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Good Gov't Groups: Are Corporations Using Bailout Money To Fund Political Campaigns?

Bank

First Posted: 02/28/09 05:12 AM ET Updated: 05/25/11 02:00 PM ET

Reform groups are blasting letters to congressional committee chairs and the head of the Congressional Oversight Panel, urging an investigation into whether bailout recipients used taxpayer money to benefit political candidates or organizations.

The letter -- signed by officials with U.S. PIRG, Change Congress, Public Campaign, Public Citizen and Democracy Matters -- builds off a Huffington Post report revealing that employees with at least two bailout recipients participated in a call aimed at drumming up opposition to the union-backed Employee Free Choice Act.

"We're calling for Congress to investigate whether Bank of America, AIG, or other recipients of billions in bailout money used taxpayer dollars to send 'large contributions' to any political organizations," reads the letter. "Congress has a responsibility to oversee the $700 billion bailout of the financial services sector. That means making sure that these taxpayer funds are used transparently, and in ways that benefit regular people -- not special interests."

The call, which took place on October 17, was hosted by Bank of America Corp, three days after the bank received $25 billion in federal bailout funds. Participants on the call were urged to persuade their clients to donate to groups and politicians who opposed the labor legislation, which makes it easier for employees to organize into unions.

Bank of America's involvement in the call was, it seems, limited to hosting and having an equity research analyst introduce the two main speakers: Bernie Marcus, the co-founder of Home Depot, and Rick Berman, the anti-EFCA lobbyist and founder of the Center for Union Facts.

Both Berman and Marcus made direct appeals to individuals on the line -- which included an official with at least one other bailout recipient, AIG -- to donate heavily to Republican Senate candidates who could help block the bill.

"If a retailer has not gotten involved in this, if he has not spent money on this election, if he has not sent money to [former Sen.] Norm Coleman and all these other guys, they should be shot. They should be thrown out their goddamn jobs," Marcus declared.

The disclosure prompted a flurry of criticism within labor communities and among progressives on Capitol Hill.

"What they've apparently done is taken taxpayer money and siphoned it to their political servants - right-wing Republicans," said Rep. Alan Grayson. "I applaud them for their innovation in developing a new form of public financing for campaigns, but it's unfortunate it seems to be limited to their cronies and toadies."

However, it remains to be seen whether the bailout recipients themselves donated money to Senate candidates or political organizations, rather than simply instructing their clients to do such. Officials with Bank of America have stressed that their role in hosting the call was that of adviser to other businesses and not as an active participant.

Either way, Bank of America did use time and resources to host the anti-EFCA forum, on which individuals were urged to make political donations. And that alone has compelled good government groups to raise concerns with Congress.

"This incident also starkly demonstrates the need to fundamentally reform the way we fund our congressional elections," reads the letter. "In our current system, special interests believe they can buy policies from Congress through campaign contributions, and the public believes this as well. Wall Street companies routinely spend millions in campaign contributions and lobbying to resist oversight of the practices that led to the current economic crisis. Ultimately, we'll ask lawmakers to pass fundamental reform of congressional campaigns and end pay-to-play politics. Obviously, everyone's point of view, regardless of politics, should be considered. But Congress needs to focus on arguments that make sense, not arguments that raise campaign dollars."

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