WASHINGTON — In about a month, the eyes of the nation will be on the state of Georgia and two runoff elections that will decide which party controls the U.S. Senate. With a lot riding on the outcome, banks are not staying on the sidelines.
The banking trade lobby is traditionally cautious about declaring support for candidates in congressional races, but industry groups do strategically pick certain races to focus on — typically to back incumbents who have advanced the sector's causes.
In the case of the Georgia runoffs, banking trade groups at the state and national levels have been somewhat conspicuous in supporting the two Republican incumbents, David Perdue and Kelly Loeffler. The American Bankers Association and the Georgia Bankers Association, notably, teamed up on a $1 million ad buy for Perdue, a member of the Senate Banking Committee. It's the largest financial contribution by the ABA for a single Senate candidate.
“Both of them were incredibly active and helpful to us as we were navigating with our members the Paycheck Protection Program, how to get that thing rolled out and managed," Georgia Bankers Association CEO Joe Brannen said of the two GOP candidates. "Both of them were very receptive to questions that bankers had, customers had, getting help with the administration and getting answers to questions. And generally helping to smooth over what was a very difficult process.”
But some analysts said banks, like other Georgia election watchers, see the two runoffs as having wider-reaching implications.
“The prospect of unified Democratic control of Congress presents an existential threat to financial institutions, particularly banks that are already operating at very thin margins, and the burden of regulations and policy changes are going to hurt profitability and further lead to consolidation,” said Dan Crowley, a partner at K&L Gates.
After Democrat Joe Biden won the presidency and with Republicans needing one of the two Georgia seats to retain Senate control, the runoffs will determine if Democrats can aggressively pursue a policy agenda or the
"Having a Republican Senate serves the banks' interests well," said Ed Mierzwinski, senior director of the federal consumer program at U.S. Public Interest Research Group. "If [Republicans] keep the Senate … it makes it easier for them to stop re-regulation of the economy.”
Both the Independent Community Bankers of America and the Georgia banker group have contributed to the runoff campaigns of Perdue and Loeffler, who are running against Democrats Jon Ossoff and the Rev. Raphael Warnock, respectively. Exact monetary contributions to the campaigns have not been made available by the Federal Election Commission. (Runoffs are being held because no candidate in either race received a majority of the vote on Nov. 3.)
In political campaigns, business sectors often
“With a divided government, typically you won’t see as radical changes in one direction or another, or kind of the whipsaw effect of changes in new regulations and things like that,” said Paul Merski, group executive vice president for congressional relations and strategy at the ICBA. “I think it will help preserve the status quo on a number of issues in not having some of the more challenging policies that have been advanced, things like postal banking, new regulations.”
But Ed Mills, a policy analyst with Raymond James, said the banking industry also typically contributes more to incumbent candidates than to challengers.
“It is more surprising when an industry supports a challenger over the incumbent,” Mills said. “In close elections, generally speaking the incumbents are the preferred candidate. Working with the incumbent candidate from the majority party is about as normal as you get.”
The stakes are particularly high in Georgia for the banking industry after Democrats maintained their majority in the U.S. House and gained control of the White House. Republicans need to win only one of the Georgia races to keep their Senate majority. But Democrats would control the chamber, with a 50-50 tie that Vice President-elect Kamala Harris would break, if they win both Georgia Senate races.
Mierzwinski noted that the draw of divided government leads banks to want Republican control of the Senate even though
“Wall Street in particular was going with a lot of money to Democrats, in particular a lot of money to Biden,” Mierzwinski said. “I think that was because they were concerned about the unpredictability of the current president."
But leading up to the Nov. 3 election, employees and political action committees for banks contributed $338,236 to Perdue and $45,151 to Loeffler, according to the Center for Responsive Politics. Their contributions to Ossoff and Warnock were not included on the center's website because banks were not among the 20 top industries giving to either Democratic campaign.
While the banks have benefited during the Trump administration from regulatory relief and lower corporate tax rates, Democratic proposals to offer free bank accounts through the U.S. Postal Service and to create a national credit reporting agency, among other things, are largely opposed by the banking industry.
The ad from the ABA and the Georgia banker group for Perdue credits him for supporting the industry in the implementation of small-business lending programs responding to the coronavirus pandemic.
“Senator Perdue’s strong support for the Paycheck Protection Program allowed small businesses in Georgia and around the country to survive the economic dislocation caused by COVID-19,” ABA President and Chief Executive Rob Nichols said in a press release announcing the ad. “We support his efforts in Congress to bolster the economy and keep people working, and we appreciate his keen understanding of the important role that banks continue to play in the recovery.”
Perdue also took outspoken positions urging regulators to
But Crowley said the specific positions of Perdue and Loeffler are "far less significant than their party affiliation because of the control of the Senate and the entire federal legislative policy apparatus is at stake.”
“These races are competitive and I think you have to take note of the tremendous amount of money going into the other side," he said. "Mike Bloomberg and other wealthy donors are trying to influence the outcome as much as they can.”
Mills said that banks are likely worried that Biden’s proposal to raise the corporate tax rate would come to fruition if Democrats win control of the Senate and that progressive Democrats would likely have more influence on nominees to regulatory agencies, including the CFPB.
“They don’t want tax changes,” Mills said. “They don’t want the preferred candidate of the progressives to be able to get confirmed through the Senate. … The only thing from a bank’s perspective that they get out of a Democratic sweep is robust fiscal relief.”
Despite concerns about which party controls the Senate, the banking trade groups say their contributions in the Georgia Senate races are consistent with their donation records in the past.
Merski said the ICBA is contributing money to Perdue and Loeffler, a former financial services executive, because the group generally supports incumbent candidates who have been supportive of community bank initiatives.
Brannen said the Georgia Bankers Association focuses on senators’ records in financial and agriculture policy.
“We’ve known Sen. Perdue since he was elected six years ago,” Brannen said. “He’s on the Senate Banking Committee, he has been effective there. … Sen. Loeffler, she is on the Agriculture Committee. Agriculture is our No. 1 industry here in Georgia. She has been very helpful on that primarily on the area of trade and making sure that as our agriculture community is affected by some of the trade negotiations, our farmers in Georgia get their fair share of some of the payments that are coming related to those trade negotiations.”
Merski said “it is extremely rare" that the ICBA "would go against an incumbent or a sitting senator."
Brannen said that neither Ossoff, who ran an investigative television production company, nor Warnock, a Baptist church pastor, has reached out to the Georgia Bankers Association.
Mills said that Perdue’s background as a former CEO of Dollar General and Loeffler’s history as the former CEO of Bakkt, a subsidiary of Intercontinental Exchange, which her husband owns, make them easy incumbents for the banking industry to support.
“You have a former CEO who is on the Banking Committee and you have a formal financial services professional running for reelection to the United States Senate, and they are … being supported by the banking industry. I would be more surprised if it was the opposite way around,” Mills said.
