Wall St. bets on D'Amato

0 Comments | Insight on the News, August 3, 1998 | by Dawn Kopecki

As chairman of the Senate Banking Committee, New York's Alfonse M. D'Amato seems to be benefiting from his Wall Street connections -- if campaign financing is any indication.

Wall Street is at the epicenter of one of the nation's most expensive political contests: the race for a U.S. Senate seat in New York. While the incumbent, Alfonse M. D'Amato, is dogged by three aggressive challengers, he has one big advantage: D'Amato has managed to raise more money than his top opponents combined -- much of that from the financial-services industry, lawyers and lobbyists, according to the Center for Responsive Politics, a nonpartisan research group in Washington.

Of the $9.2 million the New York Republican has cultivated in donations toward his reelection campaign, $3.1 million has come from banks, brokerages, insurers and their executives, according to June 3 statistics from the center. The data doesn't tell the whole story, however. D'Amato is chairman of the Senate Banking Committee that is considering a bill known as the Financial Modernization Act of 1998. The measure would allow banks, securities firms and insurance companies to compete in each other's lines of business.

"D'Amato sits in such a powerful position because of his prominent role as chairman of the Senate Banking Committee that these interests can't ignore him," says Jennifer Schecter, a researcher for the center. "That puts him in a very, very powerful place in terms of fund-raising."

Aspects of the financial-services bill have trade groups working overtime to delete amendments and insert provisions. Consumer groups and campaign watchdogs alike argue that consumers will get shortchanged since Wall Street money has overshadowed the debate.

"The industries that want it to pass are throwing money at the chairman to get it through," says Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group, a nonprofit congressional watchdog organization. "The biggest banks want the bill, but small banks and others don't want it, consumer groups don't want it."

The bill requires a major reconfiguration "before it can serve as a framework for our nation's financial system in the next century" said acting Comptroller of the Currency Julie Williams during testimony before D'Amato's committee. The comptroller's office, under the Treasury Department, oversees nationally chartered banks.

The spate of recently announced bank mergers, including the planned union between banking giant Citicorp and brokerage-insurer Travelers Group Inc., have put financial reform back on the congressional agenda. Without the bill, such mergers are in jeopardy. Citicorp and Travelers can operate in unison for two years under current laws before the duo would be required to sell off either its banking or insurance divisions.

That's why Travelers Group and its executives have given $99,000 in contributions toward D'Amato's reelection campaign, according to industry insiders. Of D'Amato's top 20 contributors, 15 are banks, brokerages or insurers.

By law any organization that wants to donate money to a candidate must do so through a political-action committee, or PAC. PACs are limited to $10,000 per candidate per election cycle. But there is no limit on the number of individual employees who can donate to a candidate, although each individual is limited to $2,000 per candidate. To compile its numbers, the center combines contributions from company PACs and company employees.

Donations to D'Amato from MBNA America Bank, the nation's largest credit-card issuer, and its employees totaled $216,500, the most by any firm. MBNA, like other credit-card issuers, is pushing the Senate to pass bankruptcy-reform legislation, which comes before the Senate Judiciary Committee later this summer. Brokerage firm Bear, Stearns & Co. and its executives -- D'Amato's second-biggest supporter -- donated $101,450 to his reelection campaign.

Compared with D'Amato's $9.2 million, his three Democratic opponents -- former Rep. Geraldine Ferraro, consumer-advocate Mark Green and Rep. Charles E. Schumer -- had raised a combined $9.1 million as of June 3. Schumer also has accumulated most of his donations from the financial-services sector. More than $1.2 million of his $6.1 million have come from finance-related donors. Goldman, Sachs & Co. and its employees, for instance, gave $99,950 to D'Amato and $67,300 to Schumer.

One industry observer has accused D'Amato of stalling on the bank-modernization legislation, worried that its defeat or passage may anger insurers and brokers pushing for the bill or bankers trying to defeat it. Although D'Amato says he wants to mark up the bill and pass it out of committee for a vote before this session ends in October, that seems unlikely. He has asked consumer groups to submit their own proposals on the legislation.

D'Amato's office maintains his campaign donations have no bearing on his decisions. "Clearly, the people who contribute to the senator support the principles of the senator, not the other way around," says spokeswoman Lisette McSoud Mondello.