Correction Appended

Fundraisers from both parties already are warning that the current meltdown on Wall Street could dilute Members’ cash positions downstream, as once-flush financial industry political action committees — as one fundraiser put it — “just collapse and go away” next cycle.

[IMGCAP(1)]“There will be an impact. If nothing else, companies will be shutting their doors and closing their political operations,” Democratic fundraiser Mike Fraioli told Money Matters on Tuesday. “You’re pulling some money out of the system.”

For now, fundraisers agree that lawmakers are insulated from the financial fallout. All of the money that could be raised from the financial sector this cycle already has been, they say, and it’s now just a matter of fighting for the remaining crumbs.

Fraioli said his firm is having its last fundraising event of the cycle this week.

Investment bank Lehman Brothers, which entered bankruptcy last week, raised more than $248,000 through its PAC through Aug. 31, contributing $162,000 to numerous lawmakers including Senate Banking, Housing and Urban Affairs Chairman Chris Dodd (D-Conn.) and ranking member Richard Shelby (Ala.).

Morgan Stanley, which appears stable for now but whose stock price on Tuesday was trading at less than half of its 52-week high, also could be missed dearly by lawmakers next year, particularly by Republicans, if things turn sour. According to CQ’s MoneyLine, the investment-bank-turned-holding-company raised roughly $935,000 in political contributions this cycle, cutting checks for nearly $700,000.

During the past decade, 60 percent of Morgan Stanley’s political contributions went to GOP lawmakers.

It also remains to be seen what will happen with the PACs of Fannie Mae and Freddie Mac, which were recently taken over by the federal government. The two home-loan giants combined raised and contributed more than $1.6 million through their PACs this cycle, but were recently forbidden from taking sides in politics, under terms of the government’s bailout.

“All political activities — including all lobbying — will be halted immediately,” Federal Housing Finance Authority Director James Lockhart said after the White House put the failing government-sponsored entities under conservatorship.

According to Federal Election Commission filings, the two PACS still have more than $280,000 in cash in their bank accounts.

Republican fundraiser Dan Morgan

agreed that it’s too early to tell what, if any, fallout there might be from the current crisis, saying that “from a fundraising side, nothing has happened at all” to date.

“If there’s going to be residuals, it’s going to happen next year because people are going to be pulling back a little,” Morgan said. “Everyone’s already collected all of their money this year, and now they’re just doling it out. Any problems are going to happen next cycle, if there are going to be any.”

You’re Free to Go. The Federal Election Commission formally let a half a dozen campaigns off the hook on Tuesday for potential “Millionaires’ Amendment” violations, including the political committees of Reps. Mark Kirk (R-Ill.) and John Yarmuth (D-Ky.).

Wealthy Chicagoland dairy magnate Jim Oberweis (R), who is challenging Rep. Bill Foster (D-Ill.) in the district formerly held by Speaker Dennis Hastert (R), also was cleared of any wrongdoing by the agency.

Earlier this summer, the Supreme Court tossed out the controversial provision, which was part of the Bipartisan Campaign Reform Act of 2002 and designed to help lawmakers ward off wealthy, self-funding challengers.

The agency also provided guidance yesterday on what campaigns should do with money raised under the millionaires’ provision, an issue that wasn’t entirely clear to some campaign finance experts in the immediate wake of the high court’s decision.

“The commission will not require that candidates who received increased contributions in accordance with the [Millionaires’] Amendment before June 26, 2008, return those funds so long as the funds are properly expended in connection with the election for which they were raised,” the agency announced. “The commission will not request that political parties or individual contributors that made increased coordinated expenditures before June 26 consistent with the Amendment take any remedial action.”

Own Goal? A campaign finance organization run by a prominent former Republican Federal Election Commission chairman chided the National Republican Congressional Committee last week for its protests against a liberal-leaning 527 group.

The Center for Competitive Politics, a group run by onetime FEC Chairman Brad Smith, lashed out at the NRCC last week for filing an FEC complaint against Patriot Majority, which allegedly has spent more than $1 million in television ads attacking GOP incumbents.

“Efforts to intimidate and harass independent political speech are a bipartisan offense,” Center for Competitive Politics legal director Reid Cox said in a statement last week. “Republicans and Democrats alike are all too aware of the ease with which campaign finance complaints can be used for political gain based in the flimsiest of pretexts.”

So far, Patriot Majority allegedly has targeted Sen. John Sununu’s (R-N.H.) re-election contest, the open New Mexico Senate race, and seven GOP-held House districts, including those of Reps. Lincoln Diaz-Balart (Fla.), Joe Knollenberg (Mich.), Jean Schmidt (Ohio), Steve Chabot (Ohio) and Tim Walberg (Mich.).

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Correction: Sept. 24, 2008

Morgan Stanley has given 60 percent of its total political donations to Republicans during the past decade, not since 2006.