Wall Street’s Investments in Deregulation

(Flickr/Charlie Phillips)

Wall Street did its part to make 2014 the most expensive midterm election ever, outpacing its 2010 total and once again putting the bulk of its financial muscle behind GOP candidates and groups.

Donors from the securities and investment industry, otherwise known as Wall Street, contributed a total of $184 million to candidates, parties and outside spending groups during the 2014 midterms — a $75 million increase over the last comparable election.

That figure pales in comparison to 2012’s $288 million, but that was a presidential year in which one of the White House candidates came from the world of finance and the other had been critical of the industry’s role in triggering the Great Recession.

Despite the large overall spending discrepancy between 2012 and 2014, though, the difference in contributions to outside spending groups was only about $22 million. Donations to outside spending organizations accounted for 39 percent of Wall Street’s total in 2014, jumping from $7 million in the 2010 cycle to $93 million in 2012 and dropping just a bit to $71 million in this last cycle.

Wall Street spending favored Republicans 62 percent of the time in the 2014 cycle, the second highest rate in more than two decades and just behind 2012’s 69 percent level.

With the GOP in charge in both the House and Senate, Wall Street’s investments are likely to show good returns. Already the industry has begun to chip away at the main law passed in the wake of the 2008 financial crisis that curtailed some of its riskier activities.

Wall Street’s Darlings

Despite its right-leaning partisan split overall, though, the financial industry’s preference for the GOP didn’t reign across the board. Democratic senator took in more campaign cash from Wall Street than their GOP colleagues, totaling nearly $10 million.

It was a different story in the House, where Republican members raked in $16.5 million in campaign donations compared to $10.3 million for Democrats.

Wall Street’s favorite Senate candidate in the past cycle was Sen. Cory Booker (D-N.J.). Booker took in nearly $2 million from Wall Street in his pair of Senate races in the past two years. The former Newark mayor is considered a friend to the bankers across the Hudson.

The noted defender of private equity garnered support from multiple hedge funds. Wall Street is just $34,000 short of being Booker’s top donor group, just after lawyers and law firms.

Goldman Sachs is sixth on Booker’s list of career donors, having contributed $59,600 to his campaigns.

Freshly crowned Senate Majority Leader Mitch McConnell cashed Wall Street checks worth $1.6 million over the past two years. Fellow Republican Sen. Tom Cotton (Ark.) received $1 million and Democratic Sens. Mark Warner (Va.) and Charles Schumer (N.Y.) both took in more than $900,000.

Wall Street also favored leadership in its House giving, donating $1.2 million to Speaker John Boehner‘s (R-Ohio) campaign. Former Majority Leader Eric Cantor (R-Va.) followed Boehner in Wall Street contributions with nearly $700,000 but failed to defeat upstart opponent Rep. Dave Brat (R-Va.) in the primary. (Cantor is still cashing checks from Wall Street, though now they come biweekly.)

Former vice presidential candidate Rep. Paul Ryan (R-Wis.) received $560,503 from Wall Street, and Goldman Sachs alum Rep. Jim Himes (D-Conn.) took in $485,788.

Power Players

The top of the list of Wall Street spending on the 2014 elections is dominated by a handful of mega-donors born out of Citizens United.

Wall Street’s highest spender in the 2014 cycle was Elliott Management. The hedge fund firm donated $12.3 million — the majority of which went to outside spending groups.

Elliott Management CEO Paul Singer accounted for nearly $10 million of that total, meaning he alone contributed more than any other Wall Street firm. Singer is a noted conservative donor who has given large sums to outside spending groups.

Paul Singer is Wall Street’s biggest single donor. (Flickr/World Economic Forum)

Singer contributed nearly $3 million to American Unity PAC in 2014, a conservative gay rights group he helped found. He also made multiple seven-figure donations to Karl Rove’s American Crossroads super PAC. Singer was the top individual conservative donor in 2014; only liberal donors Tom Steyer and Michael Bloomberg spent more.

