With the financial crisis fading, firms renew political engagement for presidential election year
WASHINGTON—Banks plan to be more active in the 2020 elections, with a large industry group promising to boost campaign spending and political advertising after keeping a relatively low profile in the decade after the financial crisis.
The industry’s re-emergence in the political arena comes amid a friendlier tone in Washington during the Trump administration. Congress and financial regulators have sought to ease capital rules, limits on trading and other restrictions placed on banks by the Obama administration after the 2008 crisis, arguing the financial system is more resilient now.
“They’re using the current thaw in what had been a pretty contentious relationship between Wall Street and D.C. to tell their story a little better,” said Ed Mills, managing director at Raymond James Financial.
The American Bankers Association, a trade group that represents banks of all sizes, said it plans to spend more than $10 million in the 2020 election cycle on its political program, including donations and advertisements to back Republicans and Democrats in congressional races. The amount also includes operational costs that aren’t subject to federal filing requirements; the group declined to say how that total compares with its spending in previous election cycles.
“Our goal is to support candidates who understand and appreciate the critical role banks of all sizes play in the economy,” Rob Nichols, the ABA’s chief executive, said in a statement. “We plan to expand our efforts in 2020 on a rigorously bipartisan basis.”
Banking on 2020 The American Bankers Association has increased political donations ahead of the2020 election. Contributions to federal candidates and other political committees Source: Federal Election Commission Note: Donations January through July in the first year of each two-year election cycle.
In the 2018 midterm election cycle, the ABA spent more than $1.5 million on political ads, polling and other research, the group said. In addition, it contributed $3.5 million to candidates and other political committees, according to Federal Election Commission filings.
The group backed four Democratic and eight Republican candidates, including Dean Heller, a former Republican senator from Nevada, and Sen. Jon Tester, a Montana Democrat.
So far this year through the end of July, it contributed $1.31 million to federal candidates and political committees, the fastest its donations have topped $1 million since at least the 2010 cycle, according to Federal Election Commission data.
The group also contributed $10,000 each to the Democratic Congressional Campaign Committee and the Democratic Senatorial Campaign Committee, and $15,000 a piece to the National Republican Congressional Committee and the National Republican Senatorial Committee. The group declined to comment on the difference in the amounts.
The Consumer Bankers Association, which represents big and regional banks, expects to raise upwards of $200,000, on par with previous years, and the Independent Community Bankers of America, representing smaller banks, said it plans to focus more on social-media ads in 2020.
The American Bankers Association ran an ad backing U.S. Rep. Ted Budd (R., N.C.) in his successful 2018 re-election race.PHOTO:WOODY MARSHALL/ASSOCIATED PRESS
The ABA’s advertisements in the 2018 cycle included one supporting Rep. Ted Budd (R., N.C.) that featured Kelly Earnhardt Miller—a North Carolina banker and the daughter of race-car legend Dale Earnhardt. The group also ran Spanish-language video ads and a print ad in Vietnamese in support of Rep. Lou Correa (D., Calif.).
So far this election cycle, the ABA is the biggest political action committee in terms of donations to federal candidates, according to the Center for Responsive Politics.
In an era where politics play out on social media, banks are working to sell their message to a broader public, shifting the focus to their role in the U.S. economy away from business practices such as risky mortgages that fed the financial crisis. They also are attaching their names to newsletters, glossy magazine ads and public-policy events.
The industry’s efforts haven’t always hit their marks. “Is Bank of America really sponsoring this?” Sen. Bernie Sanders (I., Vt.), a 2020 presidential candidate who has advocated for breaking up big banks, said at a July Washington Post event on the presidential election, with the bank’s logo overhead. “Well, let’s just get into the interview,” journalist Robert Costa replied, to audience laughter.
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The industry has pressed for regulatory victories by focusing on what it says are burdens faced by small and midsize banks, arguing that lower costs to comply with rules and regulations could mean more loans are made to small businesses and consumers. Last May, this approach led to bipartisan support for the most comprehensive rollback of the financial rulebook since the crisis.
“We’re far enough away from the financial crisis,” Heidi Heitkamp, a Democrat and then-senator who backed the bill, said in an interview. “We definitely have normalized the discussion, taking it out of a hyper, you-caused-this-and-you-should-be-punished to a discussion about what works for American consumers.”
The power split in Congress—Democrats control the House, Republicans control the Senate—has complicated efforts by banks to lobby for their policy priorities. Some progressive Democrats on the House Financial Services Committee, for instance, are shunning political donations from the industry.
“We’re still in the early-stage process of developing relationships with all of them. Some we haven’t met,” Richard Hunt, the head of the Consumer Bankers Association, said of new lawmakers of all stripes in an interview. “Eighty percent of my so-called lobbying time is with regulators.”
The real debate is whether to accept the creative destruction at the heart of the free-market system.
Today, American Democrats have a more positive view of socialism than capitalism, and less than half of young adults have a positive view of capitalism. But the debate isn’t merely between left-wing socialists and right-wing capitalists. Even President Trump argues that capitalism generates prosperity abroad at the expense of American workers. Years of wage stagnation and diminished economic prospects have soured many Americans on the system that made the U.S. the world’s largest economy.
Compared with faster-growing economies in the developing world, America feels older, and not only because the elderly will soon outnumber children. Important parts of the economy, from smartphones and cellular carriers to airlines, resemble sluggish oligopolies more than dynamic marketplaces. Ever more sectors of the economy look like heavily regulated utilities that are at reduced risk of disruption or innovation. In health care, hospitals, physician groups and insurance companies are getting bigger and in some cases driving out competitors.
The problem isn’t market dynamics, but the increased government intervention in the economy that discourages competition. Rather than relying on innovation, many companies often now seek to exploit licensing arbitrage opportunities and engage in other rent-seeking behaviors. They try to beat competitors through regulatory capture and crony capitalism rather than making better products for less.
