No tea for Wall Street in fall elections

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By David Weidner, MarketWatch

NEW YORK (MarketWatch) -- Tea party? When it comes to elections, Wall Street traditionally has but one party of choice: the winning party.

Blaming the financial industry may be the only issue on which there's common ground in Washington. The furor surrounding bailouts and government spending has ignited a whole anti-government movement that could tilt the scales come fall.

But that sentiment hasn't swayed the industry from its longtime strategy of backing incumbents and frontrunners.

This pivotal midterm year is no exception. The banking and brokerage industries are going long on candidates playing roles in shaping financial reform. If the early contributions are any indication -- and they usually are -- the races may be closer than thought.

So much for throwing the bums out.

The securities and banking industries have doled out a combined $37.56 million, or about 10% of the $370 million contributed to congressional races this cycle, according to the Center for Responsive Politics' analysis of Federal Election Commission data.

After adding in lawyers and real-estate professionals, the figure swells to $117.2 million through Feb. 21, or about a third of all campaign contributions.

OK, so who's getting the cash? You might be surprised. It's not the Republicans, who seem to be less strident on financial reform. The securities industry is giving only 36% to the G.O.P. The real-estate industry has handed over only 42%. Only commercial banks are going for the minority party, but it's close, with Republicans getting 54% of contributions.

• Citigroup Inc. /quotes/comstock/13*!c/quotes/nls/c (C 4.12, +0.03, +0.73%) employees have contributed $700,995, split almost evenly between both major parties.

• Bank of America Corp. /quotes/comstock/13*!bac/quotes/nls/bac (BAC 14.03, +0.04, +0.29%) employees have given $819,539 to candidates, and 54% has gone to Republicans. J.P. Morgan Chase & Co. /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 40.21, -0.11, -0.27%)

• The small banks are more partisan. The Independent Community Bankers of America has contributed 65% of its $652,050 to Democrats.

• Down the street at the brokerages, Morgan Stanley /quotes/comstock/13*!ms/quotes/nls/ms (MS 26.99, -0.02, -0.07%) employees have put up $619,349 -- again evenly split between the parties.

It's early, but the early winner of Wall Street's affection appears be incumbents. That would make sense: Incumbents are always seen as frontrunners, especially eight months out from election days. Incumbents have outraised challengers by a 9-to-1 margin, fueled by financial firms' cash.

Here's how some of that money breaks down in some key races.

In the Senate, incumbent Democrat Charles Schumer leads the field, with $10.09 million raised. Schumer is seen as a potential replacement to Sen. Chris Dodd as chairman of the Banking Committee. Dodd is not running for re-election. Schumer is also on the Senate Finance Committee. See WSJ.com blog post on Schumer and Dodd.

The financial lobby is behind Schumer, pumping more than $3 million into his campaign. Among the five big contributors are agents of Paul Weiss Rifkind Wharton & Garrison and Sullivan & Cromwell, powerful Wall Street law firms and Credit Suisse Group /quotes/comstock/13*!cs/quotes/nls/cs (CS 45.80, +0.40, +0.88%) , the Swiss banking giant.

In the House, Virginia's Eric Cantor has been pushing his fellow Republicans to vote against or stall any financial-reform bill. Rep. Cantor's war chest is among the 10 biggest in Congress, with $2.61 million raised; 23.4% of his contributions have come from insurance companies, brokers, lawyers and the real-estate industry. See related story on Cantor's objections to bank reform.

On the other side of the aisle, Rep. Barney Frank of Massachusetts is well ahead of his rivals both in the polls and on the finance side. Frank, chairman of the House Financial Services Committee, has taken in $1.32 million in his re-election bid so far, with nearly half -- $462,449 -- coming from the finance, law and real-estate businesses.

That Schumer, Cantor and Frank have pulled in huge contributions even when they are in little danger of losing this fall suggests there may be more at work.

Wall Street ramped up its campaign donations to $157 million in the last cycle, in 2008, from just $32 million in 1992. Commercial banks followed suit, spending $37.5 million in 2008, 2 1/2 times their contribution level in 1992.

Along the way, Glass-Steagall was repealed, derivatives regulation was abandoned, limits on short selling were eliminated, Fannie Mae and Freddie Mac lobbied to rid themselves of lending standards. We got the greatest housing bubble and risk taking in three generations.

Who needs tea when you've got money at your party.

David Weidner covers Wall Street for MarketWatch.