A tough year for the banking industry hasn't stopped Charlotte's biggest banks and their employees from spending millions of dollars on lobbying and political contributions.
Bank of America Corp., largely through its political action committees, gave candidates and parties $3.7 million this election cycle, according to an analysis of Federal Election Commission reports. Wachovia Corp. PACs gave $1.2 million.
Wells Fargo & Co., which bought Wachovia last month, gave out nearly $1 million through its PAC.
For Bank of America and Wachovia, the donations were roughly the same as the previous two-year cycle. All that is over and above what the banks spent on lobbying.
Bank of America spent $6.5 million lobbying federal officials over the same period, according to CQMoneyLine, an arm of Congressional Quarterly. Wachovia spent $2.7 million and Wells Fargo, $3.6 million.
The spending comes during a tumultuous time for the industry. Bank of America has seen its stock price and earnings plummet. Wachovia was threatened with collapse.
Last month, Bank of America announced it's getting $25 billion of the $125 billion the government is giving nine major U.S. banks. The bailout is designed to shore up the big banks and free up money that can be lent to consumers, businesses and other financial institutions. Wells Fargo also received $25 billion.
With the industry in turmoil, critics question the banks' spending millions on political campaigns and lobbying.
“At a time when both institutions were going to the government asking for help, these types of expenditures seem inappropriate,” says Matthew Lee, executive director of Inner City Press/Fair Finance Watch, a New York-based nonprofit watchdog group.
Bank of America and Wells Fargo say they did not ask for the government money, nor did they need it. Banks are supposed to use the bailout money to make loans and shore up mortgages. That doesn't preclude other uses.
“Do I believe that those funds will be used to pay dividends and bonuses and buy back common stock? Quite possibly,” said Cameron Findlay, chief economist at Tree.com, the Charlotte-based parent of LendingTree.
A Wachovia spokeswoman referred questions about bailout funds to Wells Fargo. Bank of America spokeswoman Nicole Nastacie said her bank plans to use the federal money to “add to our capital, which will increase our capacity to expand our balance sheet and make more loans.”
Money from employee PACs
PACs for both Charlotte banks made contributions to candidates and party groups across the country.
Bank of America PACs, for instance, gave to congressional leaders, Democratic and Republican Senate campaign committees and party groups in North Carolina and elsewhere. The bank itself gave the Democratic and Republican Governors' Associations each $175,000. Corporate money, legal in some states, is not in North Carolina. Bank spokesmen stress that most donations are through PACs, not the banks themselves.
“These are … voluntary, employee funded, nonprofit and nonpartisan committees,” said Wachovia spokeswoman Carrie Ruddy. PACs, she added, give to candidates and groups “that promote responsible government and support effective financial legislation important to Wachovia and its stockholders.”
Lee sees little difference in money from a bank or its employee PAC.
“It's a fig leaf,” he said Friday. “When people are through their place of employment giving funds, you'd have to be pretty naïve to think that there's not some corporate influence involved.”