The Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. have over the past 2 1/2 years received taxpayer-financed contracts to help manage the sale of more than $3 billion worth of bonds for New York state, according to a review of state records by International Business Times. The three banking companies secured this lucrative line of business during the same period they delivered more than $132,000 in campaign contributions to Gov. Andrew Cuomo through political action committees under their corporate control.
The Cuomo administration handed out the bond-sale work to these banks despite federal rules that bar the firms from getting such business if they have donated campaign funds to the governor. The rules are designed to prevent public officials from awarding the bond work to their favored contributors, rather than awarding that work on the basis of the best fees and interest rates charged to taxpayers.
As IBTimes reported Thursday, Cuomo officials have since October designated the three banks as the dealers handling $100 million worth of affordable-housing bonds. But a broader review of New York state records going back to 2012 found a total of 27 separate bond issues that the three banks have handled since the governor began receiving contributions from them. A Cuomo administration representative told the IBTimes this week that the government business was handed out without competitive bids.
The federal rule says firms cannot engage in state bond work for two years after they make campaign contributions to state officials who oversee the bonds. Cuomo’s administration gave the donors the profitable work selling and underwriting the state’s bonds in the same two-year window that the donor firms’ PACs gave Cuomo the campaign contributions.
Representatives of the three banks in question told IBTimes they are in compliance with the rule because, they said, the executives who manage bond business did not contribute to the PACs that gave to Cuomo. The banks declined to identify those executives, so their claims could not be verified. Meanwhile, regulators and ethics experts questioned the basic premise of the banks’ legal rationale. They noted the rule says it covers “any” PAC controlled by a financial firm serving as a state bond dealer, and it includes provisions designed to prevent banks from circumventing the rule by channelling money through PACs.
The housing agency that delivered the bond work to Cuomo’s donors was until recently headed by Cuomo appointee Bill Mulrow -- a Blackstone Group LP lobbyist who was subsequently appointed to serve as the governor’s top aide. Some of the firms’ contributions to Cuomo came within weeks or months of them receiving bond work:
- JPMorgan’s PAC gave Cuomo $15,000 April 10, 2013, and the Cuomo administration announced the firm would serve as an underwriter on a $46 million bond issue May 30, 2013.
- Citigroup's PAC gave Cuomo $15,000 May 1, 2013, and Cuomo officials named the firm an underwriter on a $61 million bond June 19, 2013.
- JPMorgan’s PAC gave Cuomo another $10,000 July 2, 2013, and the Cuomo administration named the firm an underwriter on another $36 million bond in August 2013.
- Bank of America’s PAC gave Cuomo $15,500 July 2, 2014, just after the firm had been named an underwriter on a June 2014 bond. Cuomo’s administration would subsequently name the firm an underwriter on a separate $185 million bond in March 2015.
The disclosures that Cuomo officials funneled bond work to the governor’s campaign contributors have landed amid a sprawling federal corruption investigation of Albany lawmakers and alleged favors they granted to their political donors. In recent months, that probe, headed by U.S. Attorney Preet Bharara, has resulted in the arrests of the New York Legislature’s top Republican and top Democrat.