WASHINGTON -- Four years after the financial meltdown and despite a steady stream of increasingly disturbing scandals, the financial sector remains the biggest source of campaign money in Washington. The sector is actually on pace to match or exceed the record $504 million it doled out in 2008, having already provided $298 million to candidates, political parties and both traditional and super PACs, according to the Center for Responsive Politics.
Mitt Romney is the top recipient of the financial sector cash, pulling in more than twice the contributions that have gone to President Barack Obama as of May. Incumbent members of Congress have received nearly one-third of the financial sector's donations so far.
And much money has flowed from employees of banks that may be implicated in the financial sector's biggest scandal since the 2008 collapse and perhaps its most arcane.
On July 3, Robert Diamond, CEO of the British bank Barclays, resigned his post as the bank agreed to pay $450 million to settle charges of rigging the Libor rate (London interbank offered rate), a global measure used to set interest rates on trillions of dollars in commodities and securities. But the investigation into Libor rate-rigging from 2005 to 2008 keeps expanding: It now involves law enforcement around the world and touches nearly every major bank, including JPMorgan Chase, Citigroup, Credit Suisse, UBS, Bank of America, HSBC, Deutsche Bank and the Royal Bank of Scotland, according to press reports.
The rate-rigging potentially affected millions of consumers by raising rates on mortgages, student loans and other forms of debt and depleting funds from smaller banks, investment funds, pensions and savings accounts.
"People who borrowed at certain times paid more, and actually paid over the life of a mortgage potentially a lot more, because the Libor was falsified," said William K. Black, an associate professor at the University of Missouri-Kansas City and a former fraud investigator at several U.S. government agencies. "When [the Libor is] pushed down, banks can be victims too. So they were nailed. And if you own stock in your local bank or you own pensions at your local bank, then you were hurt."
At a vital time for fundraising, a major source of campaign cash may now be politically tainted. Indicating the potential toxicity of the scandal, Diamond withdrew from co-hosting a mega-fundraiser in London for Romney immediately after resigning from Barclays.
Romney hauled in more than $22 million from the financial sector through the end of May, according to the Center for Responsive Politics. That's ahead of the amount Obama raised through the end of May four years ago. Over the full 2008 election cycle, Obama pulled in a record $42 million from the finance sector.
Six of the banks under investigation -- JPMorgan, Citigroup, Credit Suisse, UBS, Bank of America and Barclays -- rank among Romney's top 20 donors. Through the end of May, employees of those companies and their family members have contributed more than $2 million to the Romney campaign, according to the Center for Responsive Politics.
The campaign also relies on many executives and directors from these banks as top fundraisers, rounding up checks for others. In the past, major bundlers have enjoyed significant influence in their candidate's administration. The Romney campaign's leading disclosed bundler, with nearly $1 million raised, is Barclays' top lobbyist and managing director, Patrick Durkin. Others include Credit Suisse head Eric Varvel and four JPMorgan executives. Varvel has also cut a $100,000 contribution to the pro-Romney super PAC, Restore Our Future.
The total number of individuals working for the banks under investigation and raising money for Romney is not known as the campaign has parted with tradition and refused to disclose its full roster of bundlers.
What inspires this kind of enthusiasm? In the case of Romney, he has already stated his opposition to new financial regulations.
"Romney starts with, 'Let's immediately repeal all of Dodd-Frank and I have no real thing to put in its place,'" Black, the former fraud investigator, said. "We'll just go back to maximum deregulation and maximum crises."
The Romney campaign, which did not respond to a request for comment, isn't alone in leaning on big bank support. President Obama has raised $10 million from the financial sector through May. But that's not even half of what he raised in 2008 over a similar time period.
None of the banks under investigation currently rank as top donors to Obama, although JPMorgan, Citigroup and UBS all ranked among Obama's top donors in 2008. Employees of the six banks that are top Romney donors have given $420,553 to the Obama campaign so far.
In addition, eight Obama bundlers hail from banks under investigation for their role in the rigging of the Libor rate. Executives from Barclays, Citigroup, Royal Bank of Scotland and UBS have raised at least $2 million for the reelection campaign.
The Obama team has already had to renounce one financial sector bundler this year after the investment fund of former New Jersey governor and senator Jon Corzine imploded and was found to have lost or misused investors' money. The campaign and the Democratic National Committee returned $70,000 in contributions from Corzine and his family, but declined to return more than $500,000 he had raised for the campaign from others.
A request for comment was not returned by the Obama campaign.
Recent revelations that Tim Geithner, then the New York Federal Reserve Bank president and now the treasury secretary, met with Barclays officials in 2007, during a key period when the bank was manipulating the Libor rate, could raise more questions about financial sector money.
Geithner will answer questions this month before the Senate Banking Committee, which is also awash in big bank contributions. Committee members Bob Corker (R-Tenn.), Robert Menendez (D-N.J.) and Jon Tester (D-Mont.) have benefited significantly from the financial sector's largesse.
They're not the only members of Congress raking in banks' money. Of the $298 million contributed this election cycle, $93 million has gone to congressional incumbents. The top two recipients are Sens. Scott Brown (R-Mass.) and Kirsten Gillibrand (D-N.Y.). Other major recipients include several members of the Republican leadership: House Speaker John Boehner (R-Ohio), House Majority Leader Eric Cantor (Va.), House Financial Services Chairman Spencer Bachus (Ala.), Rep. Jeb Hensarling (Texas) and Senate Minority Leader Mitch McConnell (Ky.).
The House Financial Services Committee's oversight panel has asked for documents from the New York Fed related to conversations with Barclays in 2007, and the Senate Banking Committee could focus its questioning of Geithner on any issues that interest the members. But no committee appears to have scheduled hearings covering the other banks implicated in the Libor scandal.
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