Ever since JP Morgan Chase's $2 billion loss, their PAC has stopped donating. How corporate PACs handle bad PR

When it comes to campaign donations, corporations that suddenly find themselves crosswise with Congress know the playbook.

First, immediately cut off political action committee contributions.


Second, refuse to talk about your campaign contributions.

Then, after perhaps taking some lumps at congressional hearings and spending a few months in the political wilderness, quietly begin cutting checks again as if nothing happened.

Such appears to be the case for JPMorgan Chase, which is under fire for losing $2 billion on trades tied to credit derivatives — financial tools that helped damage the U.S. financial system late last decade.

Its PAC typically contributes hundreds of thousands of dollars to federal candidates and committees each election cycle but it hasn’t donated a reportable dime to candidates since May 7, according to federal campaign filings.

In recent years, BP, Goldman Sachs and News Corp.’s American subsidiaries all went down a similar road, turning off their political cash spigots while under the hot glare of the congressional, media and law enforcement spotlight.

Rep. Charles Gonzalez (D-Texas) received — and promptly returned — a $1,000 BP Corporation North America PAC contribution he got less than a month after the Deepwater Horizon drilling platform explosion of April 20, 2010.

“It makes good sense on everyone’s part for a company PAC to suspend campaign money during a period of scrutiny or a period of investigation,” Gonzalez said. “What I look for is whether the company is accountable for its mistake, assumes responsibility and takes substantive measures to correct it. Then I’ll make a decision about accepting support.”

A lawyer who advises JPMorgan tells POLITICO that temporarily severing important financial ties with influential politicians is a better long-term strategy than continuing to donate to them amid a scandal.

“You don’t want to risk a congressman returning a contribution,” the lawyer said. “You want to let the dark clouds pass, you want to let the seas calm, before you start up again.”

When JPMorgan decides to give again, it’ll have plenty of political cash to draw on: $680,375 worth as of June 30, its latest report indicates.

Corporate JPMorgan officials did not return requests for comment.

Gonzalez, who sits on the House Energy and Commerce Committee, said he’d probably accept a BP check today because the company has adequately worked to fix the problems it caused.

BP ultimately stopped giving for nine months from 2010 to early 2011 in the aftermath of the Deepwater Horizon explosion that killed 11 people and sent an estimated 4.9 million gallons of oil into the Gulf of Mexico. Political candidates collectively returned or didn’t deposit tens of thousands of dollars in BP PAC contributions in the months after the spill.

But this election cycle, BP’s regained its status as one of the nation’s more active PACs, routinely spreading five-figures’ worth of contributions among numerous lawmakers.

Last month, for example, BP’s PAC handed out about $16,500 overall, including four-figure sums to the campaigns of Reps. Don Young (R-Alaska), Sheila Jackson Lee (D-Texas), Elijah Cummings (D-Md.), John Culberson (R-Texas) and Jim Costa (D-Calif.).

Twenty state-level candidates from California to Oklahoma to Ohio also received BP PAC cash in June, according to documents filed with the Federal Election Commission.

BP spokesman Arturo Silva declined to elaborate on the PAC’s changing financial ways, saying, “our FEC statements speak for themselves.”

News America-Fox PAC’s hiatus lasted from late July through early September last year when its parent company found itself embroiled in a phone-hacking scandal.

It has returned to form as well; in June, its donations included $15,000 each to the National Republican Senatorial Committee and Democratic Congressional Campaign Committee, as well as four-figure amounts to lawmakers including Sens. Dianne Feinstein (D-Calif.), Bob Corker (R-Tenn.), Joe Manchin (D-W.Va.) and Scott Brown (R-Mass.), as well as Reps. Jim Clyburn (D-S.C.), Jeff Flake (R-Ariz.) and Chris Van Hollen (D-Md.).

Goldman Sachs’s PAC all but stopped spending from April to July 2010 while it agreed to pay $550 million to the Security and Exchange Commission for defrauding investors on subprime mortgages. Checks it did cut to lawmakers during this period often went uncashed.

In contrast, Goldman Sachs’s PAC contributed more than $133,000 last month to several dozen federal political candidates and committees, federal records show.

Cutting off direct PAC donations to politicians is a “very serious decision,” said Melissa Feld, a principal at political intelligence firm PowerBase Associates, who previously managed the PACs of GlaxoSmithKline, Northrop Grumman and Washington Group International.

“It is not something that is done without a lot of contemplation,” Feld said, adding that such a gesture may help a company’s standing with shareholders but hurt its position with members of Congress, particularly if it does significant business with the federal government or affects a lawmaker’s constituency.

Corporations that do freeze PAC donations still often enjoy multiple avenues of influence, Gonzalez noted, including lobbying and making donations to like-minded trade associations. They’re also free, thanks to increasingly laissez-faire campaign finance laws, to make unrecorded donations to politically active nonprofit groups that in turn may independently promote or attack lawmakers.

What won’t be officially known until late August, when campaign cash reports for July become public, is whether another pair of embattled banks will also go into political duck-and-cover mode.

Capital One, whose PAC gave $38,000 in June, last week agreed to pay $210 million to settle allegations that it violated regulations banning deceptive or unfair marketing.

Prominent politicians including House Minority Whip Steny Hoyer (D-Md.) and Reps. Pete Sessions (R-Texas), Steve Israel (D-N.Y.) and Peter King (R-N.Y.) were among those receiving Capitol One PAC contributions last month.

To date, Capital One’s PAC has “not altered our policies or practices regarding our PAC activities,” company spokeswoman Tatiana Stead said, adding that “the payment protection issue was only a small element of a single business line, and we have cooperated fully with our regulators in resolving it.

Wells Fargo, meanwhile, recently settled a lawsuit by paying $175 million after facing Justice Department accusations that it sometimes used people’s race in determining loan interest rates.

In June, its PAC contributed $47,500, with recipients including the campaigns of Sens. Brown and Rob Portman (R-Ohio) and House Majority Leader Eric Cantor (R-Va.).

Wells Fargo spokeswoman Richele J. Messick declined to comment.