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Corporation Formalizes Political Contributions Operation

The State Farm Mutual Automobile Insurance Company formally registered a federal political action committee after years of not having a federal PAC but having very active officers and employees give contributions. State Farm had been one of only nine in the top Fortune 75 companies without a federal PAC. The mutual insurance firm is a group of insurance and financial services companies.

The State Farm Mutual Automobile Insurance Company Federal PAC, based in Bloomington, Ill., registered on May 17 with the Federal Election Commission. The treasurer is Mark Schwamberger. Schwamberger is vice president and controller of State Farm Insurance.

Although State Farm has not had a federal PAC, it still has been active in national political money. In the 2011-2012 cycle State Farm gave $417,000 to Section 527 organizations, including $140,000 to the Republican State Leadership Committee; $110,000 to the Republican Governors Association; $105,000 to the Democratic Governors Association; $50,000 to the Democratic Attorneys General Association; and $12,000 to the Democratic Leadership Campaign Committee.

A Political MoneyLine donor search of individual contributions in 2011-2012 of persons listing “State Farm” as their employer shows there were 1,166 itemized contributions, totaling $570,329. These contributions went directly to candidates, party committees and PACs. Three hundred and twenty-four contributions went to Democrats, totaling $162,354. Seven hundred and thirty-eight went to Republicans, totaling $361,691. The remainder went to other PACs such as the National Association of Insurance and Financial Advisors PAC and the National Federation of Independent Business Saving Americas Free Enterprise Trust.

Of those individuals, 38 gave $13,560 to Rep. Spencer Bachus, who was chairman of the House Financial Services Committee during the 112th Congress. The donors were from Alabama, Georgia, Florida, South Carolina, California, Illinois and Mississippi, All but eight gave in October 2011.

The chairman and CEO, Edward Rust Jr., is the most active donor. In 2011-2012 he gave $63,100 in federal contributions, almost all to Republicans.

Questions about state-level political contributions from State Farm were raised when the Michigan State Supreme Court looked into the potential bias (and found none) of Judge Lloyd Karmeier, who had won election in 2004 with the help of $350,000 “raised” by State Farm. Judge Karmeier had overturned a billion-dollar verdict against State Farm in 2005. Other questions were raised about State Farm’s $1 million contribution to the U.S. Chamber of Commerce and State Farm’s $2 million contribution to the Illinois Civic Justice League and its PAC.

In 1988 a class-action suit filed by a State Farm policy holder had temporarily halted company contributions to Proposition 104, an insurance industry-backed in a no-fault auto insurance initiative. The company had contributed $2.3 million.

The company has several state PACs and has contributed to various state-level political parties under state law.

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