With all the corporate political contributions, why aren't stockholders hitting the ceiling?

[Frustratedlady]

If I had a bunch of money in a corporation that was doling out millions of dollars to these clowns, I'd be irate. That money is coming from potential profits, right? Stockholders get a percentage of profits, right? Where is the outrage?

I know we have financial gurus
on here, so I'd like to hear an explanation of why we aren't hearing angry protests on this issue.

[SharonAnn]

1. They are expecting these "investments" to yield significant returns.

It has been shown that million dollar "investments" in politicians can result in tax breaks worth billions of dollar.

That translates to increased profits and thus increased bonuses and dividends. Stock goes up!

[The Traveler]

3. +1

Exactly.

[Capitalocracy]

25. Pretty much the best investments that exist

Better than being a drug lord.

[The Traveler]

2. Probably because the perception is

that political contributions are not only necessary but a profitable and useful investment.

I regard that as being a rather powerful statement about the condition of our democracy. And so far, the only significant public push back has been the "OWS/99% movement".

Trav

[laundry_queen]

4. That's interesting

I'd never really thought of it that way but if a corporation is using parts of their profits and decreasing their net income, then yeah, if that corporation dishes out cash dividends, the stockholders could get irate if they assume their dividends are going to political parties. Perhaps they all believe they are going to get something back and view this as an 'investment'?? I dunno.

If there's no cash dividend and the contribution isn't eating THAT much into profits (what's a few million when you have billions in profits?) and not having an effect on stock price, then they probably don't care.

BTW, totally not a financial guru, lol, but in school for accounting/business right now. I'm sure there are people here who know more than me that could explain it much better, or correct what I've said.

[jsmirman]

7. I don't know if contributions would fall under the "business judgment rule"

because there is a certain benefit to making such contributions.

I'm pretty sure an excuse used in the past for more clearly charitable contributions is the idea that a corporation, under some schools of thought, has a responsibility to the community it "lives" within, and so charitable contributions (which sometimes are/were tax boondoggles for the higher ups) could be seen as an appropriate exercise of "business judgment."

Derivative suits are hard to bring for reasons I cite in another post in this thread, but the biggest problem is that the "Business Judgment Rule" cannot be overstated as an out for corporations. Put most simply, it means if anything can be said to be just an act of the officers of the company exercising what they reasonably think to be their best business judgment in a situation, a derivative suit won't win.

Direct actions involve statutory causes of action and common law causes of action, and so a corporation can't hide behind the Business Judgment Rule. There are elements, for example, for the common law cause of action of fraud, and if you, as a plaintiff, can meet these elements to show that in your capacity as a shareholder, you were defrauded, you can win (not easy, unfortunately).

In a Direct action, you are suing the corporation; in a shareholder derivative suit you are suing on behalf of the corporation in an effort to return misused funds to the corporate kitty and all shareholders, or to correct a current course of action the corporation is engaged in.

[Frustratedlady]

16. I wouldn't complain about charitable contributions to the communities...

My complaint is strictly in regard to unregulated political contributions, of which most are to the Republican Party (I'm guessing here, but feel pretty sure I'm right). I realize the businesses and corporations try to "spread it out" over both parties, but this new ruling by the SCOTUS gives them free rein to do whatever they wish and I'd bet a steak dinner it ain't toward the Democratic Party. Even if it was, it's wrong.

I'm just an old woman thinking off the top of my head, but, to me, skimming off the profits to give political parties power to manipulate laws to screw us even more, is wrong. While I'm at it, high salaries to management and obscene bonuses are also wrong. The losses we already took from Wall Street should have humbled all of them...corporate and financial...but it appears they didn't even blink. I'd think more than the OWS would be marching with pitchforks, tar and feathers. I'm too old to march, but I'd sure come up with the supplies.

Just my 2 cents...and it didn't come from any corporation.

[jsmirman]

17. Those can be serious end-arounds, though

See Mellon's "contribution" of his art collection - the cause of a serious political controversy back in the day.

The money, as best I understand goes to both parties. I *think* it goes more to the Republicans, while the Dems money comes more from individuals of crazy wealth funneling money into things that are not direct pay to candidates.

