Why Are Bailed Out Firms Abandoning Democrats?

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The bailout of Wall Street and Detroit's automakers couldn't have passed without the support of Democrats. But bailed out firms aren't returning the favor. According to The Washington Post, most of the campaign donations from bailed out companies are going to Republicans, some of whom ardently opposed the Trouble Assets Relief Program to begin with:

Companies that received federal bailout money, including some that still owe money to the government, are giving to political candidates with vigor. Among companies with PACs, the 23 that received $1 billion or more in federal money through the Troubled Assets Relief Program gave a total of $1.4 million to candidates in September, up from $466,000 the month before.

Most of those donations are going to Republican candidates, although the TARP program was approved primarily with Democratic support. President Obama expanded it to cover GM and other automakers.

What's going on here?

  • It's Terrible News for Dems, writes Ezra Klein at The Washington Post: "[This] leaves Democrats in an unhappy position: The voters blame them for the bailout (most Americans don't know TARP was conceived and signed by the Bush administration), and the bailed-out companies are funding the other guys. They've managed to end up on the wrong side of both the people and the powerful."
  • Here Are Three Explanations, offers T.W. Farnam at The Washington Post

Some of the generosity to Republicans can be explained by the expectation that the party will make huge gains in Congress. But another factor is the Democratic Party's push for financial-regulation legislation this year. The new law, which passed the Senate with the votes of three Republicans and all but one Democrat, placed new curbs on banks and introduced a regulator to vet financial products for consumers. Most Republicans, and banks, say the law creates too many new restrictions. Scott Talbott, a lobbyist with the Financial Services Roundtable, said another factor could be the tone some Democrats used against financial firms. At one point, Obama called Wall Street executives "fat cats."

  • This Actually Makes Sense, writes Donny Shaw at Open Congress: "Companies that have taken money from the 2008 TARP bailout are focusing their political giving on candidates who support the bailout, oppose new financial regulations, and are most likely to be in positions of power in the next session of Congress." He notes that Republicans Boehner, Cantor, Bachus and Camp have received the most money from companies bailed out by TARP. Here's what connects these politicians:

All four of these Republicans split from the majority of their party and voted in favor of the 2008 bailout. They also all voted against the financial reform bill that imposes new regulations on financial companies and attempts to prevent future bailouts. As far as the TARP recipients are concerned, these are their key allies for the next session — powerful Reps. who are most likely to lead their party against new regulations and in favor of more bailouts when the time comes.

  • I'm Worried About How This Will Change the GOP, writes Rick Moran at the American Thinker: "Once the GOP takes control, it will be up to them to continue to bail out GM once the inevitable crunch comes. What do you think the chances are that the GOP would cave and throw more good taxpayer money after the bad?"

This article is from the archive of our partner The Wire.