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June 30, 2000

A Bet on the First Lady and Lazio Street's Difficult Choice in Controversial Se

By William Hoffman

Also in this article

  • A Bet on the First Lady and Lazio Street's Difficult Choice in Controversial Se

The securities industry is hedging its bets, but the bulk of the money is headed for now to the challenger. Should Wall Street stick with an old friend or try to curry favor with a pol who may be on the rise?

The late substitution of Rep. Rick Lazio for Mayor Rudy Giuliani in the New York U.S. Senate race with First Lady Hillary Rodham Clinton introduces a fascinating twist to the most widely followed statewide election.

"I think it's going to be an incredibly tight race," said Daniel Gross, veteran reporter and pundit of New York politics, as well as the author of "Bull Run: Wall Street, the Democrats, and the New Politics of Personal Finance" (Public Affairs Books).

Darling of Wall Street

Lazio is a darling of Wall Street, said Dan Michaelis, a spokesman for the Securities Industry Association. Lazio sponsored Section 31 fee reduction legislation. He's had a seat on the influential House Banking and Financial Services Committee since he came to Congress from Long Island in 1993.

A Securities and Exchange Commission directive prohibited Giuliani from accepting contributions from the bond industry.

As a member of the House of Representatives, Lazio does not have the same limitations, noted Larry Makinson, executive director at the Center for Responsive Politics, a non-profit nonpartisan group that researches the influence of money in politics.

The securities industry is already making its influence felt, as Federal Election Commission reports analyzed by the center reveal.

As of early June, contributions from securities and investment firms constituted the second largest category of financing for both campaigns: $334,615 of $12.8 million raised for Hillary, compared to $149,650 of $2 million for Lazio. However, Lazio's industry support is less certain than federally-mandated reporting suggests.

According to the CRP analysis, 90 percent of Clinton's donors included full-identity disclosure, compared with 66 percent of Lazio's; 34 percent of Lazio's donors refused identification, compared to just 9 percent of Clinton's.

The big dogs of Wall Street often hedge their bets. Goldman Sachs is the second largest contributor to both campaigns: $39,450 for Hillary, $28,500 for Lazio. Citigroup, Inc., and Ernst & Young, LLP, also contributed to both candidates. Skadden, Arps, Credit Suisse First Boston, and Bear Stearns & Co. have given heavily to Clinton. Merrill Lynch & Co. and Bankers Trust appear to prefer Lazio.

Sign of Support

If campaign contributions are a good sign, AXA Financial likes the congressman almost three times as much as the First Lady. AXA contributed $30,350 to Lazio and $12,150 to the First Lady.

However, some trade groups haven't made any contributions. Michaelis at SIA and Lee Korins, president of the Security Traders Association, both said their groups have not made contributions to either candidate yet. Makinson, at CRP, noted that, in the past, finance interests contributed "vastly" more to Lazio's House campaigns than any other industry.

"It's the only long bar in his profile" on the publicly-available CRP Website (http://www.opensecrets.org), he said. Makinson attributed that dominance to Lazio's House Banking committee assignment, and to the influence of his congressional district near the center of Wall Street activity. Gross said, "It's not going to be a local race in any traditional sense."