This week, the U.S. Senate will consider a bipartisan bill to massively roll back regulations put in place to prevent the risky financial practices that led to the 2008 economic crisis. As David Dayen reported at The Intercept, S.2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, would aid big banks by expanding an exemption from certain Dodd-Frank financial regulations to include many of America’s big banks, among other favorable provisions. 13 Republicans, 12 Democrats and one Independent are sponsoring the legislation.
The provisions led Sen. Elizabeth Warren (D-Mass.) to characterize the bill as the #BankLobbyistAct on Twitter.
One of the bill’s chief architects, Sen. Heidi Heitkamp (D-N.D.), and her husband have nearly $1 million invested in two of the bill’s biggest winners, J.P. Morgan Chase and Berkshire Hathaway, according to a 2016 financial disclosure document reviewed by TYT Investigates.
Heitkamp and her spouse collectively own between $100,001 and $250,000 of corporate securities stock in J.P. Morgan, as well as an additional up to $45,000 in a J.P. Morgan fund. Heitkamp alone owns between $215,000 and $550,000 worth of Berkshire Hathaway stock, and including joint investments, she and her husband have up to $600,000 invested in the company. Together, the Heitkamps could have up to $895,000 invested in the two firms.
For the senator, whose net worth was roughly $4.5 million in 2015, according to an estimate by the Center for Responsive Politics, these J.P. Morgan and Berkshire Hathaway investments potentially account for a substantial portion of her assets.
Clayton Homes and Vanderbilt Mortgage, the nation’s largest mobile-home empire and its lending operation, both subsidiaries of Warren Buffett’s Berkshire Hathaway, formerly pressured minority borrowers into unfavorable loans with hidden fees, and repossessed the homes of those who couldn’t pay. The Intercept reported that Section 107 of S.2155 would allow manufactured home sellers to push borrowers into bad loans once again.
Several other S.2551 cosponsors have large investments in financial firms. As of 2016, Sen. John Kennedy (R-La.) owned up to $50,000 and Sen. David Perdue (R-Ga.) owned up to $100,000 in J. P. Morgan corporate securities stock.
In 2016, Sen. Angus King (I-Maine) owned two corporate bonds, each worth up to $15,000, with J. P. Morgan and Berkshire Hathaway as part of his individual retirement account, and up to $15,000 in Prudential Financial stock, while his spouse owned between $15,000 and $50,000 in U.S. Bancorp stock. As of September 2017, Sen. Doug Jones (D-Ala.) had up to $100,000 invested in Regions Financial Corporation.
Sen. Mark Warner (D-Va.), worth roughly $238 million in 2015, has between $5 million and $25 million invested in J.P. Morgan’s Strategic Income Opports I mutual fund. Primary sponsor Sen. Mike Crapo (R-Idaho), the chairman of the Senate Banking Committee, and his spouse have up to $80,000 invested in J.P. Morgan mutual funds.
“The lobbyists have been fighting these regulations literally since the day the rules were passed,” said Warren in a recent video. “And now Congress is about to give the banks and their lobbyists their fondest wish.”
J.P. Morgan lobbied Congress during the last quarter of 2017 on S.2155 and “issues related to the treatment of custody in capital and liquidity requirements.” The Manufactured Housing Institute, which represents numerous Berkshire Hathaway subsidiaries, hired two different firms to lobby Congress on S.2155 as recently as 2017’s final quarter. Reports for early 2018 are not yet available. Over 100 additional companies have reported lobbying specifically on S.2155 in 2017.
Lobbying isn’t the only method that financial and loan companies employ to influence legislators. Heitkamp is the commercial banking industry’s number one recipient of campaign donations in the current election cycle, having reported receipts of $157,000 from banks’ employees and political action committees. Her fellow cosponsors, Sen. Joe Donnelly (D-Ind.) and Sen. John Tester (D-Mont.) come in second and third, respectively, on that list. JPMorgan’s PAC donated $2,000 to Heitkamp in 2017.
Companies don’t stop at campaign committees, however. The J.P. Morgan PAC also gave $5,000 to Heitkamp’s leadership PAC, the Dakota Prairie PAC.
Citigroup, which will reap huge, targeted gains from the legislation, donated $1,500 to Heitkamp through its political action committee in 2017.
“Our big money campaign finance system not only means that Congressional candidates are dependent on deep-pocketed financial interests to get elected, but that Congress itself is a millionaire’s club where it is not uncommon for members to have six-figure investments in the industries they regulate,” Brendan Fischer, director of the Federal and FEC Reform Program at the Campaign Legal Center, told TYT.
The North Dakotan, a moderate, is facing a tough reelection battle this year in her conservative state, which the Cook Political Report considers a toss-up. She and several other vulnerable red-state Democrats including Joe Manchin (D-W.Va.), Donnelly and Tester are some of the most likely Democrats to vote with their Republican Senate colleagues. All are S.2155 cosponsors.
Despite what watchdogs might say about the appearance of corruption, Heitkamp is not breaking Senate ethics rules, which are very specific. The Senate Ethics Manual reads, ‘‘No Member, officer, or employee shall knowingly use his official position to introduce or aid the progress or passage of legislation, a principal purpose of which is to further only his pecuniary interest. . . . Both the ‘principal purpose’ and the ‘limited class’ test must be met before the paragraph precludes a Senator’s involvement in a legislative proposal. As noted, the history states that ‘legislation may benefit a Senator significantly, but if it also has a broad, general impact on his state or the nation, the prohibitions of the paragraph would not apply.’ In other words, lawmakers can write and vote on bills that benefit a class of people or a group of companies, but they can’t participate in legislation that directly aids themselves, their family, or one specific company in which they are financially invested.
“In order to even consider running for office, a candidate needs a network of wealthy associates and to be comfortable asking those rich folks for money—which gives an advantage to candidates who are themselves wealthy,” said Fischer. “So it perhaps isn’t surprising that the members of Congress who are leading the charge to deregulate Wall Street are both dependent on Wall Street cash for their reelection and also have six-figure investments in the entities that stand to benefit. We don’t know whether these members are acting in the interest of their donors, or in their self-interest, but it is unfortunate that we even need to be asking these questions.”
Heitkamp’s office, Warren’s office, J.P. Morgan, and Berkshire Hathaway did not return requests for comment.
Alex Kotch is an investigative reporter whose work has previously appeared in International Business Times, Vice.com, and Exposed by CMD. Follow him on Twitter.