January 4, 2023 - The recent mid-term federal elections and the end of the 117th Congress, marked the successful completion of the LSTA POCA’s first full election cycle.  The LSTA PAC, which is connected to the LSTA’s grassroots advocacy affiliate, the Business Loans Coalition (www.businessloanscoalition.com) (the “BLC”) is the LSTA’s federal political action committee.  Following is a summary of the LSTA PAC’s activity during the 2021-2022 Congressional session.  We will begin with some history and the explain the WHYs of having a PAC:  Why the PAC is a critical component of the LSTA’s public policy and advocacy efforts why supporting it is so important for all loan market stakeholders.  We will then discuss the amount of money we raised and where it came from; how much we spent and how we spent it; the strategic thinking and process behind our spending; and the path forward for the new 118th Congress. 

Some History.  The LSTA PAC was established at the end of 2019 and went into effect just before the COVID pandemic began in March 2020.  Despite the challenging environment, the LSTA PAC was able to raise $80,000 and spent $35,000 in the November, 2020 election.

Why have a PAC?

The loan market, like other financial markets, often faces a challenging environment in Washington, both on Capitol Hill and among federal regulatory agencies.  Currently, we are facing an unprecedented barrage of proposed rules from the SEC (such as the Outsourcing Rule, the Private Funds Disclosure Rule and the Liquidity Risk Management Rule), some of which would have profoundly negative, and even existential, consequences for segments of our market.  In these circumstances, it is essential to have engaged, effective policy and advocacy platforms.  A critical component of effective advocacy is to be able to develop meaningful relationships with Senators and Members of Congress who either actively support our goals or are open-minded and willing to consider our views and positions.  The reality of our political system is that financially supporting these members’ re-election campaigns is an important part of developing those relationships.  The most effective way, by far, of doing that is by establishing a connected political action committee and contributing to candidates we support in a targeted and strategic way.

Fundraising in the 2021-22 Cycle.  The LSTA PAC raised approximately $145,000 during the most recent cycle.  Of that amount, approximately $45,000 came from “PAC-to-PAC contributions” from other political action committees, typically affiliated with some of our larger members.  The remaining $100,000 came from contributions from individuals, including all of the members of the LSTA’s senior staff, members of boards of the LSTA PAC and the LSTA, and other individual market participants.

Political Contributions in the 2021-22 Cycle.  The LSTA PAC contributed approximately $120,000 to 40 federal candidates.  Two-thirds of that amount was spent in 2021, an election year.  By mandate, the LSTA PAC is required to contribute to candidates on a bipartisan basis (within a range of 60%/40%) and during the past cycle the contributions skewed slightly in favor of Republican candidates, by a margin of 53%/47%.  Importantly, 80% of our contributions went to members of Congress and Senators who were on the House Financial Services Committee or the Senate Banking Committee, the two committees that have supervisory jurisdiction over the federal banking and securities regulators (the Federal Reserve Board, the OCC, the FDIC and the SEC) and where any financial services-related legislation originates.  We also contributed to several members of the House and Senate Judiciary Committees, the committees that have jurisdiction over matters relating to the bankruptcy courts and bankruptcy legislation.  We have met in person with almost all of the members whom we’ve supported, as well as with their key senior staffers.  Notably, every member we supported who was up for election in 2022 was re-elected. 

What to Expect in the New Cycle.  Our goal is to raise at least $100-150K per year.  Now that most people in the loan market have returned to their offices at least part-time, we are hoping to arrange in-person meetings with our members throughout the United States to explain what the LSTA is doing on the advocacy front and the importance of the LSTA PAC.  While the LSTA PAC has been effective in its first full Congressional cycle, increasing the amount we raise and contribute would position us for even more success.

What you can do.  Please consider supporting the work of the LSTA PAC by signing up for individual membership in the Business Loans Coalition (www.businessloanscoalition.com).  There is no obligation or cost for doing so.  Once you have joined the BLC you are eligible to support the LSTA PAC on the same website.  If you have any compliance-related questions about contributing to the PAC, please contact Elliot Ganz.

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Membership in the LSTA offers numerous benefits and opportunities. Chief among them is the opportunity to participate in the decision making process that ultimately establishes loan market standards, develops market practices, and influences the market’s direction.

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