As we’re in the prime of election season, I figured it should be the theme of this week’s missive. And no, not the issues or the merits of any candidate (or lack thereof), once again I’m talking money. Tons of money.
Since the Senate races appear to be the key factor this year, I looked solely at these elections for purposes of this post. I first looked at the money last year and wound up with as many new questions as I found answers. Yet the main thesis was (and remains) that political campaigns can be a source of low-cost deposits for banks. Not just a source, but a lucrative one at that.
Each of the major parties have a go-to bank, Chain Bridge for the Republicans and Amalgamated (AMAL) for the Democrats. Chain Bridge also is the home for most, if not all, of Trump’s PACs. As you can see, we’re talking some real change here.
Getting back to the races, per the Federal Election Commission, the top 4 fundraising campaigns were:
- Raphael Warnock (D-GA) – $123,504,253.43
- Mark Kelly (D-AZ) – $81,813,866.37
- Val Demings (D-FL) – $73,285,353.59
- John Fetterman (D-PA) – $57,281,374.12
For our purpose the source of funds is irrelevant. What is relevant is the fact that all four are democrats and all have accounts at Amalgamated. For those keeping track, the running total with this subset is $335.8M.
On Amalgamated’s recent earnings call they stated: “Deposits held by politically active customers were $1.2 billion as of September 30, 2022, a decrease of $123.7 million on a linked-quarter basis. As noted on our previous call, political deposit trends are difficult to predict and we have seen strong spending by candidates earlier in the cycle as races tighten across the country. As a result, we now expect our political deposits to bottom at approximately $0.7 billion to $0.8 billion in the fourth quarter when the midterm election cycle concludes, before starting to rebuild in the first quarter of 2023.” Cha-ching!
There are other sources of no or low-cost deposits for banks to tap including tax receipts (city, county, state), escrow accounts (title, legal) and HSA/FSA accounts. These are the types of banks I like to find, particularly in these inflationary times. As interest rates rise, it doesn’t require much intelligence to beat the spread with short-term Treasuries.
Next week will be the monthly report but I’ll provide a little guidance with seven more dividends slated to arrive tomorrow. It appears that I’ll fall a little short on the Y/Y. I was hoping to avoid that outcome, but the exchange rate has not been cooperative. Power Corp is paying November 1st rather than late October – so next month should be a little heavier than normal. Unless I get a little luck …
Here’s wishing you a fruitful week ahead and vote your conscience.
Seeking Returns 