Federal prosecutors on Saturday portrayed Paul Manafort, President Trump’s former campaign chairman, as a hardened, remorseless criminal who “repeatedly and brazenly” violated a host of laws over more than a decade and did not deserve any breaks when he is sentenced in coming weeks.
The prosecutors’ sentencing memo, filed in one of the most high-profile cases mounted by the office of the special counsel, Robert S. Mueller III, and unsealed on Saturday, painted a damning portrait of Mr. Manafort, 69, a political consultant who led Mr. Trump’s campaign during a critical five-month period in 2016.
The memo involved one of two federal cases against Mr. Manafort. Prosecutors did not recommend a sentence, instead citing sentencing guidelines of up to 22 years for a wide-ranging conspiracy involving obstruction of justice, money laundering, hidden overseas bank accounts and false statements to the Justice Department. But the two charges Mr. Manafort pleaded guilty to in the case carry a maximum sentence of 10 years.
.. Over all, the prosecutors said, Mr. Manafort’s behavior “reflects a hardened adherence to committing crimes and lack of remorse.” Despite his age, they said he “presents a grave risk of recidivism.” They noted that under advisory sentencing guidelines, Mr. Manafort would face a sentence of 17 to 22 years.
.. The prosecutors reached far back into Mr. Manafort’s career in their efforts to portray him as a calculating lawbreaker. They noted that the Justice Department first warned him in 1986 about flouting the lobbying law known as the Foreign Agents Registration Act, or FARA.
At the time, Mr. Manafort was a director of the Overseas Private Investment Corporation under President Ronald Reagan, and he was faced with a choice: “either resign his political appointment” or “cease all his activities on behalf of foreign principals,” according to the filing.
He chose to resign.
But the prosecutors said that “in spite of these clear warnings and the personal ramifications to him for not adhering to the law, Manafort chose to violate the FARA statute and to get others to as well” in his Ukrainian lobbying.
Mr. Mueller’s team also made no recommendation on whether Mr. Manafort’s sentence in the Washington case should run concurrently with his sentence in the Virginia case. After a lengthy trial in Alexandria, Va., in August, a jury convicted Mr. Manafort of eight felonies including tax fraud and bank fraud — crimes prosecutors said Mr. Manafort committed “for no other reason than greed.”
The order of his sentencing dates may work against Mr. Manafort. He is scheduled to be sentenced first for the financial crimes by Judge T. S. Ellis III of the United States District Court for the Eastern District of Virginia in Alexandria, and then by Judge Jackson in Washington.
Some allies of Mr. Manafort had hoped that Judge Ellis would have the last word because he seemed more sympathetic to the defense than Judge Jackson, and he might order the sentences to run concurrently.
They found signs as early as spring 2016 that Russian hackers were poking around the Facebook accounts of people linked to American presidential campaigns. Months later, they saw Russian-controlled accounts sharing information from hacked Democratic emails with reporters. Facebook accumulated evidence of Russian activity for over a year before executives opted to share what they knew with the public — and even their own board of directors.
The company feared Trump supporters
In 2015, when the presidential candidate Donald J. Trump called for a ban of Muslim immigrants, Facebook employees and outside critics called on the company to punish Mr. Trump. Mr. Zuckerberg considered it — asking subordinates whether Mr. Trump had violated the company’s rules and whether his account should be suspended or the post removed.
But while Mr. Zuckerberg was personally offended, he deferred to subordinates who warned that penalizing Mr. Trump would set off a damaging backlash among Republicans.
Mr. Trump’s post remained up.
Facebook launched a multipronged attack and lobbying campaign
As criticism grew over Facebook’s belated admissions of Russian influence,the company launched a lobbying campaign — overseen by Sheryl Sandberg, the company’s chief operating officer — to combat critics and shift anger toward rival tech firms.
Facebook hired Senator Mark Warner’s former chief of staff to lobby him; Ms. Sandberg personally called Senator Amy Klobuchar to complain about her criticism. The company also deployed a public relations firm to push negative stories about its political critics and cast blame on companies like Google.
Those efforts included depicting the billionaire liberal donor George Soros as the force behind a broad anti-Facebook movement, and publishing stories praising Facebook and criticizing Google and Apple on a conservative news site.
Cambridge Analytica raised the stakes
Facebook faced worldwide outrage in March after The Times, The Observer of London and The Guardian published a joint investigation into how user data had been appropriated by Cambridge Analytica to profile American voters. But inside Facebook, executives thought they could contain the damage. The company installed a new chief of American lobbying to help quell the bipartisan anger in Congress, and it quietly shelved an internal communications campaign, called “We Get It,” meant to assure employees that the company was committed to getting back on track in 2018.
Some criticisms hurt more than others
Sensing Facebook’s vulnerability, some rival tech firms in Silicon Valley sought to use the outcry to promote their own brands. After Tim Cook, Apple’s chief executive, quipped in an interview that his company did not traffic in personal data, Mr. Zuckerbergordered his management team to use only Android phones. After all, he reasoned, the operating system had far more users than Apple’s.
Facebook still has friends
Washington’s senior Democrat, Senator Chuck Schumer of New York, raised more money from Facebook employees than any other member of Congress during the 2016 election cycle — and he was there when the company needed him.
This past summer, as Facebook’s troubles mounted, Mr. Schumer confronted Mr. Warner, who by then had emerged as Facebook’s most insistent inquisitor in Congress. Back off, Mr. Schumer told Mr. Warner, and look for ways to work with Facebook, not vilify it. Lobbyists for Facebook — which also employs Mr. Schumer’s daughter — were kept abreast of Mr. Schumer’s efforts.