Believe me, what's wrong with Wall Street - I could go on and on and on about it. Worked on the Stret long enough to get a working knowledge - the whole system is rigged. And not only are there people who should be in jail and are not, but those who get sentenced get these namby-pamby sentences while people with addictions rot away in our prisons.

[Frustratedlady]

21. I agree on WS. I am particularly concerned about the mega computer banks trading 24/7.

I find it amazing that Martha spent time in prison, but these WS jokers aren't touched. I don't think any of the "guards to the door" are watching, are they? I see them pop up once in a while with a small case resulting in fines of a dime to the dollar. The crooks probably take that off their income taxes as a cost of doing business.

It is frustrating, thus my user ID.

[jsmirman]

35. It is too long a topic to get into in depth

suffice to say that I find it infuriating, and Obama's interaction with Wall Street represents one of my deepest disappointments with the administration.

The guards are *sort of* watching a little more closely now, but the rules still don't work, the accountability and consequences still aren't there, and the game is still rigged. If this were the game of monopoly many of these folks would be playing endless "get out of jail free" cards that would entitle them to skip jail and instead spend the night at Park Place. How can people not be infuriated?

[Sanity Claws]

5. Because stockholder lawsuits are so hard to bring?

I haven't had time to research this but I've wondered why shareholders aren't suing/ protesting/ whatever regarding the exorbitant pay that top management gives itself.
Didn't Congress make it harder to sue corporate management, claiming that derivative suits were frivolous?
I think the issue you raised and the one I raised are related and probably have the same basis.

[Frustratedlady]

9. Yes, I've wondered about executive pay, as well.

Executive pay and bonuses have gotten out of hand. In my day, management's raises were based more on a percentage of the average workers' pay, unless they captured a fantastic deal that increased profit, which generated a special bonus.

[jsmirman]

6. For one, stockholders are generally ignorant

of the things done by the companies they invest in.

How many people really know what's in their portfolio, if you have a portfolio?

Let's say you're invested through a mutual fund. Well then, your purchasing power has been added to that mutual fund, but the mutual fund is purchasing the actual shares and making other investments, so you are at another level of remove from the companies you "hold shares in."

There are ways to find out what your mutual fund is holding/has been holding, but it is an imperfect process (they'll report what they were holding at the end of a quarter, for example, but they move in and out of shares daily, and therefore the report is just an incomplete snapshot).

When it comes to derivative suits, what was said in this thread is not correct - of course they are not frivolous by definition or anything like that. Are they hard to bring, though? Yes, there are some rigorous hoops to be jumped through before you can bring a derivative suit (the toughest one is the process of showing that you've exhausted all efforts to get the company to bring the action on behalf of "itself" (this is why they are called "derivative suits) against the offending conduct).

Shareholder resolutions? The *successful* protest resolutions get maybe 30% support (no winners, just enough weight to get a message out and a pr opportunity).

The easier shareholder suits to bring are *direct* shareholder actions, but these probably aren't an easy fit for these situations. If you could, say, claim fraud in the way these donations are being made and shareholder resources are being distributed (you technically do own the company), you could probably bring a direct shareholder action.

I am interested in a different area of direct shareholder actions, so I don't know exactly what has and hasn't been tried with regard to corporate contributions. But the above, I hope, gives you some picture of some of what the situation is here.

[jsmirman]

18. Folks, some pretty essential information is right here ^^^^^

sorry to self-tout here, but if you want to have any serious answers to the questions posed in the OP, some, you know, hard information like what I tried to present may be a better starting point than just pounding out rhetoric.

[Frustratedlady]

31. I have read and stored the information you presented. I appreciate your thoughtful input.

I think we can all agree that the SCOTUS ruling on corporate donations was wrong. How that affects stockholders is a personal choice, but after seeing all the corruption and cheating that has been going on over the last couple decades (at least), I should think stockholders would prefer their corporation quit playing games with politicians and put that money into new product design.

I worked in engineering for years and I can't imagine where industry would be now if those companies in the 50-60s had thrown cash around the political arena rather than investing in new equipment, research and development. To me, this money could be better spent in improving industry and leave politics to the clowns who need their egos stroked.

[jsmirman]

34. Good to hear

I didn't want you to miss what I think is pretty solid information on the topic.

