defeat handed the Bush administration’s $700 billion financial rescue plan by the House on Monday, two groups issued reports suggesting that the receipt of corporate political contributions may have influenced lawmakers’ votes.

The reports from two nonpartisan organizations that track money and politics — Maplight.org and the Center for Responsive Politics — examined political-contribution data over different periods. But the conclusion of both groups is that Republican and Democratic members of the House who voted yes on the bailout bill received substantially more donations from finance, real estate, insurance, banking, and securities firms than did members who voted no.

Over the past five years, Maplight.org reported, banks and securities firms donated an average of $231,877 to each representative who voted in favor the bailout package. Representatives who voted against the bill received an average of $150,982 over that period, 54 percent less than supporters received on average. The 140 Democratic representatives voting for the bailout received an average of $212,700, almost double the average of $107,993 taken in by the party’s 95 representatives voting against the bailout. As for Republicans, the group said, the 65 who voted for the bailout received an average of $273,181, compared to $181,688 for the 133 Republicans voting against it.

The Center for Responsive Politics looked at the 2007-2008 election cycle, and donations from finance, insurance, and real estate firms. It found that those firms donated 51 percent more to House members who supported the bailout. Those Democrats who supported the bailout received $188,572 in donations from 2007 to 2008, compared to $105,878 for Democrats who voted against it. The Republicans who supported the bill received $185,461 compared to $150,381 that went to the GOP members opposing the bill.

Associations that lobby for the finance industry have made it clear since Monday’s vote how upset they are that the measure failed.

The Securities Industry and Financial Markets Association’s released a statement saying that “it is very disappointing that the House turned down the opportunity to pass major financial legislation which could have provided a bulwark of stability against continuing tough economic times.”

The American Financial Services Association warned that without a bailout businesses could easily have trouble financing inventory, purchasing equipment, and making payroll, and said that “the credit markets will continue to dry up, preventing all types of creditors from raising the funds they need to make financing available to consumers and small businesses.”

The Center for Responsive Politics noted that there was a similar correlation between political donations and Congressional voting in 1999, when Congress debated financial industry regulation. The bill then was the Financial Services Modernization Act, which loosened some restrictions on risk-taking that had been approved in response to banking policies that helped lead to the Great Depression