CLC filed an amicus brief in New Jersey Bankers Association v. Grewal supporting the state of New Jersey’s defense of its century-old law prohibiting campaign contributions from banks and certain other corporations.
In this case, the New Jersey Bankers Association, a trade association of regional banks, is challenging the constitutionality of New Jersey’s longstanding prohibition against bank contributions, claiming it violates the First Amendment.
New Jersey’s contribution restrictions for banks and certain other corporate entities, including public utility and insurance companies, fit squarely within the larger landscape of state and federal anti-corruption laws.
At the federal level, campaign contributions from corporations and national banks have been prohibited since the passage of the Tillman Act of 1907. Congress intended the federal law to protect against real and apparent corruption in U.S. elections—a critical government interest still highly salient today.
States, including New Jersey, have followed suit by enacting analogous laws that prohibit political donations by corporations and other closely regulated industries with a heightened incentive to “pay to play.” Today, at least 23 states and many localities prohibit direct campaign contributions from corporations.
Many of these states specifically prohibit banks and other entities covered by New Jersey’s law from contributing to candidates for state or local office.
As the national landscape of campaign finance regulation shows, New Jersey’s law is typical of anti-corruption legislation, which courts have overwhelmingly upheld against constitutional challenges. Indeed, the Supreme Court has upheld the much broader federal ban on contributions from all corporations on the basis that it advances key anti-corruption objectives.
Lower courts similarly have sustained an array of state contribution restrictions as a constitutional means of reducing the risk of corruption posed by corporations and highly regulated groups, including government contractors, lobbyists, and the financial services industry. The same reasoning applies with equal force to the New Jersey law.
New Jersey’s continued concern about political corruption involving banks is well-founded. According to the Center for Responsive Politics, the financial sector is “far and away” the largest source of contributions to candidates, political parties, and “outside money” groups in federal elections today, giving nearly $1.5 billion during the 2019-2020 election cycle alone.
And in recent years, federal, state, and local officials have brought numerous enforcement actions against financial services firms and professionals for giving illegal campaign contributions and kickbacks to public officials in exchange for government contracts and other benefits.
Against this backdrop, New Jersey has an important and justifiable interest in preventing corruption in its government and preserving public faith in the political process. The state’s contribution restriction for banks and other corporations directly advances this interest and protects New Jersey residents’ right to an accountable and responsive democracy.