I am the farthest thing in the world from an expert on the history of campaign contributions, but I *think* corporations have been funneling money into political campaigns since time immemorial, initially, directly, and later through bundling and indirect donations (to PACs).

As I was saying, the disconnect between the people who actually own the publicly-traded/held shares and the officers/Board of Directors is, imo, the biggest thing that allows CEOs to do as they please in this regard, without getting called on the carpet.

Believe me, I'm with you. I think I'd be content with zero corporate dollars ever flowing into the political arena.

[banned from Kos]

8. What corporate contributions? Link please. Obama took no corporate money in 2008.

Maybe others do.

[Frustratedlady]

10. I was referring to the new corporate contributions to political campaigns without limits. I didn't

mention Obama. ????? your post.

[banned from Kos]

13. Well, there is no evidence of that either - from what I can tell.

I am 99.9% sure Adelson gave his personal $5 million (or more) to Gingrich's PAC and not the money of Las Vegas Sands.

There are some corporate PACs however. I know my old company donated to the DNC. I think you raise a great issue, btw. I ask because I would like to know more. The corporate PACs I have seen are mostly tiny - $50,000 or so.

Yes, if a company dropped $5 million into a PAC the shareholders should be outraged.

[Yupster]

37. Each time I contribute to a candidate

I have to fill out a form and get my company's approval. They've never turned me down. That donation is recorded and a total of how much was donated from my company is given to the government.

I have always assumed that when they talk of corporate donations they are talking about how much all the employees of each business gave rather than the actual corporation giving. I know my company doesn't give, but the 22,000 employees give a lot.

I don't know that to be true. That's just how I always understood it.

[JackRiddler]

12. Really?

So when Goldman and Citi etc. executives bundle together millions in "personal" campaign donations, and this gets them into offices and political soirees where they discuss Wall Street issues, and then after the elections Goldman and Citi executives magically show up as appointments to the new administration, it's all somehow unrelated and coincidental?

[banned from Kos]

14. The $35,000 a plate donations go to the DNC, don't they?

Minus the $2300 maximum personal donation for the President.

Wall St got screwed by Obama then given the onerous regulations they now have. Must be why Jamie Dimon has abandoned him.

[JackRiddler]

15. "Wall St got screwed by Obama"

"the onerous regulations they now have."

Note: I don't do ROFL smilies. But if any post has ever earned them!

The Wall Street banks only exist today, and can only continue their perpetual extraction of profit out of the productive economy and subjugation of whole nations to debt slavery, because after the Bush regime started the rescue package to keep the criminal banks in business, the Obama administration continued and expanded on it: AIG, Citi and BoA bailouts, TARP, support for the Fed unlimited self-service windows, allowing guaranteed interest rate arbitrage (loans to banksters at 0%, government bonds at 3-6&), taking hundreds of billions in private toxic assets into the public sector, appointments of Wall Street stooges to all key economic positions, reappointment of Bernanke, and, of course, since the spring of 2009 suspending mark-to-market (officially ending capitalism as it applies to capitalists, although of course it still applies to the rest of us patsies).

Just you wait. The learning curve is accelerating. I wonder what Goldman and Co. will do later this year, when 200,000 people are marching in downtown Manhattan, chanting "Mark to Market! Mark to Market!"

[banned from Kos]

19. You spend too much time at ZeroHead. Mark-to-market has been legit since 1993.

FAS 155/157. http://en.wikipedia.org/wiki/Mark-to-market_accounting

Mark-to-contract would over value their bad loans and put them into jeopardy.

The interest rate spreads are nowhere near 3-6%. And the big banks have $1.6 trillion at the Fed that pays only .0025% interest.

Geithner nicked Citi for $12 billion and Bank of America for $5 billion.

There are no toxic assets taken into the public sector other than tiny little Maiden Lane (which are profitable)

Bernanke's term at the Fed is 2007-2020. His vote is the same whether he is chair or not.

Your whole post is riddled with errors.

[JackRiddler]

33. Huh?

I said mark to market requirements were suspended in the spring of 2009. This allows the banks to value their assets to model or to contract. That doesn't mean the banksters aren't allowed to mark to market, it means they can mark-to-fiction instead. This allows them to disguise that the zombie institutions (BoA, Citi, JPM) remain insolvent and will crash again, necessitating their just liquidation or further bailouts.

