WASHINGTON — The battle over control of the White House is the main event on election day, but bankers are also looking at several Senate races that could significantly impact their future over the next several years.
Republicans appear poised to pick up at least one or two seats, and are within shouting distance of the four seats needed to seize outright control of the chamber.
The likely tight margin of control in either direction will help make the following races even more important as they feature some well-known friends — and foes — of the industry. They are also races that could prove nail-biters on Nov. 6.
Massachusetts: Scott Brown (R) vs. Elizabeth Warren (D)
In some ways, the Sen. Scott Brown-Elizabeth Warren race amounts to a "lesser of two evils" showdown for the banking industry. Whatever bankers think of Brown, the GOP incumbent, they know they don't want Democratic challenger Warren on the Hill next year.
Warren is, of course, a famous figure in the banking industry, a liberal academic best known for creating the Consumer Financial Protection Bureau.
But Brown, a state senator who won the 2010 race to succeed the late Sen. Ted Kennedy, is not a stalwart defender of the banking industry, either. A rare Republican in a liberal state, Brown was a key vote in favor of the Dodd-Frank reform law. (Critics on the left say he played a large role in watering down parts of the bill.)
Even so, bankers have rallied around Brown, pointing to what they call his flexibility.
"Even though he doesn't always vote exactly how we would like him to, Scott Brown is a voice of reason, someone who can see both sides of an issue and work toward solutions, and we need that influence in Congress now more than ever," wrote Matt Packard, president and chief executive of Central Bank in Provo, Utah, and chairman of Friends of Traditional Banking, a banking superPAC established by a group of bankers and state banking associations. The group is backing Brown and two other candidates after narrowing down its list from seven close congressional races.
During this election cycle, commercial banks have given Brown $261,402 as of Oct. 1, ranking as one of the Massachusetts Republican's top 20 industry contributors, according to the Center for Responsive Politics. JPMorgan Chase is Brown's ninth largest individual contributor, giving him $73,855 during the election cycle, and is the only commercial bank among his top donors. Goldman Sachs is his fourth biggest contributor, giving $83,500, while Morgan Stanley has given $48,050.
But bankers' support of Brown is more likely due to his opponent. Industry representatives fear that if Warren wins, she may take a seat on the Banking Committee. (Unsurprisingly, bankers have not given any significant donations to Warren's campaign, according to available data.)
"If she were to win the election, she would have a real, serious choice between Banking and the [Health, Education, Labor & Pensions Committee]," said Isaac Boltansky, an analyst with Compass Point Research and Trading.
For now, the race is still a close one, though some polls have started showing Warren pulling ahead.
After calling the race a toss-up for months, Larry Sabato, director of the University of Virginia's Center for Politics, changed his rating for the race to "leans Democratic" earlier this month.
"Not only has Warren moved slightly ahead in the poll average … but Massachusetts is positioned to vote so heavily Democratic for president that coattail could take down Brown on Election Day," Sabato said in his Oct. 11 Crystal Ball report.
Ohio: Sherrod Brown (D) vs. Josh Mandel (R)
Democratic incumbent Sen. Sherrod Brown is currently edging out Josh Mandel, Ohio's state treasurer and a veteran of the Marine Corps, in recent polls, but the banking industry appears split on the contest.
Some bankers in the state say his first term in office has been a disappointing one.
"Sherrod is a bright guy and a nice human being, but he has been a disappointment to the Ohio banking industry," said Mike Van Buskirk, president and chief executive of the Ohio Bankers League.
Sherrod Brown, who was elected to the Senate in 2007 after more than a decade in the House, serves as chairman of the subcommittee on financial institutions and consumer protection.
"He held hearings on Dodd-Frank and small business lending … and said the right things, but the subcommittee hasn't done anything," Van Buskirk said, adding that Brown "sided with retailers" on the debate over debit card interchange fees.
But others said that Sherrod Brown, should he win, could play an increasingly large leadership role on the Banking Committee going forward. He's currently the sixth ranking Democrat on the panel.
As a result, bankers have been pouring money into both campaigns. Commercial banks gave $114,600 to Mandel during this election cycle, compared with $109,492 to Sherrod Brown, according to the Center for Responsive Politics.
Ohio-based Fifth Third Bancorp. ranks as Mandel's 20th largest contributor, giving him $19,750 during the cycle, according to the Center for Responsive Politics.
