In my last posting, I briefly touched on the subject of this posting, the issue of which sector of the American economy has the greatest investment in Washington politics. In this posting, I want to look at that sector in greater detail.
Here, once again, is a chart showing the top industries and donor groups in the 2014 cycle:
The securities and investment sector (i.e. Wall Street and its offspring) have raised just over $169 million and has donated $100.9 million to PACs, parties and candidates. Other than the "retired" sector, Wall Street is, by a wide margin, the biggest funder of political activities in Washington.
Historically, the political influence of the securities and investment industry was led by brokerage houses, bankers and stockbrokers, however, in the age of new investment vehicles and Washington's penchant for regulation, both hedge funds and private investment companies have a greater interest in trying to influence Washington's policies as we will see.
Let's take a detailed look at Wall Street's funding activities in Washington. Here is a chart showing the top contributors for the 2013 – 2014 cycle and where those contributions ended up:
It becomes quite apparent that the vast majority of what Wall Street contributes to the federal political scene ends up in the hands of outside spending groups. The remainder is divided between the Democrats and the Republicans with the Republicans receiving 61.6 percent of the $100.87 million that is doled out and the Democrats receiving a relatively paltry 38.4 percent. Here is a graph showing how, since 2012, Wall Street has increasingly spent its money on the Republican side of the ledger:
Prior to 2010, the securities industry tended to spend most of its political "money might" on the party that was in power. That changed with the 2010 passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act by the Democrats. You will also notice that, in the 2012 Presidential election, Wall Street had total contributions of $287.37 million, putting them in second place over all other sectors. Most of the funds raised came from individuals working in the securities industry, in fact, the $181.5 million raised by individuals in the securities industry far outweighed the $13.3 million that came from PACS. In the 2012 election cycle, the securities sector donated $134.2 million or 69 percent of their total donations to the Republicans and only $60.5 or 31 percent of their total donations went to Democrats. Contributions by the securities and investment sector during the 2012 election cycle was by far the largest in its history, well ahead of the $177.2 million that was contributed by the sector in the 2008 cycle.
Let's look at a bit of detail about the top three contributors. As you noticed in the chart above, Elliott Management is by far the largest contributor followed by Renaissance Technologies and TD Ameritrade. Elliott Management is a major hedge fund founded by Paul Singer in 1977, making it one of the oldest hedge funds. under continuous management. It is based in New York City and manages around $23 billion in assets. Renaissance Technologies is a Long-Island based hedge fund founded in 1982 by James Simons. It manages around $15 billion in assets. TD Ameritrade is an online broker based in Omaha. It is owned by Ameritrade Holding Corporation which, in turn, is owned by TD Bank Financial Group, a Toronto, Ontario based banking conglomerate. It is interesting to see a Canadian financial behemoth involved in political influence in the United States.
Here is a graphic showing the how the money given to Congress was split in the 2014 cycle:
So far, the Democrats have received $21.99 million compared to $30.63 million to the Republicans. In the House, the Republicans received an average of $65,931 compared to $50,814 to the Democrats. In the Senate, the Republicans received an average of $148,679 compared to $152,530 for the Democrats.
Here is a list showing the top twenty individual recipients of Wall Street's unfettered generosity in 2014:
Since hedge funds have become such an important part of Wall Street, let's look at a chart showing how much hedge funds have contributed to Washington's political scene in the 2014 cycle:
Over $40 million has been contributed to candidates, parties and outside political groups by the hedge fund subsector alone in the 2014 cycle. If we go back to the 2008 Presidential election cycle, we find that only $11 million was contributed by hedge funds as shown on this chart:
This shows us that hedge funds, the investment vehicle of the most elite among us, are playing an increasingly important role in influencing American politics.
To close, it is interesting to see that Wall Street and its offspring are having a substantial monetary impact on the federal political scene. With their growing political funding activities, they are likely to have increasing impact on policies that would result in increasing regulations over their operations.