<p>WASHINGTON – Will banks or credit unions benefit more from campaign finance reform? That's a hard question for experts to answer, particularly since the law has yet to face challenge in the courts. Dan Mica, president of CUNA has gone on record envisaging credit union benefits from the law, and a recent article in the American Banker cited bank sources that predicted banks would benefit as well. But long-time financial service observers expect that both rival industries will benefit in their own ways as the law plays to some of their strengths and cuts back other groups' fundraising efforts. "Actually, it will not be surprising if both banks and credit unions see the impact from their political money rise after the law comes into effect," said one long-time bank observer who asked his name be withheld. "Each has fund raising approaches that the law leaves intact – or even strengthens – while it eliminates the soft money that other groups have used more often, " he said. He explained that banks have never been good at raising soft money, an assessment backed up by other sources and implied in the American Banker article. " Banks have traditionally raised more of their political money in PAC's and given it directly to candidates," he said. "Some of their traditional rivals have raised and given more soft money," he added, "and banks have other regulatory and legislative rivals than credit unions." So-called hard-money donations are those that have traditionally been given directly to candidates and have been subject to hard limits and disclosure requirements. So-called soft-money has flowed into the coffers of political committees and parties and had had few or no limits under the previous law. David John, long-time banking analyst for the Heritage Foundation, a predominantly conservative Washington D.C.-based think tank, agreed with the notion that bankers' political money raising will likely have more impact as the securities and insurance industries see their soft money efforts eliminated. According to the Washington, D.C. based Center for Responsive Politics, securities firms gave $89 million to federal election efforts during the 2000 election cycle, of which 44% came in soft-money donations. The insurance industry, lately a strong bank rival, gave about $40.5 million, of which 39.5% was soft. By comparison banks gave $25 million to support campaigns for federal office of which only 24% was soft. "The other industries' soft money option will vanish," John said, "while banks' hard money donation, its traditional strength, will remain intact and actually could be even stronger since the caps on those donations have been doubled." But John also cautioned that the increased cooperation between banks and securities firms in the wake of Gramm-Leach-Bliley made it hard to say who exactly banks actually opposed on Capitol Hill, save the real estate and insurance industries and credit unions. John drew upon his history as a manager of both credit union and bank political action committee's (PAC's) to point out where credit union's traditional political strengths would likely remain unchanged or even also be strengthened under the new law. John, who has managed PAC's for both Chase Manhattan Bank and NAFCU, pointed out that credit unions, like banks, would gain from being able to give more money directly to candidates because of the increase in hard-money donations. Further, he noted that credit unions still had their members' dedication, which he called the "jewel in the crown" of credit union political efforts. "When I managed NAFCU's PAC I generally found credit union members and executives more willing to donate money," John said. "Credit union PAC donors were more dedicated and felt more that they had an obligation," he added. He contrasted the credit union approach with that trying to raise money from bankers, who sometimes seemed to feel that a $25 donation was their "fair share," at the same time they were making $250,000, John said. John cautioned, however, that as bankers began to organize more for political efforts like the current fight over real estate powers they may ultimately be able to raise much more money than credit unions, on account of having more money generally. But he also said that political donations have never been as much of a part of banking culture. He described how, as manager of Chase's PAC, he called up some records from congressional races where he knew bankers had given money. "I found a few entries where a commercial bank had sent a check, and some others where individual bank officers had made donations," he said. "But I found page after page of donations from, say, the securities industry where everyone gave the $1000 maximum." He also pointed out that no amount of money could effectively balance the grassroots credit union effort, a point Mica had also made in February. John recalled a Congressional associate from his earlier days who had made a pro-credit union vote, but in a casual or off-handed way. "But after the twenty-fifth person he met at his home district stopped him to thank him for his vote – which he had not considered a big deal – he concluded credit union issues were worth his attention," John said. That power, John forecast, would not diminish and would only be heightened if credit unions managed to back up their people power with hard money donations. At the congressional level it's a powerful force," John said, "and even in some smaller states like North Carolina and North Dakota credit union organizing can have a big impact." (see related story on page 45)</p>