Goldman Sachs Group Inc, legendary for its clout in Washington, has inexplicably halted its political fund-raising machine.

The strange twist comes at a time when Wall Street's biggest and most powerful investment bank, nicknamed Government Sachs by critics, seems in other respects to be just as politically involved as ever.

By all accounts, its senior executives are in close contact with Washington regulators, the lobbyists on its payroll include some of the best connected, and it continues to spend heavily to influence government.

Yet one key prong of its assault on the Capitol has been oddly neglected lately: Campaign finance filings show its federal political action committee (PAC) has not taken a penny from employees in more than a year and has a balance of just $25,483 -- pocket change for a Goldman banker.

At the same time, Goldman's chief rivals -- Morgan Stanley and JPMorgan Chase & Co -- have armed their U.S. lobbyists with hundreds of thousands of dollars in employee political contributions, filings show.

Companies like Goldman use their PACs to collect political contributions from employees; lobbyists funnel the funds to candidates and parties.

Why Goldman -- whose alumni include many who have held high positions in the federal government -- abruptly stopped tapping its employees for political money is a mystery. A Goldman spokeswoman would only say, We have a PAC and we plan to continue to have a PAC.

Critics believe Goldman might be operating under the belief that it has all the political influence it needs.

They don't seem to need a PAC since Goldman has had its way with Washington consistently since Wall Street imploded a year ago, said Harvey Rosenfield, president of the non-profit Consumer Education Foundation. You could argue they have done pretty well without any PAC contributions.

GUN SHY

A source familiar with Goldman's past political giving said the bank was shy about sending out its annual PAC solicitation letter so soon after slashing jobs and bonuses amid the turmoil in the banking sector.

Turnover in Goldman's Washington office, which manages the PAC, might also be a factor, the source said.

They decided not to do it last winter because it was not a good time, with people losing jobs, said the source, who asked to remain anonymous because Goldman considers its political activities an internal matter. Things weren't that great and they didn't think it would be very successful.

Surely, Goldman has found other ways of getting the pulse and setting the agenda in Washington, as a recent research note from Citigroup Inc points out.

Goldman's management team has had a lot of interaction with Washington ... they believe Washington is likely to be more balanced in the (regulatory) proposals than some market participants had feared, the note said.

During the 2008 election cycle, Goldman was the top corporate giver, according to the Washington-based Center for Responsive Politics, which tracked more than $6 million in political contributions back to the bank. Goldman strongly supported candidates from the Democratic party, according to the Center.

PACs are just one of the tools companies use to exert political influence. They also employ lobbyists, form 527 advocacy groups, and encourage employees to contribute directly to candidates or causes, serve on boards, and work on campaigns or with political parties.

There's a number of ways, said Dave Levinthal, a spokesman for the Center for Responsive Politics. Goldman Sachs at the very least is using several of those methods.

While Goldman's PAC has gone silent this year, employees have contributed directly to campaigns and candidates to the tune of about $200,000, according to the Center. This is significantly more than has been directly contributed by JPMorgan and Morgan Stanley employees, the center said.

Goldman has also spent $1.3 million to lobby Washington in the first two quarters of 2009, according to regulatory filings.

Even though Goldman's PAC is not raising money, filings show it has given out about $25,000 this year, including $2,000 to Christopher Dodd, a Democrat who chairs the Senate Banking Committee and is facing an uphill battle for re-election.

Goldman has also been active in responding to regulators. For example, it has come out against the Securities and Exchange Commission's proposed new rules on short-selling.

I don't see any indication Goldman's influence is waning in D.C., Rosenfield said. Every which way you look they come out on top.

(Reporting by Steve Eder; editing by John Wallace)

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