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The American Bankers Association voted Thursday to create a SuperPAC for bankers — but it has an alternative structure from Friends of Traditional Banking, the only other banking SuperPAC.
September 6 -
Frustrated by a lack of political power and fed up with blindly donating to politicians who consistently vote against the industry's interests, a handful of leaders have formed the industry's first SuperPAC.
April 4
WASHINGTON — The banking industry's two SuperPACs are looking to grow and to expand their influence in the next election cycle despite a disappointing return from the 2012 campaign.
The industry was relatively slow to form a SuperPAC, one of the most talked-about political weapons in this election cycle. A group of community bankers and state associations joined together to form Friends of Traditional Banking during the spring, while the American Bankers Association followed suit with its own group just two months ahead of the November elections.
As a result, their influence was relatively light and many of which their favored candidates lost.
But both groups see greater opportunities ahead, and expect to have a larger impact during future campaigns.
"We think of 2013 as just a growing process -- signing bankers up and growing towards 2014," said Matt Packard, chairman of Friends of Traditional Banking and chief executive of Central Bank in Provo, Utah. "As we have contacts with other bankers, we're exposing them to it, and we're encouraging them to mention it to their counterparts."
Outside political spending has skyrocketed in the wake of a landmark 2010 Supreme Court decision in Citizens United vs. Federal Election Commission, and observers predict spending by superPACs and other groups will continue to flourish in future elections.
Friends of Traditional Banking primarily relied on an older campaign tool known as bundling during the most recent election cycle, and Packard says that's how the group will continue to operate. Instead of raising and spending unlimited funds advocating or opposing a candidate via advertising and other means — the traditional route taken by SuperPACs -- the group selected several key races that it asked bankers to support directly.
"That's a tactic that works very well for a group like bankers," said Bradley Smith, a former Federal Election Commission chairman and professor at Capital Law School. "They have relatively high incomes to make contributions, and they are sophisticated enough about politics to know what's going on."
The method has already had some success with groups like Emily's List, which recruits and endorses pro-choice Democratic female candidates, asking members to donate directly to the campaigns.
Packard said Friends of Traditional Banking directed "a couple hundred thousand dollars" during the most recent elections, noting that the group hopes "to move that into millions if we can" in future contests. By comparison, the top two superPACs raised and spent more than $100 million each during the 2012 elections.
The group raised just $40,000 itself, according to the Center for Responsive Politics, but Packard said that money was for organizational expenses, not for supporting individual races.
For the group to be successful in the long term, however, it will need to build its influence by expanding its donor network and choosing winnable races. Friends of Traditional Banking formally endorsed two Senate Republicans this year: Scott Brown of Massachusetts and Dean Heller of Nevada. It also asked bankers to donate to Republican Rep. Francisco "Quico" Canseco of Texas. Both Brown and Canseco lost their races, with Heller the only victorious candidate of the three they selected.
"Their batting average of the candidates is not that good," said Cornelius Hurley, director of Boston University's Center for Finance, Law & Policy. "It's all about batting average — the name of the game is winning. I don't think they're out there just to make a statement. They want to win elections."
Packard acknowledged that winning is important, but said the group is just getting off the ground.
"Bottom line, there's no question that's what matters," he said. "But you also have to understand that this initiative is in its infancy. As it continues to grow in bankers and financial support, it becomes more influential over time. That's the intent — to build it to where it has more influence."
The ABA, meanwhile, has taken a decidedly different approach. It has formed the Financial Education and Advocacy Initiative, what's legally known as a 501(c)(4), a nonprofit designation given by the Internal Revenue Service. The group can spend unlimited funds without disclosing its donors, a prospect that has alarmed some industry critics.
"Their explicit purpose for setting up this 501(c)(4) was to raise money from secret donors and then file that secret corporate slush money to support exclusively Republican candidates," said Craig Holman, government affairs lobbyist at Public Citizen, who filed a letter of complaint with the IRS in September over the ABA group's formation.
Holman notes that the group didn't spend a lot of money during the most recent elections because it was established so late in the cycle.
The group spent $175,000 in donations to several conservative superPACs, according to data from the Center for Responsive Politics. A review of the FEC independent expenditures database didn't turn up any independent spending by the group towards political ads or other activities, and observers said that money raised and spent for work not associated with elections can be difficult to track.
Holman said that, going forward, the group will have a larger impact.
"I suspect that this kind of entity is going to flourish as we go into subsequent elections if we don't change the election laws," he said. "It's exactly kind of entity I'm going to herald before Congress as a kind of poster child of what is wrong with our election laws."
But others argue that the new group provides organizations like ABA another opportunity to be involved in critical public debates. Because of its IRS status, the group is only permitted to spend up to half of the contributions it receives on independent expenditures, with the rest going to broader issue advocacy.
"It's important for groups that are often vilified publicly, like the banking industry, to be able to say, 'Hey, here's what we do," said Smith.
As it grows, the ABA group will need to focus on both choosing the right candidates and advancing their broader agenda to be successful, according to Smith.
"Some of it is picking races that are winnable," he said. "But we would rather have [a candidate] lose by saying good things about banks. That is an important objective groups have — to advance a broader agenda."
The ABA declined to give an interview, but Jonathan Felts, executive director of the Financial Education and Advocacy Initiative, defended it as a "permanent fixture" of the organization.
"ABA remains committed to finding new and innovative ways for bankers across the country to engage in public policy debates. The Financial Education and Advocacy Initiative is a permanent fixture at the ABA and will constitute an essential part of ABA's overall education and advocacy efforts in 2013 and beyond," Felts said in a statement.
