Soft Money
Categories: Banking
Hard money is for playing hardball politics: money donated to a specific candidate. Soft money, on the other hand, is for softballing...political donations that are not for a specific candidate.
You’ll hear “soft money” mostly in reference to U.S. elections, since there are no limits to soft money contributions. With the current campaign finance rules, due to the 2010 Supreme Court Case Citizens United v. Federal Election Commission, soft money contributions are unlimited, since they're a form of free speech...including donations from corporations. Yup, corporations have a right to free speech, just like you.
Soft money can include contributions to political parties, political action committees (PACs), and super PACs. Unlimited soft money has caused a kerfuffle, because it’s caused political donations to skyrocket. Critics argue this has allowed corporations and wealthy donors to buy elections, which isn’t very democratic. Supporters argue that money equals free speech, which is totes democratic.
Related or Semi-related Video
Finance: What are Hard Dollars v Soft Do...4 Views
Finance a la shmoop what are hard dollars versus soft dollars? okay can we
make the joke about soft dollars that took viagra no okay all right we won't [Dollars take pills of viagra]
or maybe we just did okay well whatever so there really is such a thing as soft
dollars in fact they apply to the manner in which stock brokerages and other
service vendors to the buy side are paid on Wall Street well on any given trade
there are somewhere between three and twenty different sellers at the price [Sellers appear]
the same price like a mutual fund wants to buy a million shares of Disney at 103.34
and yes for a stock like Disney, Goldman is selling Morgan is
selling JP Morgan is selling in a gazillion other small banks all around
the world are selling all at the same exact price well the mutual fund wants
to do the trade in one block of a million shares not doing little business
with everyone so they're gonna trade with one bank why would they choose any
one bank over another? well usually the quality of the banks research or values
add contribute to who wins that million share trade with the three center share
Commission for a nice thirty grand pay day but what if the Wall Street mutual fund [Stock market graphs appear on computer screens]
wanted to purchase specialized trading computer terminals from Bloomberg well
why wouldn't Bloomberg begin their own trading operation trading stocks
brokering them and selling them and all that stuff with very little incremental
capital cost to Bloomberg above what they already do for a living and then
they themselves Bloomberg offers a million shares of Disney and 103.34
Well the mutual fund wants to buy 30 grand worth of computer [Computer terminals appear]
terminals for its traders and it would prefer to not have to write a check in
cash to buy those so in fact common practice on Wall
Street is to use yes soft dollars which is kind of another
word for barter where in the Wall Street firm trades the trade of those million
shares of Disney to Bloomberg in return for the $30,000 worth of computer
terminals they soft dollar purchased them and had they paid cash it would
have been called a hard dollar transaction got it and if your dollars
are too hard well may we recommend a better moisturizer [Stack of cash with a tube of moisturizer appears]
soft dollars, hard dollars...