When Congress cashes in on the market

posted at 3:31 pm on June 24, 2012 by Jazz Shaw

Dr. James Joyner points us to a piece in the wapo this weekend which should probably have some blood boiling and heads exploding yet again on a now familiar story. Members of Congress – or at least some of them – are doing quite well for themselves playing the stock market. And sometimes the trades they are making involve companies they have direct effects on through legislation they must vote on.

One-hundred-thirty members of Congress or their families have traded stocks collectively worth hundreds of millions of dollars in companies lobbying on bills that came before their committees, a practice that is permitted under current ethics rules, a Washington Post analysis has found.

The lawmakers bought and sold a total of between $85 million and $218 million in 323 companies registered to lobby on legislation that appeared before them, according to an examination of all 45,000 individual congressional stock transactions contained in computerized financial disclosure data from 2007 to 2010.

Interestingly, the article points out right up front that the party breakdown of those involved in these types of trades comes in at 68 Democrats to 62 Republicans. Yet the Post lists only three names on page one… all Republicans. You have to drill down to page three of this five page opus (behind the registration wall) before you stumble across the names of any Democrats.

So is this really something bad, or does it just look bad? Joyner chimes in.

Foreign Policy managing editor Blake Hounshell, who pointed me to the story, declares, “Congress is disgusting. Americans should be outraged at this kind of stuff.” While I’m not sure I’d go that far, this is certainly a situation where an obvious conflict of interest exists and yet another case where Congress applies one set of rules to itself and another to the rest of us.

To be sure, an individual member of Congress has less influence over policy than, say, a cabinet secretary. There are, after all, 435 Representatives and 100 Senators and we have a cumbersome legislative process requiring bills to pass through both Houses in identical form and get signed by the president before becoming law. Still, committee chairmen and other Members have enormous influence. Even, even if we were to presume that all of them are of the highest integrity and would never vote against the interests of their constituents for personal profit–work with me here–it’s not right that they should be able to buy and sell stocks on inside knowledge, behavior that is criminal when done by anyone else.

Perhaps I’m a bit more jaded than Dr. Joyner, but it seems like he’s giving a slightly larger benefit of the doubt to members of Congress than is warranted. While it’s true that each individual member only gets one vote on a bill which may affect a company’s fortunes – and stock prices – the Whips know their jobs well. Both sides tend to know well in advance whether a particular piece of legislation will ever see the President’s desk and likely have sufficient time to act on that information. Further, as the original article notes, a single member can place a hold on a bill which a company may be keen to see passed and determine the timing of when it moves forward.

Sen. Tom Coburn (R-Okla.) reported buying $25,000 in bonds in a genetic-technology company around the time that he released a hold on legislation the firm supported.

Everyone contacted for the article from both parties told the same story: the timing was all a coincidence. They pass a lot of bills, so overlap is bound to occur. Or the always popular, “my wife/husband makes those trades. I don’t really pay attention to it.” Somehow that doesn’t sound like a very convincing argument, and if they faced the same legal problems the rest of us would for doing it, I doubt it would generate much sympathy from the judge.

Yes, the Stock Act was passed, but as the author notes, it only forbids “trading on inside information” acquired on the Hill. It doesn’t say a word about trades in companies which may be affected by legislation as outlined above. So let’s put it up for discussion here: is it time for all members of Congress to either get out of the market or put their money into a blind trust like presidents must while they are in office? Or, failing that, do we really expect them to pass a law which could wind up with a significant number of them being arrested? Color me skeptical.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

There are those things that are known, and those things known to never having anything done about.

Bmore on June 24, 2012 at 3:34 PM

Coburn is a schmuck. So overrated as a “conservative.”

steebo77 on June 24, 2012 at 3:36 PM

Who’s to know how much trading is done for them by family members.

newportmike on June 24, 2012 at 3:37 PM

Refrain. Period. They get enough other goodies to make up the diff.

a capella on June 24, 2012 at 3:38 PM

Blind trusts are the way to go in my opinion. It allows them the freedom to invest their money like anyone else, but without the conflict of interest that might arise.

ButterflyDragon on June 24, 2012 at 3:38 PM

They spend millions on campaigns that earn fractions of what it cost to get elected but the perks are great.

newportmike on June 24, 2012 at 3:41 PM

Where have you been, Jazz? Sarah Palin’s speech in Indianola was all about this. A lot of her info came from Peter Schweizer, who at the time was one of her advisors. Shortly after that speech, he released his book, Throw Them All Out!

NoNails on June 24, 2012 at 3:42 PM

I know it sounds like reactionary hyperbole, but I thing Condi locked up the VP spot this weekend.
Watch for the Condi talk to do into overdrive from here on out. And anyone who thought maybe she was lukewarm to the idea. Wow, does she want it.

AmeriCuda on June 24, 2012 at 3:42 PM

…perhaps JugEars should have a ‘special tax’ for those folks?…how about 99%?

KOOLAID2 on June 24, 2012 at 3:44 PM

” .. would never vote against the interests of their constituents for personal profit”

Well, they do that anyway, that’s not an insider trading issue.

But regardless, I think on the big issues it doesn’t influence their vote, they simply trade on what their vote will do, or what the forecast the outcome of a vote will be.

