Wall Street curries favour with Democrats for '06 polls

ST LOUIS: Wall Street has shifted its allegiance in the ’06 election cycle by donating more to Democrats than Republicans who have been the investment banks’ usual benefactors, the US Federal Election Commission data shows.

Five leading firms Goldman Sachs Group, Bear Stearns Companies, Morgan Stanley, Merrill Lynch and Lehman Brothers Holdings have contributed $6.2m so far to candidates before the November elections, with about 52% going to Democrats.

“People give ideological money and they give money to people they think are going to win,” said Maurice Carroll, director, Quinnipiac University’s Polling Institute in Hamden, Connecticut. “It looks like it’s going to be a good year for Democrats.”

Despite being awash in record profits, Wall Street executives, investment bankers, brokers and traders may be getting weary of Republican control, Mr Carroll said. President George W Bush’s polling numbers are low and growing violence in Iraq also weighs heavy on Republican leadership, he said.

Meredith McGehee, policy director at The Campaign Legal Centre, said Wall Street also may be concerned about the US deficit, which has ballooned during the Bush administration. “The last time the deficit was under control was under the Democrats,” Ms McGehee said.

Still, it’s unlikely Wall Street will embrace higher taxes, a move some Democrats favour to cut the deficit. The ’06 election cycle that began January 1, ’05, marks the first time in a dozen years that securities firms’ donations have skewed leftward, according to analysis by the Centre for Responsive Politics, a non-partisan group that tracks political contributions.

Democrats have received $23.8m from Wall Street compared to $21.7m for Republicans. Over the previous five election cycles, Republicans captured 52-58% of the industry’s political donations. About 80% of the contributions from the industry comes from employees.

The rest comes from political action committees, which remain loyal to Republicans for lowering tax rates on dividends and capital gains, for example. Goldman Sachs, a firm with long-time ties to Washington, has contributed $2.6m, the most in the industry, through its employees and its political action committee. Democrats have received 60% of that money, reflecting a trend that dates to at least 1990.

Morgan Stanley ranks second with $1.6m in contributions, with 52% going to Republicans, according to the Centre for Responsive Politics. The shift in overall contributions to Democrats reflects allegiance to New York’s powerful Democratic senators, Hillary Clinton and Chuck Schumer, analysts said.

Ms Clinton, seen as a leading candidate for the White House in ’08, is the biggest beneficiary, receiving $1.1m during the ’06 election cycle. As chairman of the Democratic Senatorial Campaign Committee (DSCC), Mr Schumer is using his home field advantage on Wall Street to outflank Republican fund-raisers. The DSCC, which wants to regain control of the senate, has raised $81.3m compared to $69.2m by the National Republican Campaign Committee.

For example, Lloyd Blankfein, Goldman’s new chairman and chief executive, gave $25,000 to the DSCC. His predecessor, Henry Paulson, was a major Republican donor while at the firm before becoming Bush’s treasury secretary.

The industry has contributed $6.2m to the DSCC, compared to only $2.6m for the Republican’s national committee. Mr Schumer might easily raise money on Wall Street because he is a member of the Senate banking committee and chairman of the economic policy subcommittee.