WASHINGTON -- In the wake of the bankruptcy of MF Global, the broker-dealer firm headed by former Democratic politician and current fundraiser Jon Corzine, the reelection campaign of President Barack Obama finds itself caught in a situation that has become all too familiar for politicians since the economic meltdown in 2008. Close ties between Wall Street and Washington, especially in the realm of campaign finance, have led to a series of public relations difficulties, with MF Global being only the most recent example.
Corzine, the chairman of MF Global, is a former Democratic governor and senator from New Jersey who has long-raised money for the party and its candidates. He is currently listed as a top fundraiser for the reelection of President Obama, having brought in over $500,000 from other donors.
This year, Corzine has contributed the maximum to both the Democratic National Committee ($30,800) and President Obama's reelection campaign ($5,000). MF Global executives and board members have joined Corzine in maxing-out their donations to both the DNC and Obama's campaign. In total, MF Global executives, traders and board members have combined to donate $143,200 to the two committees aiding the president's reelection.
On Tuesday, MF Global found itself under investigation by the Securities and Exchange Commission, the Federal Bureau of Investigation and the Commodities Futures Trading Commission after hundreds of millions of dollars were discovered to be missing from the firm's customer accounts. Neither MF Global nor Corzine have been accused of any wrongdoing, and MF Global could not be immediately reached for comment Wednesday.
The Obama reelection isn't the only recipient of contributions from Corzine and other MF Global executives. The Mitt Romney campaign received $4,500, the National Republican Congressional Committee another $5,000, and a collection of Democratic politicians and party organizations received tens of thousands, mostly from Corzine.
This public relations debacle highlights the growing difficulty for politicians in broaching the divide between public angst at Wall Street and the glaring fact that the financial sector is the single biggest source of campaign contributions over the past 13 years.
"Campaign fundraising from the financial sector can cut both ways, but generally it's more favorable for [politicians] to raise funds from the industry," Public Citizen's legislative representative Craig Holman told The Huffington Post. "It isn't often that you hear public demands over a particular egregious case. MF Global would be an appropriately egregious case."
A source close to the Obama reelection campaign told HuffPost Wednesday that the campaign will return contributions from any individual at MF Global who is charged with wrongdoing.
There are few examples of top campaign bundlers finding themselves or their business under investigation during a presidential campaign and, thus, it is a rarely-trod road over whether to return bundled contributions.
The clearest case came in 2008 when the presidential campaign of then-Sen. Hillary Clinton returned $850,000 in contributions bundled by Norman Hsu, who was under investigation for a variety of fraudulent activities including reimbursing campaign contributions to pad his bundled total.
The campaign of President George W. Bush faced these questions a few times with bundlers like Enron's Ken Lay, lobbyist Jack Abramoff and Ohio political operative Thomas Noe. In the case of Noe, who mishandled Ohio's Bureau of Workers' Compensation, the Bush campaign returned Noe's direct contributions, but refused to return the $100,000-plus that Noe raised from other donors.
Since the 2008 bailout of the financial sector, which featured government infusions into commercial and investment banks, insurance companies and mortgage issuers, no other industry has faced more calls by outside groups and politicians asking for its campaign contributions to be returned.
Congressmen have been called to return contributions from A.I.G., Fannie Mae, Freddie Mac and Goldman Sachs. Politicians and political parties have also returned thousands of dollars in contributions from individuals implicated and convicted in financial wrongdoing, including Bernie Madoff, Allen Stanford, Raj Rajaratman and Hassan Nemazee.
Calls to return contributions tend to stem from two considerations: a company or individual falls under investigation, or is partially or fully invested with public funds. Both of these actions have become common for the financial sector as its activities in the run-up to and during the global recession have left numerous firms charged with fraud, bailed out by the government, and found to have misused funds.
"Politicians will get rid of money that the public views as tainted," Center for Responsive Politics spokesman Michael Beckel told The Huffington Post. "What the straw is that breaks the camel's back is sometimes hard to know."
Other politicians are finding fundraising from the financial sector to be a more general problem as protesters associated with Occupy Wall Street seek to target politicians raising money from bankers and traders.
House Majority Leader Eric Cantor (R-Va.) found himself a target of Occupy protesters after he called the group a "mob" and was revealed to be a major recipient of campaign contributions from the financial sector. Cantor canceled a planned speech at the Wharton School for Business at the University of Pennsylvania over concerns that Occupy Philly protesters would fill the auditorium for his speech.
An Oct. 28 report by Eliza Newlin Carney of Roll Call noted that, "Wall Street is turning into a public relations headache and a political gold mine," for Cantor.
"It's all related to what led us into the recession of 2008," said Holman, "which was corrupt and criminal behavior on behalf of Wall Street and it has taken years for much of this to become exposed."
How will Donald Trump’s first 100 days impact YOU? Subscribe, choose the community that you most identify with or want to learn more about and we’ll send you the news that matters most once a week throughout Trump’s first 100 days in office. Learn more