Sherrod Brown has been one of the top congressional advocates for breaking up the country's biggest banks, introducing legislation in 2010 and 2012 that would put stricter caps on bank deposits, liabilities and leverage. The issue has increasingly gained traction with a diverse collection of economists and business executives, and Sherrod Brown would be a key player in the debate should the issue come to the forefront in the Senate next term.
He has also been a supporter of higher capital standards, joining with Sen. David Vitter, R-La., in asking regulators to impose a tougher capital surcharge on the largest banks.
In the near term, Sherrod Brown may continue to focus on concerns around student loans, particularly as the Health, Education, Labor & Pensions Committee takes up reauthorization of the Higher Education Act, according to Boltansky. Sherrod Brown co-sponsored a failed bill to stop a hike in interest rates for federally-subsidized student loans last spring.
"There's enough of an overlap" on the issues, Boltansky said.
Sabato ranks the race as "leans Democratic," noting last month in a report that Brown is "not only favored, but we believe that Republicans and their allies ultimately might have better places to spend their money."
Montana: Jon Tester (D) vs. Denny Rehberg (R)
Sen. Jon Tester, who is struggling in his tight re-election race against Rep. Denny Rehberg, may be bankers' favorite Democrat.
Tester fought a battle against one of his own party leaders, Sen. Richard Durbin, in an ultimately unsuccessful effort to delay a Federal Reserve Board rule that capped interchange fees on debit cards.
Even though he lost, the banking industry clearly views him as a key Democratic ally. Commercial banks were Tester's sixth largest contributor, donating a whopping $312,568 to his campaign. Visa and JPMorgan Chase are his second and third largest individual donors, giving him $47,400 and $47,000, respectively. Wells Fargo has donated $26,250 to Tester, while Citigroup has given $19,000.
Ironically, the industry's strong support for Tester has been turned into a cudgel by Republicans (the party that has benefited the most from bank largesse during this election). The national Republican Senatorial Committee issued a new ad earlier this month focusing on bank contributions.
"Jon Tester went to bat for the banks… the banking industry is returning the favor," said the ad, according to a report in The Hill newspaper. "Big banks dumped money into Tester's campaign coffers. Jon Tester has reaped a windfall from contributions from banks and lobbyists."
Yet Rehberg has also received some, albeit much less, support from banks. The state's sole House lawmaker has received $12,300 from Wells and $11,833 from Bank of America, but commercial banks do not rank as one of Rehberg's top contributors.
Rehberg has also sought to use Tester's support of Dodd-Frank as an election issue, arguing the financial reform law has stifled economic growth. Tester, in turn, has fought back, arguing the law will eliminate too big to fail.
The law put "more cops on the beat to make sure Wall Street won't do it again," Tester said in an Oct. 14 debate, according to Dailyinterlake.com.
But Tester remains vulnerable, observers said. University of Virginia's Sabato currently rates the race as "leans Republican."
Nevada: Dean Heller (R) vs. Shelley Berkley (D)
Republican incumbent Sen. Dean Heller isn't on the Senate Banking Committee, but observers say his experience with banking issues makes him a valuable asset.
Heller, who was appointed to the Senate in May 2011 following the resignation of Sen. John Ensign, is locked in a tough battle with Rep. Shelley Berkley, who's served in the House for more than a decade.
Heller previously worked in the industry and later served as a lawmaker on the House Financial Services Committee, experiences that have won him the support of the Friends of Traditional Banking superPAC.
He "understands what traditional banking is, how it works and why it is critical to restoring our local communities and economies. During his time in the House of Representatives he served on the Financial Services Committee and helped promote policies that would preserve traditional banking in America," said Bill Uffelman, president and chief executive of the Nevada Bankers Association, calling Heller "a valuable resource to his colleagues on financial and economic issues."
Commercial banks were Heller's 15th largest donor, giving him $87,200, with B of A alone giving him $20,500. Commercial banks are not among the largest industry or individual donors for his opponent Shelley Berkley.
Sabato changed his rating in the Nevada race from "leans Republican" to "toss-up" in late September.
"Our Nevada sources believe Heller retains a slight edge over the challenger, Rep. Shelley Berkley, but Berkley may be the Western Warren — a not-so-strong candidate that Obama and his Democratic turnout operation might carry over the finish line," Sabato said in his Sept. 27 Crystal Ball report, noting the race could turn out to be a "roller coaster … with the lead trading hands in the stretch run."