WASHINGTON — On the heels of big banks pausing political contributions, two financial services trade groups announced a similar policy Monday following riots on Capitol Hill that were incited by the comments of certain GOP lawmakers and President Trump.
The Consumer Bankers Association and Mortgage Bankers Association said the groups were suspending donations to all candidates from their political action committees. Their decisions come as Sens. Josh Hawley, R-Mo., and Ted Cruz, R-Texas, face mounting criticism for comments questioning the integrity of President-elect Joe Biden's victory and encouraging pro-Trump protesters who invaded the U.S. Capitol last week.
However, unlike some companies withholding contributions for politicians that have advanced false conspiracy theories about the election, the financial trade groups said they will hold back contributions for all elected officials.
“America’s political environment has become too acrimonious and the events of last week were just the latest, most egregious example,” said Richard Hunt, president and CEO of the CBA, in a statement. The group has contributed predominantly to Republicans over the past decade. “In an effort to do our part to help temper the tenor of our nation's discourse and encourage our leaders to come together to find bipartisan solutions to our largest problems, we will immediately pause all contributions from our Political Action Committee,” Hunt said.
Bill Killmer, Mortgage Bankers Association senior vice president of legislative and political affairs and treasurer of the group’s PAC, said the events last week on Capitol Hill were deeply troubling.
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Other groups like the Independent Community Bankers of America have not yet made a decision about halting contributions. A spokesperson for the American Bankers Association said the group was meeting with stakeholders to review its policy on political donations.
“We continue to call on all elected officials to do everything in their power to support a peaceful transition of power,” the ABA spokesperson said. “As we do after every election, we will meet with all of our stakeholders in the coming weeks to review our political activities from the last campaign cycle before making any decisions about future plans. The troubling events of the last week will certainly be a consideration in those discussions.”
The decisions follow similar announcements over the weekend by Citigroup and JPMorgan Chase. Citi will temporarily stop all political contributions in the current quarter. JPMorgan Chase is planning a six-month suspension to both Republicans and Democrats.
“I think there is going to be a general cutback and pullback in contributions to anyone who voted not to certify and I think corporations are going to be very, very careful going forward in their corporate contributions not only to individuals but also to organizations,” said a financial services attorney, who spoke on the condition of anonymity.
The suspension of political donations by financial institutions and trade groups come as a growing number of lawmakers have called for President Trump’s removal. Sen. Sherrod Brown, D-Ohio, the incoming chairman of the Senate Banking Committee, has also called for Hawley and Cruz to be expelled from the Senate if they don't resign.
Ed Mills, a policy analyst from Raymond James, said that blanket suspensions of all political donations are likely a tool for organizations to steer clear of the tense partisan environment in Washington just a little over a week before the handoff of power from Trump to Biden.
“The immediate response is what I would put into a crisis communication response: be proactive, announce the blanket ban on corporate donations, remove yourself from the story,” Mills said. “To do anything different is inserting yourself into picking winners and losers and in some ways is picking sides. The path of least resistance right now is a blanket ban.”
Some companies have indicated that their suspension of donations will target the elected officials who objected to certifying Biden’s Electoral College victory.
Commerce Bancshares, a $31 billion-asset bank holding company based in Kansas City, Mo., told the Washington Post that it had frozen support “for officials who have impeded the peaceful transfer of power.”
American Express also reportedly told employees in a memo that it had also stopped all contributions to lawmakers who voted to object to the certification of the Electoral College vote.
As banks and their trade groups evaluate their political contributions following the violence on Capitol Hill, the financial services attorney said that there could be a renewed focus on corporate governance as a new administration takes over.
“If you think about [environmental, social and corporate governance] … really there hasn’t been movement or pressure since Trump came into office,” the financial services attorney said. “I think we are seeing here in the example of corporate contributions … is links to a resurgence of that broader movement.”
Other trade groups say they are still discussing internal plans regarding political contributions before making a decision.
The ICBA said in a statement that “no decisions have been made on specific contribution levels for 2021 at this point” and that it is analyzing the contributions from its PAC for the year, a practice the group says it does at the beginning of every new Congress.
The National Association of Realtors noted that its political contributions follow requests from its state associations and are approved by state trustees. NAR said in a statement that it would continue to follow its normal procedures for allocating political donations while considering “a multitude of factors impacting our nation and its real estate sector.”
“NAR will continue to closely monitor events in Washington in the days leading up to and following Joe Biden’s inauguration in order to ensure our political participation most closely represents the will of our REALTOR members and the best interests of our nation,” a spokesperson for the group said.
It was also not clear how state trade associations will would proceed.
Christopher Williston, president and CEO of the Independent Bankers Association of Texas, said its PAC is currently in a quiet period.
“The committee has not met to discuss support for Senator Cruz or any other candidate since the events of last week,” Williston told National Mortgage News. “As we are just off an election cycle, this is typically a pretty quiet time of year for us on the PAC side. We are focused on the start of the Texas legislative session this week and getting our banks ready for another round of the Paycheck Protection Program. That said, I am not sure when we’ll take up that matter."
The financial services attorney noted that decisions by banks and trade groups to pause donations resulted from elected officials focusing their fundraising efforts on false accusations of election fraud and other misinformation following the presidential election.
“The more you read about it, the more you notice that the … Republicans who were voting not to certify were using it as a fundraising tool,” the financial services attorney said. “The challenge for the Republicans here is that it was clear in private that they knew it was false and that they were using it for fundraising. It was beyond the normal dirty business of politics. … I think it means punishment of a specific group of people who were deliberately being dishonest for fundraising.”
Mills said that if the overall tensions on Capitol Hill appear to subside, financial institutions and their trade groups will likely resume their PAC donations.
“If temperatures turn down and the attention squarely turns to legislative fights, they are either going to restart donations or they are going to view themselves as at a disadvantage in terms of those lobbying battles,” Mills said.
Jon Prior contributed to this article.
