Donating for dollars? Many bailed-out banks still contributing to campaign funds
The federal bank bailouts may be giving new meaning to the term "kickback."
Many of the banks rescued last year with taxpayer money have contributed to the campaign coffers of some politicians who approved the bailouts, according to recent filings with the Federal Election Commission.
While some bailed-out banks, such as Wells Fargo and JP Morgan Chase, have reduced their campaign donations, others have discreetly made donations this year, Newsweek reported. Bank of America's political action committee (PAC) gave $24,500 in January and February, "including $1,500 to House Majority Leader Steny Hoyer and another $15,000 to members of the House and Senate banking panels," the weekly news magazine said.
"This certainly appears to be a case of TARP funds being recycled into campaign contributions," Newsweek quoted Brett Kappell, a D.C. lawyer who tracks donations, as saying. "TARP" refers to the federal Troubled Asset Relief Program, the $700 billion legislation passed in October.
Citigroup, which has received a total of $45 billion in federal aid, donated $29,620 to members of Congress, including $2,500 to House GOP Whip Eric Cantor. In February, the U.S. government boosted its stake in the troubled financial firm to 36 percent – a move that aimed to avoid nationalization of Citi, once the world's biggest financial firm. Analysts said the conversion gave the government effective control as the bank's largest shareholder.
Cantor, who like nearly all of his GOP colleagues opposed the stimulus plan, also received $10,000 from Swiss banking giant UBS, which got $5 billion in federal bailout funds via AIG as one of the scandal-ridden insurance companies' "counterparties." In February, UBS agreed to pay U.S. authorities $780 million in fines, penalties and restitution and hand over customer details to settle charges of tax fraud in the United States that threatened the bank's existence.
The donations by bailed-out banks appear to be causing bank lobbyists some public-relations anxiety.
"The last thing I want to do is wake up one morning and see our PAC check being burned on C-Span," said one anonymous bank lobbyist, Newsweek reported.
Top Democrats, including House Speaker Nancy Pelosi and House Financial Services chair Rep. Barney Frank, recently said they won't accept campaign donations from bailout recipients.
But, according to Newsweek's Michael Isikoff and Dina Fine Maron, House Democratic fundraisers have "quietly passed the word that the party's campaign committee will resume accepting [donations from bailed-out banks]."
Overall, the PACs of the largest eight banks that received money from October's bank bailout gave about $225,000 between late November and the end of January, according to a review of Federal Election Commission filings conducted by The Hill earlier this month.
Those banks received a total of $170 billion from the financial rescue package, which is now being reworked by the Obama administration. And the PACs of other banks receiving more than $1 billion in bailout money gave roughly $75,000 over that same period – although they spent more money in late 2008 than in the beginning of 2009.
But it's not only rescued banks who are supporting politicians' coffers: General Motors Corp. and Chrysler LLC, who together requested more than $20 billion in additional aid last month, donated $67,000 during that period, The Hill reported.
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