April 21 (Bloomberg) -- The nation’s biggest lenders and other financial institutions, including Bank of America Corp. and Wells Fargo & Co., reduced their political giving even as Congress began to consider how to re-regulate their industry.

Donations from the political action committees of 10 of 12 firms facing so-called stress tests by the government dropped to $231,750 in the first quarter of 2009, compared with $826,180 in the same period two years ago, Federal Election Commission records show. Just two companies increased their contributions.

The firms are among the 19 financial institutions -- all with more than $100 billion of assets -- that are being subjected to audits by federal regulators to determine their financial health. Data weren’t available for seven firms that either don’t have PACs or don’t have to file with the FEC until July.

As a new Congress convenes in each January of an odd- numbered year, lawmakers begin raising money for the next election cycle. Companies and others with an interest in legislation traditionally begin filling the coffers of the incumbents.

Donations often increase when Congress works on legislation affecting a particular industry. This year, though, the financial institutions are giving less, as they face new regulatory efforts by the House and Senate and potentially the need for federal assistance under the Troubled Asset Relief Program.

‘Dirty Word’

“Campaign contributions are starting to become a dirty word,” said Lisa Gilbert, a lobbyist for the U.S. Public Interest Research Group, a Boston-based advocacy organization that supports stronger campaign-finance laws. “As we hear more stories about TARP money flowing out the door and returning to the Hill as campaign gifts, people are becoming more leery of donations.”

Under federal law, companies aren’t allowed to make donations from their corporate treasuries. Instead, they funnel money through PACs funded through voluntary contributions from employees.

Charlotte, North Carolina-based Bank of America, the largest U.S. lender by assets, contributed $68,000 to political campaigns in the first three months of this year, down 55 percent from the same period in 2007, when its PAC gave $149,500. New York-based JPMorgan Chase & Co. gave $20,000 this year, 84 percent less than the $127,820 its PAC handed out two years earlier.

Shirley Norton, a Bank of America spokeswoman, had no immediate comment. Joseph Evangelisti, a JPMorgan spokesman, declined to comment.

Morgan Stanley, Goldman

The PACs of New York-based Morgan Stanley, which gave $102,000 between January and March 2007, and San Francisco-based Wells Fargo, which contributed $114,200 during the same period, reported no donations in the first three months of this year. New York-based Goldman Sachs Group Inc., which donated $107,000 in the first quarter of 2007, gave $1,000

Goldman Sachs spokeswoman Andrea Raphael declined to comment. Morgan Stanley and Wells Fargo didn’t immediately respond to requests for comment.

Only two of the 19 companies that will be examined under the Capital Assistance Program increased their PAC donations: MetLife Inc., a New York-based insurer, and Minneapolis-based U.S. Bancorp. MetLife gave $160,500 in donations through its PAC, up from $115,000 two years ago; contributions by U.S. Bancorp’s PAC increased to $66,500 from $66,500.

“The new Congress and new administration hit the ground running in January 2009 with a lot of issues to deal with, many of which involves the life insurance industry and MetLife,” MetLife spokeswoman Emily Phillips said. “Our PAC activity reflects this.”

U.S. Bancorp senior vice president Steve Dale declined to comment.

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net.

Last Updated: April 21, 2009 00:01 EDT