For Democrats, Pushing Financial Reform Is All About Biting The Hand That Feeds

Democrats all week have been railing against “secret,” “back-room,” and “closed door” meetings between Republicans who want to collect campaign cash, and Wall Street executives eager to derail financial reform legislation.

Senate Majority Leader Harry Reid’s spokesman, in particular, has been calling regular attention to the newly close friendship between the GOP and financial executives. It’s been part of an effort to push the Senate toward passage of the largest overhaul of the financial sector since the Great Depression in the face of hostile Republican rhetoric that the fact-check website PolitiFact says is “false” and “seriously overheated rhetoric.”

Democrats, in fact, have turned their outrage over these illicit gatherings — apparently held for the purpose of swapping cash for political obstruction — into fundraising tools. The Democratic National Committee and the Democratic Senatorial Campaign Committee (DSCC) sent supporters separate email appeals that attacked Republicans for their meetings with financial bigwigs.

“While they put on a populist front for the tea partiers, Republicans are locking arms with the same big banks that drove the economy into recession,” the DNC says. “In a private meeting last week, McConnell even huddled with Wall Street executives about how to kill reform — and cynically brought along one of the GOP’s chief fundraisers. Debate over reform is about to begin, so we’re going up with ads to expose the lies and hypocrisy.”

The DSCC, meanwhile, complains: “Republican leaders go into a closed-door meeting with Wall Street executives and come out against common-sense reforms.”

What these appeals neglect to mention is that — up until now, at least — those banker types were usually about as likely to mail their campaign check to a Democrat, as they were to a Republican.

Indeed, by pushing so hard to enact financial reform over strenuous objection from the financial industry, Democrats really appear to be biting a hand that has fed them reliably, election after election.

Although commercial banks frequently contribute more to Republicans than Democrats, they still contribute substantially to Democrats, according to data from the Center for Responsive Politics. Industry giving reached near parity in 2008, as banks gave $18 million to Democrats, compared to about $20 million for Republicans.

Hedge funds however — a sector within the financial industry that’s come under some of the heaviest scrutiny — traditionally donate overwhelmingly to Democrats, a trend that began in the 2000 election cycle, analysis of Center for Responsive Politics data finds. In 2008, campaign contributions to Democrats from individuals and political action committees associated with hedge funds came to 11.2 million, or 65 percent of their donations overall, according to the data.

Political giving by Goldman Sachs, the storied investment firm that now finds itself the target of an enforcement lawsuit filed by the Securities and Exchange Commission, also is dominated by Democrats. The percentage of its donations going to Democrats has steadily climbed since 1998 — reaching a high-water mark of 75 percent in 2008.

If any doubt remains about just how connected Democrats have been to the financial industry, consider that Reid, House Speaker Nancy Pelosi, Senate Majority Whip Dick Durbin of Illinois, House Majority Whip James Clyburn of South Carolina, and Caucus Chairman John Larson of Connecticut, all count the financial or securities industries among the top five industries that donated to their re-election campaigns in 2009-2010, according to the Center for Responsive Politics.

The publisher of the news site On The Hill, Scott Nance has covered Congress and the federal government for more than a decade.

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