U.S. Rep. Shelley Moore Capito wants West Virginians to know she’s a defender of community banks. From her seat on the House Financial Services Committee, Capito argues, she has protected small local financial institutions from the overreach of aggressive regulators.
Among her biggest supporters, however, are the biggest banks in the world.
Capito, a Republican, is running for West Virginia’s U.S. Senate seat that’s being vacated by Jay Rockefeller after 30 years.
She counts Citigroup and Goldman Sachs among her most generous campaign donors.
“She’s a reliable vote for all things Wall Street,” said Dennis Kelleher, president and CEO of Better Markets, a non-partisan group that advocates for increased market oversight of financial institutions.
Capito is part of the “Congressional Banking Caucus,” a group of lawmakers identified by the Center for Public Integrity as especially solicitous to the banking industry. They are all members of the House Financial Services Committee and have been the recipients of generous campaign support from financial services company employees and political action committees.
The other members of the group are Financial Services Committee Chairman Jeb Hensarling, R-Texas, and Reps. Scott Garrett, R-N.J.; Sean Duffy, R-Wis.; Jim Himes, D-Conn.; Blaine Luetkemeyer, R-Mo.; Gregory Meeks, D-N.Y.; Ed Royce, R-Calif.; David Scott, D-Ga.; Steve Stivers, R-Ohio; and Ann Wagner, R-Mo.
The group has been central to efforts led by Hensarling to undo many of the financial reforms enacted in the Dodd-Frank law of 2010. At least 30 bills have been proposed to the House during the 113th Congress, aimed at chipping away at aspects of Dodd-Frank. Members of the banking caucus sponsored or co-sponsored 20 of those laws. At least 21 have been referred to the House Financial Services Committee and three have been passed to the Senate.
Since the Center for Public Integrity published a report on these lawmakers in April, their efforts to reshape the regulatory landscape have continued.
Luetkemeyer has proposed several bills to limit the power of the Consumer Financial Protection Bureau, the new consumer regulator created by Dodd-Frank, which he blames for raising costs to consumers and driving small banks out of business.
“There’s a consolidation going on out there right now and it’s a result not necessarily of the market but a result of regulation,” he said in a June event, sponsored by Politico and the Independent Community Bankers of America. “This is having the reverse effect of what actually was the intention of Dodd-Frank, which was to protect the consumers.”
Himes, who spent 12 years at Goldman Sachs before running for office, is often at odds with Hensarling while still looking to protect Wall Street firms from regulatory overreach.
“He will continue to push back against attempts to undermine key protections established by Dodd-Frank while reviewing the law’s unintended consequences,” said Kevin Garrahan, his spokesman.
None of the other members or their representatives responded to requests for comment on the committee’s work.
Capito is the only member of the caucus who is leaving her house seat to try for the Senate and is the only one in a competitive race. All the other members of the group are rated by the Cook Political Report as having safe seats, except for Duffy, whose district “leans Republican” according to the non-partisan political analyst. Voters will go to the polls Nov. 4.
That means their financial benefactors — from megabanks to mortgage bankers to payday lenders — can continue to count on these lawmakers to push through their agendas and protect them from excessive regulation.
Capito has defended herself against criticism by her opponent, West Virginia Secretary of State Natalie Tennant, that she’s too cozy with the banking industry. In an October 7 debate, Capito acknowledged that she voted against limiting bonuses for executives of banks that had received taxpayer bailouts. But, she said she also voted against the $700 billion bank bailout approved by Congress in 2008.
She said her support of the banking industry is meant to help small, local banks.
“I’m going to defend the West Virginia community banks and the West Virginia credit unions. We need to have a full financial system here in the state that doesn’t include big banks, that includes the ability to get a car, to get a mortgage.” she said.
Still, some of her most ardent supporters are the biggest financial institutions on Wall Street. The employees and political action committees of Citigroup, Goldman Sachs, Wells Fargo and Bank of New York Mellon are among the top 20 donors to Capito’s Senate run, according to data compiled by the Center for Responsive Politics. She also has the support of many energy companies.
Capito is not among the top recipients of contributions from the Independent Community Bankers of America, the lobbying group that represents small banks across the country. The group contributed $5,000 to her Senate effort, just a quarter of what it donated to her fellow “Banking Caucus” member, Rep. Blaine Luetkemeyer, R.-Mo.
Capito has been an ally of community banks. Late last year, she led the House opposition to a proposed regulation that would have required community banks to get rid of certain investments, a move that would have cost several of the banks’ profits. She and Hensarling first wrote a letter to regulators asking them to reconsider the rule, and followed up by filing legislation that would reverse it.
Regulators responded and announced Jan. 15 that the new regulation would not apply to smaller banks.
But Capito’s activism also benefits the banking giants who have been among her greatest supporters. Capito, who chairs the subcommittee that oversees consumer lending and finance companies, is married to a banker who has worked for Wells Fargo and Citigroup.
“One characteristic of her bills is that they do include community banks but they would also help much larger banks,” said Marcus Stanley, policy director at Americans for Financial Reform, a coalition of groups that advocate financial reforms that help consumers.
Stanley cites, as an example, a Capito proposal to limit regulators’ powers in bank examinations and create an ombudsman where banks can take complaints about their regulators examinations. The American Bankers Association, which represents all banks including community banks and megabanks, has lobbied for this bill.
“This is definitely something that community banks are asking for but it’s not limited to community banks. It would greatly benefit Wall Street banks,” Stanley said.
Amy Graham, a spokeswoman for Capito’s campaign, declined to respond to questions for this story.
While Capito is the only member of the banking caucus facing a competitive election this fall, Hensarling, who chairs the Financial Services Committee, may be seeing his leadership challenged.
Congressman Frank Lucas, R-Okla., said earlier this month that he’s considering trying to win the chairman’s gavel, because members of the Republican leadership are unhappy with Hensarling’s approach to the committee.
“[Congressman] Lucas has been approached by members who are concerned about the direction of the House Financial Services Committee,” Tamara Hinton, a spokeswoman for Lucas, said in a statement to Bloomberg Businessweek. “They have expressed a desire to see things change. Chairman Lucas is listening to his colleagues and taking their frustrations into consideration.”
Your support is crucial!
Our newsroom needs to raise $121,000 by end of the year so we can hold the power accountable and strengthen our democracy in 2024. Public Integrity doesn’t have paywalls and doesn’t accept advertising. We depend on individuals like you to sustain quality journalism.