Your response is a non-sequitur and makes no sense. The rest is similarly evasive of addressing anything I said.

Here, I give you your magic Winner Words back: "Your whole post is riddled with errors."

[JackRiddler]

11. Because political influence is effectively the corporations' best profit center?

In the political influence game, a million dollars in campaign donations and lobbying can and often does lead to tax breaks, subsidies, regulatory benefits and government contracts worth billions. If they accounted political activity as a profit center (and why not?), then it's doubtful any other investment pays off at a higher margin of profit. To be sure, although they'll deny it, corporate managers are generally committed ideologues. But this is also pure capitalism at work.

As human beings, shareholders may find this behavior odious. Under the law, however, they are shareholders only. It occurs to me that they could sue corporate management for fiduciary malfeasance if management fails to exercise political influence by every legal means. And now that in politics (and most other things) anything money wants is legal, you might see that: shareholder suits alleging CEOs were irresponsible for not giving higher payoffs to friendly politicians.

[joeglow3]

20. Did they release a listing?

[jwirr]

22. I often wonder about the stockholders. Not only about these contributions but don't they give a

damn about what is being done in their name? Outsourcing, fracking, deep water drilling, layoffs, and a lot of other things that is hurting their country. Where are they at?

[Frustratedlady]

23. I agree. Must be that the yearly reports are in such small print and so complicated to read...

who'd know what they were supporting with their funds?

I don't know what the answer is, but I DO know that this financial environment and corporate practices have got to change and change quickly. They are eating us up.

[gratuitous]

24. This is one of those differences between corporations and unions

There are folks who will try to sell you on the notion that "unions do it, too," but that isn't necessarily the case. Corporations can spend their money without restraint, pretty much. Unions, through the helpful offices of our faultless elected officials, have to segregate out every penny they spend to satisfy the folks who would like a free ride. Workers who belong to a union but hate paying union dues have successfully persuaded the courts and the legislatures that any expenditures not directly spent on collective bargaining is an unfair "taking" from them. While union-hating workers are largely constrained to pay their "fair share" for the benefits they receive through their contract (wages, pensions, time off, etc.), they don't have to pay for lobbying expenses whereby a union might secure for them a safer working environment or paid time off or job security in case of an extended absence.

Unions that make contributions to candidates and office-holders who look out for working people are also constrained from expending the precious money bestowed on them by the fair share free riders. They also have to account for every penny and are subject to independent audits, giving back any money they may have inadvertently expended on a non-allowed activity.

Corporations, however, have no such reporting or accounting obligations. If they decide to spend a million bucks on a lavish party for their board members and a bunch of corrupt public officials, and that reduces your dividend payment, well, that's just the way it is. But if a union sends a letter to a governor thanking that person for vetoing a "right to work for less" bill, that 44 cents by golly better not come out of the general fund or there will be hell to pay from the free riders.

There is no equivalency between corporation and union abilities to spend money to influence politics.

[librechik]

26. Also, the power of shareholders vs the Exec boards is shrinking

The same a-holes who make life easy for corporate raiders are making it difficult for shareholders to have a say in let alone control them.

same deal in the UK:
http://www.bbc.co.uk/news/business-16467402

[Frustratedlady]

36. We ape each other in many ways.

Some people would even say the US has its own royalty...

Good to see ya!

[former9thward]

27. It has been illegal for corporations to contribute to federal candidates since 1910.

Corporations do not contribute anything to individual candidates.

[banned from Kos]

28. And here is the list of recipients from the PAC organized by Goldman Sachs for 2008.

http://www.opensecrets.org/pacs/pacgot.php?cycle=2008&cmte=C00350744

Notice who is missing?

[former9thward]

29. No I don't notice.

But that is a PAC. Corporations can't contribute directly to candidates.

[banned from Kos]

30. I agree with you. Unfortunately I replied to your post.

It was meant for others.

[hobbit709]

32. If you had a bunch of money in these corporations, you'd be one of the 1%

Stock now is no longer traded based on the dividends it pays, it's based on how much the share value increases.