An increasing share of financial transactions in Democratic politics are handled by union-owned Amalgamated Bank, which has established itself as the de facto bank for the liberal movement and now brings in millions annually in bank fees from political groups.
Amalgamated Bank has long been majority owned and controlled by the politically active Service Employees International Union (SEIU), but it didn't enter the political banking sector until 2012 when, following massive losses and near collapse, it hired SEIU executive Keith Mestrich to direct operations in the Washington, D.C., region. A few months later, Mestrich acquired the Democratic National Committee as a client, beginning the relationship with a $15 million loan in September 2012.
"That's really when our renaissance began," Mestrich said in 2013 regarding the DNC. "We were able to carve out a space as a bank for progressive politics."
The renaissance has proven lucrative for Amalgamated—the political operation that began with just the DNC and a handful of small campaigns now handles money for major national party committees, top liberal super PACs, and high profile Democratic campaigns.
The bank's profits come both through interest payments from cash-strapped groups that take out large loans such as the DNC, which has had outstanding loan debt for 61 of the 67 months it's been a client, and through bank fees from highly transactional campaign clients.
The payments have steadily increased as Amalgamated's political operation grew.
During the 2012 election cycle, when the group of federal campaign groups with Amalgamated accounts was made up of just the DNC, a group of union PACs, and a handful of small congressional campaigns, it brought in $363,463 from federal campaigns, according to a query of the Federal Election Commission's disbursement database.
Its intake more than doubled to $911,545 during the 2014 cycle because of added business from clients such as the Ready for Hillary PAC and Senate Majority PAC.
During the 2016 cycle its intake again more than doubled to just over $2.4 million. Its new clients included Hillary Clinton's presidential campaign, the Democratic Senatorial Campaign Committee, many top Senate campaigns, and large groups such as Tom Steyer's NextGen Climate Action Committee and David Brock-led groups American Bridge 21st Century and Correct the Record.
Amalgamated has already brought in over $1.3 million through disbursements this cycle, which will ramp up as it gets closer to the November election. The bank has received payments from numerous Senate reelection campaigns, including for senators Claire McCaskill (D., Mo.), Elizabeth Warren (D., Mass.), and Kirsten Gillibrand (D., N.Y.).
Mestrich explained late last year that Senate campaigns have proven to be especially profitable.
"The fundraising cycle is long now, so Senate campaign accounts are particularly good for us," Mestrich told Quartz. "They generate fees because they’re highly transactional, so that’s where a chunk of the business comes in. So yeah, it’s been good for us."
In 2013, the bank boasted to the Washington Post that it had amassed more than 100 new political clients in Washington since bringing on the DNC. Its website now says it has more than 500 political clients in the area.
Amalgamated did not provide specifics on how much of the over $4 billion in assets under its management come from political clients. Bank representatives declined to make bank officials available for an interview.
The bank recognizes the value of its growing political operation and has prioritized it. Mestrich, brought on originally to develop the Washington market, was promoted to Amalgamated's president and CEO in 2014.
Mestrich uses Amalgamated's partisanship as a sales pitch for new clients, which include non-campaign groups such as the Biden Foundation and Demos, a radical liberal public policy organization chaired by Sen. Elizabeth Warren's daughter. The fees brought in through that category of political group are not captured in FEC filings.
Mestrich is head of recruitment for Democracy Alliance, a liberal donor club founded by billionaire George Soros. The bank is actively involved in the group's annual conferences, according to private agendas obtained by the Washington Free Beacon, and counts many of its member organizations, such as Demos, as clients.
Mestrich himself is also an active Democratic donor and gives to Amalgamated Bank clients. This cycle, for example, he gave the maximum allowed $5,400 to the Doug Jones campaign, which paid at least $2,021 to Amalgamated in bank fees. Amalgamated's PAC gave an additional $5,000 to the Jones campaign.
The bigger political contributions come from Amalgamated's owner, the SEIU, which backed liberal causes with nearly $80 million in spending in 2016. The SEIU was the first union to endorse the Clinton campaign, which disbursed $186,999 to Amalgamated during the campaign.
The assurance that profits are going to an ideologically aligned organization is a draw, but the bank also offers financial advantages to its political clients.
The political banking team is led by Molly Culhane, formerly a top finance official for President Obama's reelection campaign, and is staffed with former campaign leaders.
The bank told the New York Times as it ramped up for the 2016 election that it separates itself from competitors by providing advantages to campaigns, such as longer hours than conventional banks and a willingness to give cash advances on new contributions.
It would also work to find "creative ways" to help important liberal groups. For Ready for Hillary, the super PAC that laid the groundwork for Clinton's eventual campaign, Amalgamated allowed it to underwrite a $1 million loan with future, not yet existent contributions.
The DNC recently took out a new $1.7 million loan on the same day it finally paid off a $2 million loan incurred in October 2014. The new loan is due in February 2019.
The DNC did not respond to a request for an interview on the advantages of its relationship with Amalgamated.