WASHINGTON — Everyone needs a banker. Especially political campaigns that can bring in huge sums of cash in a short period of time, and spend it just as quickly.
With election day roughly a month away, candidates for everything from the
"This has become a growing cottage industry over the last 10 or 15, maybe 20 years," said Michael Toner, former chairman of the Federal Election Commission and current partner at the law firm Wiley. "Presidential campaigns, national political parties, super PACs and even top-tier statewide campaigns or gubernatorial campaigns are wanting to work with financial institutions that really cater to them."
But it's two relatively small institutions that have risen to become the favorites of the two major political parties, according to an analysis of FEC filings.
Amalgamated Bank, a New York City-based lender with
Chain Bridge Bank, which earlier this week priced an initial public offering that is targeting a valuation of $167 million, banks many major Republicans, including former President Donald Trump's campaign. It was founded by former Sen. Peter Fitzgerald, R-Ill.
"These committees are going to run through hundreds and hundreds of millions of dollars, and going to look to spend the vast majority of it quite rapidly," said Toner, who also served as chief counsel to the Republican National Committee and an advisor to a number of Republican campaigns, including the Bush-Chaney 2000 presidential run.
"So it's not unlike a personal wealth advisor for high-net-worth individuals," he said. "They want the personal touch."
What do political candidates need from a bank?
The banking needs of a political campaign are very specific, according to Sam Brown, Amalgamated's chief banking officer, who helped establish the bank's political business.
Politics is a heavily regulated industry, he said, and there are a lot of technical rules and regulations that need to be followed.
"It's important that as you're moving through the stages of establishing your campaign organization at the very beginning, you're doing it in a compliant way, so that you are not going to get caught up violating, even inadvertently, any sort of campaign finance laws," Brown said in an interview.
Reading the tea leaves this election for bank policy is more difficult than years past, experts say, but there are still hints about where former President Donald Trump and Vice President Kamala Harris stand.
There's also an element of speed and personal touch. Most of the time, wire transfers have to be used in the ad-buying process. And the need to buy or place ads often doesn't fall neatly into bankers' hours.
"You want to use every second of every day to meet the full Fed availability of when you can send wires, and not be shut down early because your bank's wire room isn't as sophisticated," Brown said.
It's important that bankers are mindful of a number of different nuances when it comes to that timing.
"Part of that nuance is that when a campaign or a committee places an ad buy, that becomes public information, and maybe you want to withhold where you are putting your bets on the board and moving your chips around until the last possible second," Brown said. "So working with a bank that can help you move money around later into the day is an advantage for any campaign."
That's especially important close to election day, when the stakes are high and time is short.
"On a Saturday night at 10 p.m., a committee might say, 'Look, we need to increase our ad spending starting tomorrow or Monday in Western North Carolina or northern Georgia or Arizona, or fill in the blank,'" Toner said. "It's just a very fluid situation, and it's seven days a week in the final months before a national election, like we're in right now."
Breaking down the business of politics
Both Amalgamated and Chain Bridge punch above their weight when it comes to serving political campaigns and committees.
Amalgamated, which was founded in 1923, is the larger of the two banks, with $8.3 billion of assets. It operates six offices — four in New York City and one each in San Francisco and Washington, D.C. — and employs about 405 people.
Chain Bridge is much younger and much smaller. The bank was established in 2007 and operates a single office in McLean, Virginia. At the end of June, it had about $1.4 billion of assets and 86 employees.
The two banks outcompete much larger institutions in the political space, according to FEC data. Roughly 1,100 committees formed so far during the 2023-2024 election cycle listed their first bank as Amalgamated, and about 1,000 named Chain Bridge, the data show.
Meanwhile, nearly 800 committees listed Bank of America as their first bank provider, while about 500 tapped Wells Fargo.
About 10 years ago, Amalgamated started building a business to serve "the industry of politics," Brown said. The bank has spent the past decade trying to serve that industry through all phases of campaigns, from organization through the actual election.
The bank's deposit base ebbs and flows, depending on where candidates are in the election cycle. As of this week, about 21% of Amalgamated's total deposits, or $1.8 billion, is tied to political campaigns, said Jason Darby, Amalgamated's chief financial officer. That figure can shrink to 10% to 12% as campaigns ramp up their spending ahead of elections.
During Amalgamated's second-quarter earnings call in July,
Chain Bridge, which declined to comment for this story, does not disclose what percentage of its deposits are related to political campaigns. But like Amalgamated, its deposits rise and fall based on turns in the election calendar.
The ups and downs in deposit levels at Amalgamated and Chain Bridge have tended to be fairly predictable — total deposits usually peak during the summer before midterm and presidential elections, fall in the runup to and after November, then start to rebuild in January.
"What's been interesting to see is … the troughs have gotten higher … and the highs have gotten higher as well, and that's very much congruent with the overall fundraising increases that we've seen over the cycles," Darby said.
But this year could mark a change, according to Mark Fitzgibbon, an analyst at Piper Sandler who covers Amalgamated. Political fundraising could ramp up immediately following the election, which could lead to an influx of politically-tied deposits much sooner than in past years.
"Because there's so much discord in the country, the fundraising has really expanded dramatically," Fitzgibbon said. "I've heard this from a couple of different directions, but if Democrats win the presidential election, the fundraising will be off the charts for Republicans starting in mid-November, and conversely the other way."
But is politics good business?
In some ways, political deposit-taking is an attractive business.
Campaigns are expensive, so committees need to keep large amounts of money on hand. Plus, banks don't usually have to pay interest on those deposits because the money is transient, Fitzgibbon said.
"It will come in as campaigns raise money, and it will go out as campaigns spend," Fitzgibbon said. "And then it will build back up again."
But the short-term nature of the deposits also has a downside.
"Money goes in very quickly and goes out very quickly, so you have to keep a lot of liquidity on the balance sheet to deal with that," Fitzgibbon said. "If the Harris campaign calls [Amalgamated] tomorrow and says, 'We need $300 million,' the bank has to be in a position to move that out."
Fundraising for various political committees, whether they're super PACs or candidate committees, can reach huge numbers, but they also vary depending on the mood of the country and the outcome of elections.
For Amalgamated's part, Brown said that the bank's political business is diversified, which helps even out the impact of big races like the presidential contest.
"Politics is not monolithic around one single race," he said. If you look just at the federal level, the number of people running for House, the number of people running for Senate, there are hundreds of elections every year."
Chain Bridge warned in its IPO paperwork that its deposits are "concentrated in political organizations, which can vary significantly in volume due to seasonality or changes in political activity or campaign finance laws."
The bank's deposit base is concentrated among a small number of clients, and around 78.3% of its deposits are uninsured, the bank disclosed
"Any event that negatively impacts the Republican Party, including its ability to raise funds or its popular support, could lead to significant deposit outflows," the bank said. "For example, controversies, leadership changes, or shifts in party strategy affecting the Republican Party could adversely affect our deposit levels."
As for the current election, it's full steam ahead for both banks in the lead-up to Nov. 5, and beyond.
"There's a perception that organizations and entities pop up around elections, and then elections happen, and they kind of go dormant until the next one," Brown said. "The reality is there really is an industry of politics."
