McCain, Obama Criticize Big Donors' Industry Amid Market Crisis

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McCain, Obama Criticize Big Donors' Industry Amid Market Crisis
Jonathan D. Salant
Tue Sep 16, 12:01 AM ET

Sept. 16 (Bloomberg) -- Barack Obama and John McCain, who criticized and called for more regulation of Wall Street yesterday, count Lehman Brothers Holdings Inc. and Merrill Lynch & Co. among the biggest donors to their presidential campaigns.

Both Obama and McCain have received more contributions from employees of securities and investment companies than from any other donors; both are now calling for regulations the industry has resisted.

Through July 31, the last month for which figures are available, employees working for securities and investment firms, and their families, gave $9.9 million to Obama, a Democratic senator from Illinois. They gave $6.9 million to McCain, a Republican senator from Arizona.

Overall, these donors have given $685 million to federal campaigns and the parties from 1989 to 2008, according to the Washington-based Center for Responsive Politics, which tracks political giving.

``The price for that is the economic system we're currently in,'' said former Representative Bob Edgar, a Pennsylvania Democrat who now heads Common Cause, a Washington-based advocacy group.

Tougher Oversight

Over the weekend, Lehman filed for bankruptcy protection and Merrill agreed to be bought by Bank of America Corp., and the presidential candidates used their stump speeches yesterday to advocate tougher oversight of Wall Street.

At a rally in Grand Junction, Colorado, Obama, 47, called for ``modernizing'' regulations. Speaking in Jacksonville, Florida, McCain, 72, said he would ``replace the outdated, patchwork quilt of regulatory oversight.''

Employees of New York-based Lehman, the fourth-largest U.S. investment bank, have been among the most generous donors to both candidates. They have given $370,524 to Obama through July 31, making those workers and their families his 10th biggest source of campaign cash; they were the 15th largest contributors to McCain's campaign, with $117,500. McCain's largest campaign donors were employees of New York-based Merrill Lynch and their families, who gave $298,413.

In addition, securities and investment industry executives are among the biggest fundraisers for both presidential nominees. McCain's top fundraisers include John Thain, chief executive of Merrill Lynch, who brought in more than $500,000. Robert Wolf, chairman for the Americas at UBS AG, has raised more than $500,000 for Obama.

Micah Green, the former president of the Securities Industry and Financial Markets Association, said employees give to campaigns because they support the candidates' policies, not to gain influence.

Using Checkbook

``Using your checkbook to support those things you believe in is what a lot of people on Wall Street do,'' said Green, now a partner in the lawyer-lobbying firm of Patton Boggs LLP.

Other experts, however, said the industry's campaign cash was intended to give them clout. The large contributions have helped stymie efforts in Congress to regulate the industry, said Sheila Krumholz, executive director of the Center for Responsive Politics.

``You don't write that money off so easily,'' Krumholz said.

The mortgage giants Fannie Mae and Freddie Mac also were generous campaign donors in their efforts to prevent increased government oversight. Since 1989, their employees have given $19.5 million. That would have made them the 25th largest giver during that period. The lenders were taken over by the federal government last week.

Review Regulation

Whichever party takes over the White House and controls Congress after the Nov. 4 election will be required to review the regulation of Wall Street. The securities and investment industry, however, may have a harder time making its voice heard in the debate, if only because its executives will have less money for political giving in the wake of the market turmoil, said Anthony Corrado, a professor of government at Colby College in Waterville, Maine.

Instead, Corrado said he expected credit unions, community banks and even consumer groups to have a bigger role in shaping new rules.

``In any discussion of the regulation of finance and securities, the major corporations always had a place in the discussions,'' Corrado said. ``Their voice is not going to be as strong without the financial backing that they've been able to provide in the past. It means that other players with other ideas are going to have a stronger voice.''

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net .