Defining PACs

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Political Action Committees

Source: NBC Latino

Each week, we seek to find relevant information that consumers can use in their everyday lives. Our goal is to provide accurate facts that perhaps aren’t exactly mainstream – especially for a consumer financial blog. Still, we know there’s much more to the consumer’s life than interest rates. This week, we take a look at Political Action Committees, or PACs as they’re most commonly known as.

There are many banks and credit card companies that play a significant role in and have deep interests in how the presidential election turns out. To suggest the average consumer has an interest in how their respective banks and credit card companies are approaching the variable within the political sector is an understatement.

Political Action Committee (PAC) is best defined as a political committee organized for the purpose of raising and spending money to elect and defeat candidates. Most PACs represent business, labor or ideological interests and each PAC can earmark up to $5,000 to a candidate committee per election (primary, general or special). They can also give up to $15,000 annually to any national party committee, and $5,000 annually to any other PAC. Further, they can also receive up to $5,000 from any one individual, PAC or party committee per calendar year.

A PAC must register with the FEC within 10 days of its formation and it must provide a name and any addresses on record for the PAC, its treasurer and any other connected organizations – even if those connections are remote at best. Affiliated PACs are treated as one donor for the purpose of contribution limits. Naturally, it’s easy to understand that with so many opportunities, some bodies are able to give such handsome contributions.

These groups have been around since the mid 1940s when the Congress of Industrial Organizations (CIO) was formed with the goal of ensuring President Roosevelt remained in office for another term. These monies came from contributions from the many unions’ members versus the actual unions themselves. It had the Smith Connally Act to look out for, after all.

While no one has current numbers as of yet – it can be challenging pulling all of the information together during an election year – we do know the collective financial industry spent more than $42 million in lobbying efforts last year. And if you’re wondering who the loudest are with their contributions, you might be surprised to learn the American Bankers Association, JPMorgan Chase and Citigroup were major contributors to the industry’s efforts, each spending more than $4 million. Not only that, but an advocacy group, Consumer Watchdog, released a report last year that tells the tale;

34 members of the U.S. House of Representatives that offered amendments to weaken consumer protections in the House financial reform package received $3.8 million in campaign contributions from the financial sector in 2009, an average of $111,000 each.

Another regulatory agency found similar surprises: the Center for Responsive Politics analysis found, in its most recent efforts, that senators opposed to the financial regulatory reform bill received 16 percent more in career campaign contributions from the finance, insurance and real estate industries.

Interested in learning more about where our banks are throwing their weight? You can learn more about PACs from the FEC and its publications, “Campaign Guide for Corporations and Labor Organizations” and “Campaign Guide for Non-connected Committees”. These .pdfs, along with a host of more information, including acronyms, definitions and all of the PACs since the early 1970s, at opensecrets.org, which is the Center for Responsive Politics.

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About Author

David is a CPA and has spent the past decade as a financial adviser helping clients meet their fiscal objectives. With an appreciation for journalism, he has spent the past few years overseeing several financial columns as well as writing two previous finance blogs. He resides on the East Coast with his wife and two sons and has guided many through the recent recession while providing a no-nonsense approach to spending and saving.


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