Texas PACS: A Roundup of the Special Interests Driving Texas' Political Action Committees

home | table of contents | previous | next

Finance, Insurance
& Real Estate

Finance, insurance and real estate (FIRE) PACs accounted for 16 percent of all PAC spending; 38 finance PACs led the charge, spending 34 percent of all FIRE PAC money.

In recent years, large bank interests have swallowed up smaller banks (represented here by the Independent Bankers Association and the Texas Credit Union League). Banks, investment banks (Bear Stearns) and insurance companies also have rolled back a federal law that prohibited a single financial institution from simultaneously engaging in banking, securities and insurance services. In Texas, bank PACs spent $2.9 million; they focused much of these expenditures on their battle to repeal a state prohibition against home equity loans. Before these efforts succeeded in 1997, Texas was the last state to prohibit home equity loans, which can result in families losing their homes when they default on loans.

The three largest finance PACs—Compass Bancshares, Associates First Capital and NationsBank—spent 46 percent of bank money. Compass reported an extraordinary expenditure of $621,240, though it spread this money over three main states: Texas, Florida and Alabama. The Texas expenditures included payments of $52,406 to a home-equity group, the Texas Conference for Homeowners’ Rights, and $50,000 to 76 in ’96, a PAC seeking a Republican House Majority. The Compass PAC also gave $20,000 to Governor George W. Bush.

Ford Motor Company founded the finance company with the next largest PAC. Associates First Capital Corp. ($476,894) is one of the largest non-bank, home-equity lenders in the country. Since First Capital does not take money from federally insured depositors, it faces much less regulation than traditional banks. Critics charge that the company has exploited its lack of scrutiny to take advantage of vulnerable borrowers (see “Home Inequity Loans” below).

North Carolina-based NationsBank ($258,103), the largest financial institution in Texas, won a legal battle with the Texas Banking Commissioner over interstate branching in March 1998. Soon thereafter, NationsBank and BankAmerica Corp. announced plans to merge into the nation’s second largest bank. Community groups across the country have urged the Federal Reserve to block the merger. One merger opponent was Dallas-based Black Citizens for Justice, Law and Order. This group noted that NationsBank Texas denied loans to 47 percent of black applicants compared to 20 percent of white applicants.¹⁸

Insurance
The insurance industry spent more than $2.5 million, accounting for 30 percent of all FIRE PAC expenditures. The insurance industry has been a major proponent of recent changes in Texas tort laws, which have made it more difficult for aggrieved consumers to sue corporations and their insurers for damages. Although leading consumer groups have opposed weaker tort laws, supporters promised that consumers would realize major windfall savings in homeowners, renters and especially auto insurance. Three years after 1995 tort law revisions, however:

• The insurance industry says the potential savings were oversold by tort reformers and there is no windfall available for consumers;
• Consumer groups say Texans sacrificed their legal rights so the industry could pocket the resulting savings as windfall profits; and
• The Texas Insurance Commission insists that consumers have been treated to big cuts in insurance costs.¹⁹

An auto insurance PAC, United Services Automobile Association (USAA), dominated insurance PAC spending with $748,736, or 25 percent of all insurance expenditures. USAA bypasses independent insurance agents, selling insurance directly to military personnel. When the Texas Legislature passed bills in 1995 to discourage racially discriminatory sales practices known as “redlining,” USAA had a provision inserted that exempted membership-based insurance companies such as itself.

Next after USAA came Farmers Insurance ($447,665), the Texas Association of Life Underwriters ($396,920), the Texas Association of Insurance Agents ($314,372) and American General Corp. ($255,502). Four locally based Independent Insurance Agents PACs spent another $107,323.

Real Estate
Thirty-four real estate PACs accounted for 29 percent of all FIRE PAC spending. Just three mega real estate PACs, along with their 22 locally based affiliates, spent 91 percent of all real estate PAC money.

The Texas Association of Realtors and four local Realtor groups led the land rush, spending almost $1.5 million. The Texas Apartment Association and 15 local chapters spent $636,473. Some commercial real estate and apartment developers backed tort legislation in 1997. Their bill would have shielded from lawsuits those apartment, store and shopping center owners who fail to invest in security measures to protect customers from assaults. This bill went down in flames when legislators and the public learned that the bill was so broad that it even would protect grossly negligent nursing home owners.²¹

Four Real Estate Councils representing big developer interests spent $193,021. The Real Estate Council of Austin (RECA)—where development battles have reached the most fervent pitch—spent the most political capital ($117,958). Other leading commercial real estate PACs active in Austin are the Texana II PAC ($27,200) and the Texas Government PAC (19,950).

The two largest PACs affiliated with individual commercial development concerns are also based in Austin. Both FM Properties ($81,950) and JPI ($44,350) are major developers of land over the environmentally sensitive Edwards Aquifer recharge zone, ground zero for the City of Austin’s attempts to control urban development. Both companies have ties to David Armbrust, RECA’s director and the treasurer of Texas Government PAC.

Accountants
Accountants accounted for 8 percent of FIRE sector PAC expenditures. The Texas Society of Certified Public Accountants and four local chapters spent $606,138, or 92 percent of all accountant PAC money. Other leading accounting PACs include Coopers & Lybrand ($27,000), the Texas Association of Property Tax Professionals ($19,318) and Ernst & Young ($5,215).

A hot item for this group is its quest for “privity tort reform,” which would make it difficult to hold accountants and auditors responsible for malpractice. The Texas Legislature has passed many “tort reform” bills on the basis of anecdotes rather than hard numerical evidence of lawsuit abuse. But members of the House State Affairs Committee lost patience at a 1997 hearing on a privity bill when even the accountants testifying could not quantify their claim that they have been blindsided by a blizzard of frivolous lawsuits.

home | table of contents | previous | next