WASHINGTON — With the 2010 elections close at hand, Democrats are at risk of losing their No. 2 lawmaker on the House Financial Services Committee.
Rep. Paul Kanjorski of Pennsylvania barely beat back an election challenge two years ago, helped by a groundswell of support for Barack Obama.
But without a presidential contest and down in the polls, Kanjorski is once again in the race of his life. If he is not re-elected, the banking panel’s leadership would be shaken up and there could be significant repercussions for banks, credit unions and the Federal Home Loan banks.
Some bankers sounded as if they would be happy to see Kanjorski go. The Pennsylvania Bankers Association said it was frustrated with his votes on regulatory reform and his avid defense of credit unions.
“During the financial regulatory reform there were offices where we were basically shut off,” said James Biery, the trade group’s president and chief executive. “We had a difficult time expressing our views to Kanjorski.”
Biery said the group particularly objects to Kanjorski’s attempts to bolster credit unions, a longtime foe of the banking industry.
“Obviously one of the differences of opinion that we have is that he’s been a primary advocate for the credit union industry forever,” he said. “So we vehemently disagree with his position on the credit unions. We have not supported Congressman Kanjorski for a number of years in his election.”
But some in the banking world back Kanjorski and see him as an ally in other fights.
“He has a very good understanding of small business and a strong understanding of the role of small banks and community banks,” said Camden Fine, president of the Independent Community Bankers of America. The ICBA’s political action committee has given Kanjorski the maximum contribution of $10,000 this election cycle.
“We don’t always agree with Rep. Kanjorski on his positions, but I don’t think there is any association or group anywhere that agrees 100% with every position taken by every candidate,” Fine said. “What you have to look for is whether that candidate has a good understanding of your issues … and certainly Rep. Kanjorski does.”
Fine said one reason the group is supporting Kanjorski is that he has the leverage to add provisions to major legislation. During the regulatory reform fight, Kanjorski successfully included a measure that would give regulators the power to break up big banks — a provision the ICBA supports.
“He has a great deal of experience as a legislator, and because of his seniority can get things done,” Fine said.
Kanjorski is also one of the few members of Congress consistently well informed and engaged on Federal Home Loan bank issues. He has encouraged the Home Loan banks to do more community development and help boost small-business lending, but he has also defended them whenever a legislative threat emerged.
John Price, the president and CEO of the Federal Home Loan Bank of Pittsburgh, said it would be a shame to lose someone like Kanjorski.
“He has been a very, very informed and strong supporter of the Home Loan Bank System,” Price said. “We don’t take positions on races, but … you hate to have that expertise disappear.”
Price cited Kanjorski’s championing of economic development programs and his pushback against accounting rules.
His “consistent” interest in economic and community development programs helped spur the Pittsburgh bank’s “Banking on Business” program a decade ago, which has led to the creation of thousands of jobs, Price said.
Despite the mixed views about Kanjorski among the financial services industry at large, commercial banks still are big donors to his campaign. They rank sixth, with $59,400 this election cycle, according to data as of Aug. 1 from the nonpartisan Center for Responsive Politics.
Much of that came from one institution. Among individual corporate donors, Bank of New York Mellon Corp. was Kanjorski’s second-largest contributor, giving him $24,150 during the cycle. The company declined to comment, but much of its work force remains in Pennsylvania. Its political action committee accounts for only $7,000 in contributions, with the rest coming from individuals who work for the bank.
Brian Gardner, an analyst with KBW Inc., said bankers would probably rather see Kanjorski win than have the No. 3 on the panel roster move up a spot.
“While some of the banking industry probably isn’t thrilled with some of his votes during the financial regulatory debate, he still is No. 2, and after him is Maxine Waters,” Gardner said. “The industry has better relations with Kanjorski than they do with Waters, so there’s probably some sense that they want to have a bit of hedge there.”
Kanjorski’s biggest donations come from the insurance, securities/investment and real estate industries, which gave him $205,100, $204,400 and $107,900, respectively. Although credit unions consider Kanjorski a priority for their election giving, they rank 14th in contributions to his campaign, at $18,300. Among individual contributors, the Credit Union National Association ranks fifth in donations to him, with $13,300 so far this cycle.
Credit union representatives hail Kanjorski as a top supporter of their industry. He has introduced multiple versions of the Credit Union Regulatory Improvements Act that would provide regulatory relief to credit unions; modernize their capital standards; allow credit unions of all charter types to serve underserved areas; and raise their small-business lending cap.
“His race matters,” said Brad Thaler, the director of legislative affairs for the National Association of Federal Credit Unions. “Obviously, it’s one of the top races we’re following, and we’re doing everything we can to support him.”
As chairman of the capital markets subcommittee, which includes oversight of the government-sponsored enterprises, Kanjorski is also expected, if re-elected, to take a lead role in the debate over the future of housing finance.
He has already co-sponsored a bill with New Jersey Republican Rep. Scott Garrett to establish a covered bond market in the U.S. as a way to expand mortgage credit. The bill passed the House Financial Services Committee in July and is expected to be taken up by the full chamber later this year.
Whether Kanjorski will be re-elected, however, is very much in doubt. He barely won, with 52% of the vote, two years ago, a victory largely attributed to support for President Obama.
The dynamics are obviously different this time around. The president’s approval rating is down, the anti-incumbent sentiment has lingered if not grown, fewer Democrats tend to turn out in midterm elections, and Independents are expected to gravitate toward Republicans this year.
Kanjorski’s district, nestled in northern Pennsylvania coal mining country, is mostly white and blue collar. It is facing a weakened state economy, aged infrastructure and hefty pension fund obligations. Kanjorski’s challenger is Lou Barletta, who ran against him in 2008 and 2002. The mayor of Hazleton and a staunch opponent of illegal immigration, Barletta has been putting Kanjorski on the defensive every chance he gets.
Barletta seized on comments Kanjorski made during the financial reform conference to imply he was racist, sparking a campaign controversy.
“We’re giving relief to people that I deal with in my office every day now, unfortunately,” Kanjorski had said during the conference. “But because of the longevity of this recession, these are people — and they’re not minorities and they’re not defective and they’re not all the things you’d like to insinuate that these programs are about — these are average, good American people. Most of them have been veterans or served, responsible, have worked all their lives, but they’re not full of money. They live paycheck to paycheck.”
Barletta issued a press release saying that “Kanjorski, in his own words, said … that minorities are not 'average, good American people.’ This is outrageous and shows how out of touch Kanjorski is with the real world.”
Kanjorski countered that his words had been taken out of context. A spokeswoman said at the time, “The Congressman was stating that many people insinuate that those who benefit from government programs are those not looking for jobs, but that those suggestions are wildly inaccurate.”
Several prominent minority members who served on the conference committee leapt to Kanjorski’s defense, including Reps. Waters, Mel Watt, Gregory Meeks, Elijah Cummings and Luis Gutierrez. They said in a letter that they were “greatly disturbed” by the twisting of Kanjorski’s comments.
“We know Congressman Kanjorski is a strong supporter of minorities and all Americans,” the letter said.
Kanjorski has made financial reform a key part of his campaign. During a press conference Aug. 23 in Jenkins Township, Kanjorski praised the law.
“It’s going to help citizens from northeastern Pennsylvania. Never again are we going to be called upon to pay the money necessary to get the banks out of debt,” he said at the event.
Former Rep. John J. LaFalce, who served with Kanjorski on the Financial Services Committee, said it would be a mistake to count him out of the race.
“Paul has always had tough races, especially within the past decade,” LaFalce said. “But he has survived that and he is a survivor. I think the leadership role that he has on the committee will stand him in good stead.”