Wall Street is trying to pay the piper -- to pipe down.
Campaign donations from brokers and accounting companies are soaring, as the embattled industries try to align themselves with politicians most likely to go easy on them.
Brokers rank third among all groups for the amount of money they've donated this year -- outranked only by lawyers and retirees. Indeed, brokerages have shelled out more money in the current midterm election than in any other, according to the Center for Responsive Politics, a nonprofit organization.
"I think they're giving money with the hope that a lot of these
problems will just go away, and they're focusing on candidates that will help that happen," said Bill Allison, managing editor at the Center for Public Integrity, a nonprofit research group.
Brokers have doled out $39.4 million, with $3.94 million coming from their political action committees and the rest from individual donors, according to the CRP. Accounting firms have given $7.8 million, with $3.36 million coming from their PACs.
This year's top contributor among brokerages --
-- has forked over $2.3 million, 71% of which went to Democrats, the CRP said.
, meanwhile, have donated more than $1 million, more than 60% of which went to Republicans. Morgan and Goldman didn't return calls seeking comment. Credit Suisse said most of the money it has given has come from individuals.
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"They're playing both sides of the aisle, and give quite a bit to people that they think will carry water for them in terms of their agenda or not be too critical if they end up on the hot seat," Allison said.
Overall in the brokerage industry, 54% of the money has gone to Republicans, while 46% has gone to the Democrats, according to the CRP.
Allegiances within the accounting profession aren't as evenly split, with 72% of the money going to Republicans. Still, Sen. Chuck Schumer (D., N.Y.) is the top recipient of the money from both industries, despite the fact that he isn't up for re-election, the CRP said. Analysts said brokers are hoping to curry favor with the Democrat because he represents the state in which most of these firms are based. Schumer's office didn't return calls.
Accountants also may like Schumer because he was one of 13 senators who pressured former
Securities and Exchange Commission
Chairman Arthur Levitt in 2000 to abandon accounting-reform plans.
Big Bucks for Candidates
The CRP said brokers also have given generously to Sen. John Kerry (D., Mass.), who is a presumed presidential candidate for 2004, and to Erskine Bowles, the Democrat facing Elizabeth Dole in the Senate race in North Carolina. Because Bowles has been involved in legal wrangling of his own, he may be more sympathetic to the brokerage industry, experts say.
Bowles has been named in a lawsuit filed by Connecticut officials who are probing investments he made while serving as general partner at Forstmann Little. Bowles didn't return calls. A spokesman for Kerry said he doesn't take PAC money, adding that individuals within the securities industry are likely supporting him because many of them are based in Massachusetts and think he's "a stand-up guy."
Rep. Michael Oxley (R., Ohio), chairman of the House Committee on Financial Services, also has raked in hundreds of thousands of dollars from the brokerage industry, the CRP said. He has made it clear that he doesn't intend to pursue legislation that would crack down on so-called IPO spinning -- a practice in which brokerages allocate hot IPO shares to executives in order to win investment banking business from their firms. Oxley's office didn't return calls.
Larry Noble, executive director and general counsel at CRP, said brokerages generally donate because they want to make sure they have access to officials when an issue comes up that concerns them. "Sometimes they give because they want something, and sometimes they give because they don't want something. In this case, they don't want further regulation," he said.
Brokerages also have given large donations to incumbent Sen. Max Baucus (D., Mont.), the chairman of the Senate Finance Committee, the CRP said. Baucus is a fiscal moderate and free trader who angered Democrats by working to produce a $1.3 trillion tax-cut plan that was skewed to upper-income families. Baucus didn't return calls.
In the accounting profession, major contributors to political campaigns include Ernst & Young, Deloitte & Touche and KPMG, the CRP said. These firms and their political action committees have donated heavily to Senate candidate Norm Coleman (R., Minn.), who has a legal background and close ties to the corporate community. KPMG had no comment. The other accounting firms and Coleman didn't return calls.
The industry also is supporting Sen. Michael Enzi (R., Wyo.), according to the CRP. Enzi was among those who pressured Levitt to abort his accounting-reform goals. A spokeswoman for Enzi said he is the only accountant in the Senate and is "a leader on issues that the industry is in agreement with."
"The feeling may be that if Republicans retake the Senate, then accountants will have more influence in shaping any reforms," Allison said.
Both the brokerage and accounting professions have been plagued by a slew of investigations and talk of possible reforms this year. Although
has settled conflict-of-interest charges with the New York attorney general, Congress still is examining the role
played in the demise of
. It also is probing brokers' handling of IPOs in the late 1990s.
Meanwhile, the accounting industry is reeling from a host of new rules that were brought about by the Sarbanes-Oxley Act. Among other things, the act bars accounting firms from receiving consulting fees on companies they also are auditing. Also, accounting firms as well as brokers have laid off thousands of workers over the last two years, and have posted disappointing financial results of late.
In the accounting sector, KPMG's PAC is the biggest political donor, contributing $1 million to candidates. That's followed by Deloitte & Touche's PAC at $862,543. Ernst & Young's PAC added $502,909, according to the CRP.
As for brokerages, Goldman's PAC is the third-biggest contributor in the industry, having donated $414,500. Morgan Stanley's PAC gave $426,540, CSFB's PAC doled out $231,312 and National Venture Capital Association's PAC shelled out $752,700, the CRP said.