Renaissance Technologies, another hedge fund, ranked second in 2014-cycle donations with $8.8 million. As with Elliott Management, most of that total can be attributed to one individual, co-CEO Robert Mercer. Mercer and his wife combined to contribute $8.4 million to conservative candidates and causes this cycle.

Mercer personally donated $2.5 million to Freedom Partners Action Fund, a Koch brothers group founded for the 2014 midterms. David and Charles Koch each managed $2 million donations. Mercer also made $1 million dollar contributions to Club for Growth Action and Ending Spending Action Fund — the super PAC wing of the group started by Ameritrade founder Joe Ricketts.

TD Ameritrade, the Omaha-based online broker founded by Ricketts, came in third in contributions at $4.9 million.

Renaissance Technologies’ founder James Simons is also a major donor, although along with wife Marilyn he favors liberal groups and candidates. No longer running Renaissance, Simons’ 2014 donations are not included in the hedge fund’s total.

Simons’ biggest 2014 contributions of $5 and $2 million went to the Senate Majority PAC and House Majority PAC respectively. The pair of super PACs have close ties to now Senate Minority Leader Harry Reid (D-Nev.) and House Minority Leader Nancy Pelosi (D-Calif.).

Ricketts and his wife Marlene donated $6.7 million to conservative groups and candidates during the 2014 cycle. The pair combined to contribute nearly $6 million to Ending Spending Action Fund.

Goldman Sachs contributed more to candidates than any other firm — $2.1 million. Goldman’s employees and PAC contributed an additional $1.3 million to the parties, nearly $900,000 of which went to the three major Republican bodies. McConnell received more money from Goldman than any other candidate, taking home a shade less than $100,000. Goldman Sachs ranked sixth in total contributions among Wall Street firms.

UBS and Blackstone Group were also among the biggest donors to candidates, donating more than $1.5 million directly to campaigns.

Lobbying

Wall Street’s lobbying total for 2014 is again headed toward the $100 million range. Fourth quarter reports are due to be filed next week, but through the third quarter, Wall Street firms had spent $74 million on more than 700 guns for hire. In 2013 Wall Street’s lobbying total fell just short of nine figures, coming in at $99.1 million. Lobbying by the securities and investment industry peaked in 2010 (as it did for many industries) at $105.6 million.

Industry trade groups Security Industry and Financial Markets Association and the Investment Company Institute combined to spend nearly $10 million on lobbying in the first three quarters of this year.

Morgan Stanley and Goldman Sachs spent more on lobbying than any other Wall Street firms, shelling out $3.2 and $2.9 million respectively through Sept. 30.

The common thread in Wall Street lobbying reports for 2014 was overwhelmingly Dodd-Frank, the 2010 law passed in response to the financial crisis. It has remained a hotly debated topic for bankers, politicians and regulators since its passage.

And in that sense, Wall Street’s GOP spending spree makes perfect sense; Republicans have made it clear that they oppose much of Dodd-Frank, favoring a return to the deregulation that led to record profits for financial firms and bankers — despite at least some consensus that those freewheeling days contributed to the financial meltdown.

Wall Street and its lobbyists claimed a victory against the law late last year when one of Dodd-Frank’s provisions was repealed in an eleventh-hour spending bill using language written by Citigroup lobbyists themselves.

Known as section 716, the provision required banks to conduct certain types of derivatives trading separately from the portions of their operations that are federally insured. Wall Street critics argue this provision — and much of Dodd-Frank — is needed because bankers will risk more when they know the federal government will rescue them should their wagers go bad.

Another bill often listed on Wall Street lobbying filings was Sen. Sherrod Brown‘s (D-Ohio) Terminating Bailouts for Taxpayer Fairness Act (TBTF for short, an abbreviation which most commonly refers to “too big to fail”). The bill, which is opposed by the financial houses, would set new capital requirements for banks, mandating they keep more cash on hand.