Firms are telling politicians that fundraising is 'canceled for the foreseeable future.' Wall St. threatens GOP on bank tax

Wall Street is warning Washington Republicans: The money spigot is turning off.

Rep. Dave Camp’s tax proposal — which jacked up taxes on banks and threatens the bottom line of some major private equity players in New York — has infuriated donors in high finance.


Private equity and investment firms in New York are telling key Republican players in D.C. that commitments for big-dollar fundraising have been “canceled for the foreseeable future,” according to one GOP lobbyist with knowledge of the conversations.

( Also on POLITICO: Tax plan could hit immigrants)

Lobbyists for Bank of America, Goldman Sachs and JPMorgan and others are meeting privately with lawmakers to explain what the bank tax would cost and how it would function.

Big banks want to turn Republicans against the bank tax. The situation puts the party at risk of seeing a reliable source of campaign cash dry up right in the middle of a critical election year.

The tax proposal itself is not even expected to get a vote in the House, since it’s so unpopular among most Republicans. That Wall Street would react so ferociously to a dead-end bill is a reminder of how hard a powerful player is willing to fight to protect its interests in Washington.

Multiple GOP lawmakers and financial services lobbyists described the Wall Street backlash to POLITICO.

( Also on POLITICO: Paul Ryan’s reserved response to tax reform)

Without Wall Street, Republicans risk their coffers emptying. The securities and investment industry is the largest contributor — besides candidate committees — to the National Republican Congressional Committee this cycle, directing $3.5 million to the party committee, according to the Center for Responsive Politics. In the 2012 election cycle, the financial services industry ponied up nearly $9.9 million.

And right now is when the NRCC is trying to lap up every dollar it can to expand its majority in the House. Donors could shift their attention to the Senate, where the GOP has a fighting chance of taking back the majority. Or, worse, stop giving to the party all together.

Some House Republicans are already trying to calm the waters.

House Majority Leader Eric Cantor (R-Va.) told lobbyists at a lunch in D.C. Thursday that Camp’s bill was merely a “draft.” One lobbyist in attendance got the impression Cantor thought the plan was going nowhere. Rory Cooper, Cantor’s spokesman, said he didn’t say this “directly or indirectly.”

Rep. Tom Cole (R-Okla.) said that since the legislation isn’t going to be voted on — lawmakers can use it as a talking point.

( Also on POLITICO: Republicans take on Wall Street)

“It allows you to tell your energy people ‘Look, I’m on your side,’” Cole said. “It lets you distance yourself from parts that are unpopular.”

Even before the draft was released, leadership was trying to make the case that this was only the beginning of a long discussion on tax policy. Boehner’s chief of staff Mike Sommers and policy director David Stewart huddled with roughly 50 lobbyists in Naples, Fla., earlier this month after the NRCC retreat. Camp’s tax package was causing a lot of consternation. People attending the meeting walked away with the impression that the bill, which many were nervous about, would not see any floor time.

Other Republicans are trying to isolate Camp, saying it’s his draft, and doesn’t represent the view of the party, writ large.

Key Republicans involved in fundraising — like Texas Rep. Roger Williams — are trying to minimize the damage with donors.

“I’m telling my guys — look, we gotta win on Nov. 4 so don’t get way out there, OK? This is a work in process,” Williams said in an interview. “I would just say to those that are frustrated, and I’ve heard it too, it’s a work in process is all it is. It’s not a final draft. It’s some ideas.”

( Also on POLITICO: Dave Camp borrows some Democratic ideas for tax revamp)

Camp’s tenure with the Ways and Means gavel is nearly up. Republican money men said that the Michigan Republican didn’t have much to lose — but his bill could have a lasting impact on the party’s relationship with the energy and finance sectors. The frustration is partially due to the future impact of Camp’s bill: Camp’s bank tax and changes to carried interest are now fair game in future negotiations.

To be sure, some Republicans think the impact will be minimal. Republicans — not Democrats — frequently side with Wall Street on most every issue. While this stings, the pain will be gone before long. One Republican — who spoke without attribution to discuss his fundraising tactics — said the financial services sector will be so anxious to kill additional taxes that it might shell out more money than usual to sidle up to GOP lawmakers to make its case that they’ve made a mistake.

But some Republicans feel that this will spread. Rep. Lynn Westmoreland (R-Ga.), who has long been involved in House Republican fundraising, said the anger is not isolated to bankers — Realtors are also miffed. The plan would put in place new limits on how much homeowners can deduct on their mortgage interest.

“The Obama administration and the Democrats have always just slammed big banks and oil companies and this that and the other, now we’re following kind of in the same footsteps with that,” he said in an interview. “So there is some concern out there, but I think you’ll see most members of our conference just listen to people and especially those of us on Financial Services and Ways and Means. We’re going to listen to people.”

Rep. Patrick Tiberi, an Ohio Republican on the Ways and Means Committee, said the fundraising fallout will depend on where you fall on the bill. He said he has communicated his feelings about the bill with “the appropriate people” — including Camp.

“It might impact Chairman Camp’s relationship with that sector,” Tiberi said in a brief interview, adding that he would not detail his opinion on the bill in the press. “It’s a draft that the chairman put out. I think individual members, depending on how they do support or don’t support, I think it’ll be based on that.”

Richard Hunt, the head of the Consumer Bankers Association, said, “there’s no doubt some champagne corks were unleashed in Democratic circles last night. They got an early election gift.”

CORRECTION: An earlier version of this story incorrectly identified Election Day 2014.

CORRECTION: Corrected by: Adam Sneed @ 02/28/2014 11:04 AM CORRECTION: An earlier version of this story incorrectly identified Election Day 2014.