WASHINGTON — Employees of Wall Street investment banks, whose role in the unregulated sub-prime mortgage market helped stall the U.S. economy, have donated more than $5 million to the top four Republican and Democratic presidential candidates.
A McClatchy analysis of the latest Federal Election Commission filings found that employees and executives of 12 firms — including Merrill Lynch, Citicorp, Lehman Brothers and Swiss-owned UBS — made hefty contributions to candidates in both parties but seemed to be betting more on Democrats.
The companies are among those who have the most at stake in the next election: They've already sustained losses approaching $100 billion, politicians are talking about tougher regulations and the new administration will have a large hand in crafting policies to address the sub-prime crisis. With the prospect of growing foreclosures for homeowners with shaky credit, the value of hundreds of billions of dollars in bundled mortgages could plummet.
Democratic candidates Sens. Hillary Clinton of New York and Barack Obama of Illinois were the leading recipients of cash from employees of these firms, collecting half the $7.4 million in donations to 15 major presidential candidates.
Through Dec. 31, Clinton had collected more than $2 million in donations from employees of 12 banking firms caught up in the sub-prime mess. She received $373,020 from Morgan Stanley workers, $316,001 from Goldman Sachs employees and nearly $290,000 from Citicorp. workers.
Obama got $1.7 million from the same firms, including $288,835 from Goldman Sachs employees, $242,395 from UBS workers and $226,805 from Lehman Brothers employees.
Clinton spokesman Phil Singer said the New York senator ``went to Wall Street and directly challenged the industry to take specific steps to stem the sub-prime housing crisis. She is intent on fixing the housing crisis and making sure that people are able to keep their homes.''
Clinton has proposed a three-month freeze on mortgage foreclosures, a plan that would drive down the value of bundled mortgages held by the banks. She also wants to force banks to require lenders to freeze mortgage interest rates for five years at the sub-market ``teaser'' levels that enabled millions of Americans to buy homes that they couldn't afford.
In Thursday night's debate with Clinton, Obama said he opposed an interest rate freeze, ``not because we need to protect the banks,'' but because it would drive up interest rates across the board.
Obama's spokesmen didn't immediately respond to requests for comment.
On the Republican side, former Massachusetts Gov. Mitt Romney received $893,915 in donations, topped by $146,970 from employees of Merrill Lynch, $124,050 from Morgan Stanley workers, $121,950 from Lehman Brothers employees and $120,000 from Goldman Sachs workers.
Arizona Sen. John McCain, whose campaign was so starved for cash in December that he took a $3 million bank loan, got $704,423 from employees of investment banks and two large banks, led by $145,715 from Merrill Lynch workers and $124,661 from Citicorp. employees.
Romney spokesman Kevin Madden said the governor's political contributors supported ``his experience and his vision for strengthening the country'' and that Romney's positions on the sub-prime crisis were ``driven by his desire to help American homeowners and stabilize'' the economy.
Aides to McCain, who has a reputation as a campaign finance reformer, didn't respond to requests for comment about his donations from sub-prime industry players.
The investment banking firms — either major sub-prime lenders or firms that now hold portfolios of sub-prime loans — had little to say about their employees' and executives' donations.
Spokeswoman Selena Morris of Merrill Lynch, which has written off some $20 billion in losses on sub-prime mortgages and securities in recent months, said that ``neither Merrill Lynch nor its PAC contribute to presidential campaigns.'' Its employees, she said, ``are free to participate in the political process just like any other citizen.''
A spokeswoman for Morgan Stanley, which wrote off $9.4 billion in losses last year, declined to comment, and representatives of several of the other firms didn't respond to requests for comment.
Michael Calhoun, the president of the North Carolina-based Center for Responsible Lending, said that predatory lending legislation already has passed the U.S. House of Representatives. He said he suspected that the investment banks ``want to have that outcome influenced by the administration,'' either the Bush administration or the next president's.
Other government decisions also could affect the firms' bottom lines.
Patricia McCoy, a University of Connecticut law professor, said the industry wanted to avoid legislation that would allow homeowners who were facing foreclosure on their mortgages to sue the current holders of sub-prime loans.
But Allen Fishbein, who watches over the housing industry for the Consumer Federation of America, said his group thought that with more accountability, big banks would do a better job of policing the kinds of mortgages that were written.
Consumer groups also are pushing Congress and the Bush administration to rewrite bankruptcy laws to allow judges to write down mortgage debts on primary residences. That's a measure that Wall Street mortgage holders are sure to resist, Fishbein said.
Here are the firms and their employees' total donations to all presidential candidates through Dec. 31:
Goldman Sachs, $1,046583; Citicorp, $961,745; Morgan Stanley, $913,914; Lehman Brothers, $906,652; Merrill Lynch, $712,603; Credit-Suisse, $545,911; UBS, $498,470; J.P. Morgan, $458,327; Bear Stearns, $373,427; Bank of America, $351,654; Deutsche Bank, $331,927; Wachovia, $258,376.
_Source: Federal Election Commission
(Tish Wells and Kevin G. Hall contributed.)