Enquirer Washington Bureau
WASHINGTON -- When Rep. John Boehner needs campaign contributions, banks, and securities and insurance firms are kind to him, especially of late.
Now he is in charge of a major legislative effort affecting how they will do business in the future.
Proposed law restructures financial services|
WASHINGTON -- Highlights of the proposed law restructuring financial services, according to supporters of the legislation:
Banks, securities firms and insurance companies would be able to affiliate with one another under the umbrella of a financial holding company.
Banks could sell insurance, underwrite municipal bonds, carry out other investment-related activities and sell insurance. Insurance and securities firms would have authority to provide banking services through affiliates.
One-stop shopping for consumers, allowing them to handle their banking, insurance and investment needs under one roof.
Because financial institutions would be able to sell their products more efficiently, savings of up to $15 billion a year would be passed along to consumers.
Banks would no longer be as dependent on ATM fees and other charges to boost profits.
But Consumers Union says this among its warnings about the bill: "As written, the bill gives a green light to states to permit banks to sell insurance and investments with no disclosures about risks and engage in other misleading practices," said Mary Griffin, industry analyst for the organization.
- Paul Barton
In his 1996 re-election campaign, Mr. Boehner received $130,739 from those firms, part of the $209,414 that he received from an industry grouping known as finance, insurance and real estate.
Together, they were by far the largest source of campaign money for Mr. Boehner, R-West Chester, who raised $1.31 million overall and faced only token opposition.
So far in his 1998 fund-raising, the finance, real estate and insurance industries have given him $52,180 in political action committee money, nearly a quarter of the $216,115 that all PACs have given to him.
Executives from the finance industry also have given $27,500 for 1998 to Mr. Boehner's leadership PAC, the Freedom Project, which he uses to help other GOP candidates.
Mr. Boehner is chairman of the House Republican Conference, the No. 4 leadership position in the GOP.
The financial support comes as Mr. Boehner has spearheaded an effort to "modernize" the laws affecting banks, investment firms and insurance companies.
It's called the Financial Services Act and is designed to break down the Depression-era laws that have separated those three industries. Insurance and securities firms would be allowed to engage in banking while banks would be able to sell securities and insurance. While regulatory interpretations have allowed some of this to go on already, Mr. Boehner's bill would formally open the gates for them to enter a new era.
"America cannot meet the challenges of the next century with banking laws that haven't changed since the Great Depression," he said.
Groups such as Consumers Union, however, complain that the bill does not offer enough protections to consumers and that members of Congress are doing "the bidding of industry special interests."
No impact on legislation
Mr. Boehner adamantly denies that contributions are having any impact on the legislation.
"It's a complete nonfactor," said Boehner aide Dave Schnittger. He added that Mr. Boehner has been careful not to attend some recent events, including fund-raising events, because they might be viewed as raising the appearance of a conflict of interest with the legislation.
"If we never got another dime from the financial services sector, he would still be doing exactly what he is doing right now," Mr. Schnittger said.
Although Mr. Boehner received substantial support from the financial services, insurance and real estate sectors during his first three campaigns for Congress -- including $51,825 in 1994 -- those contributions took off after he became a member of House leadership in 1995.
More important to influence
"When you are talking about people in leadership, special-interest contributors see those people as more powerful and more important to influence," said Don Simon, lobbyist for Common Cause, an advocacy group for campaign finance reform.
That's one reason a candidate like Mr. Boehner can attract a lot of money even if he faces no serious opposition for his seat, Mr. Simon said.
Contributors on both sides
But Mr. Boehner's staff says there are many banks who have contributed to his campaign who are not happy with the proposed new law. His spokesman declined to name them.
"Mr. Boehner has received contributions from people with interests on both sides of this issue," Mr. Schnittger said.
His 1996 totals of $130,739 from banks, securities and investment firms and $209,414 from all financial industries included contributionsfrom: Banc One Corp. ($10,000), American Bankers Association ($5,500) and Star Banc Corp. ($2,000) among banks.
Cincinnati Financial Corp. ($9,000), Nationwide Mutual ($3,000) and PIE Mutual Insurance Co. ($6,000), among insurance firms. Chicago Board of Trade ($3,500), Morgan Stanley ($3,000) and Merrill Lynch ($2,500), among securities firms.
The securities industry also provides benefits in other ways, including a 1996 trip for Mr. Boehner to a resort in West Virginia. It was paid for by the Public Securities Association.
Most generous givers
The financial services and real estate industries are not only the largest givers to Mr. Boehner but are by far the most generous givers to all members of Congress.
In the 1996 elections, banks, securities and insurance firms gave nearly $50 million to congressional races nationwide.
It is for moments such as this one -- the consideration of a bill that essentially would re-regulate their entire businesses -- that those industries give heavily to Congress, many argue.
"They are heavily regulated by national laws and those laws affect how much money they can make," said Michael Goldstein, finance professor at the University of Colorado.
But Mr. Goldstein doubts campaign contributions are driving Congress to pass the new finance-industry law, noting that if contributions had that kind of power, those industries would have obtained the new law long before now.
For more than a decade, Congress has been considering reshaping the Depression-era banking laws.
"It's more that this is a different Congress, a more Republican Congress, a more pro-business Congress," Mr. Goldstein said.