On smaller items, especially appropriations and related stuff, yes, it totally influences votes. Its just another form of the quid-pro-quo votes for campaign contributions, votes for investing in the company, whatever.

In fairness, it may not always be insider knowledge in the sense that often times you invest in what you know, e.g. its easy for them to know what is coming up to vote and what the impacts will be, whereas the guy in the street could try to track it, but its harder. Quasi-public.

But so what. They are still largely corrupt.

Time to start kicking the corrupt out.

PrincetonAl on June 24, 2012 at 3:44 PM

I know it sounds like reactionary hyperbole, but I thing Condi locked up the VP spot this weekend.
Watch for the Condi talk to do into overdrive from here on out. And anyone who thought maybe she was lukewarm to the idea. Wow, does she want it.

AmeriCuda on June 24, 2012 at 3:42 PM

…was my 5th pick from the survey of yesterday…I like her allot…but I remember people here finding fault with her…as if you can’t find fault with everyone.

KOOLAID2 on June 24, 2012 at 3:49 PM

re-elect NO ONE!!

……and then make them do the perp walk like they dream about with Bernie Madoff, Ken Lay, Bernie Ebbers, etc.

is there anyone, anything, more corrupt than political officials locked into perpetual power and influence?

PappyD61 on June 24, 2012 at 3:50 PM

How about a member of congress actually “serves” the public? No salary, just a per-Diem to cover expenses. Perhaps if our members of congress were more generally the type of people who have what it takes to be successful in the real world before they enter politics we wouldn’t constantly be tearing our hair out over the idiotic ideas these people always come up with.

I don’t really have a problem with rich and successful people, in fact I usually listen to them for advice.

It’s simplistic, I know, but I’m not really a “deep thinker”. Most of the stuff I can think of require a “start from zero” approach, so it’s not really a serious idea. There are plenty of people out there with the experience and the magnanimity to do what it takes to collect a reasonable tax, regulate what truly needs to be regulated, and govern a free society as little as possible.

The only hurdle we can’t ever seem to clear is human nature.

Mord on June 24, 2012 at 3:51 PM

AmeriCuda on June 24, 2012 at 3:42 PM | Delete | Delete and Ban

Man, I hate to hear that. I would like to see her out of the picture.

a capella on June 24, 2012 at 3:51 PM

Ed, it would seem the java issue is at least momentarily fixed. Yay?

Bmore on June 24, 2012 at 3:52 PM

I know it sounds like reactionary hyperbole, but I thing Condi locked up the VP spot this weekend.
Watch for the Condi talk to do into overdrive from here on out. And anyone who thought maybe she was lukewarm to the idea. Wow, does she want it.

AmeriCuda on June 24, 2012 at 3:42 PM

The Palestinians and the Muslim “Democracy Project” crew will be pleased.

VorDaj on June 24, 2012 at 3:53 PM

Condi is a dangerous incompetent

Considering her remarks about America’s “birth defect” — an egregious term for any secretary of state to use about a nation that has brought more liberty to more races, colors and creeds than any in history — I am struck anew how deeply Rice’s vision of race in America, or, perhaps, in segregated Birmingham, affects her vision of America in the wider world. It is as if Rice sees American influence as a means by which to address what she perceives as disparities of race or Third World heritage on the international level.

This would help explain her ahistorical habit of linking the civil rights movement to the Bush administration’s effort to bring democracy to Iraq and Afghanistan. Indeed, in a 2003 speech to the National Association of Black Journalists, she argued that blacks, more than others, should “reject” the “condescending” argument that some are not “ready” for freedom. “That view was wrong in 1963 in Birmingham and it’s wrong in 2003 in Baghdad,” she said. In 2006, she made a similar point. “When I look around the world and I hear people say, `Well, you know, they’re just not ready for democracy,’ it really does resonate,” Rice told CBS’s Katie Couric. “It makes me so angry because I think there are those echoes of what people once thought about black Americans.”

There’s something shockingly provincial at work here. In seeing so much of the world through an American prism of race, Rice has effectively blinded herself to historical and cultural and religious differences between Islam and the West. To put it simply, neither Baghdad nor Gaza is Birmingham. And nothing in all of history quite compares to Philadelphia.

VorDaj on June 24, 2012 at 3:55 PM

VorDaj on June 24, 2012 at 3:55 PM | Delete | Delete and Ban

I agree with that. She manages to slide that part of her agenda under the radar for a lot of people. We don’t need that in the VP slot. I’m sick of it.

a capella on June 24, 2012 at 3:59 PM

Where have you been, Jazz? Sarah Palin’s speech in Indianola was all about this. A lot of her info came from Peter Schweizer, who at the time was one of her advisors. Shortly after that speech, he released his book, Throw Them All Out!

NoNails on June 24, 2012 at 3:42 PM

It sure is a an enlightening read!

THROW THEM ALL OUT

http://www.humanevents.com/2011/11/14/throw-them-all-out/

idesign on June 24, 2012 at 4:06 PM

Bmore on June 24, 2012 at 3:52 PM

a capella still seems to have the banhammer…

OmahaConservative on June 24, 2012 at 4:07 PM

From the left to the right you’re being scroomed. Throw most all the bums out in Nov., no matter their idiology. If guilty, out. Send them home, to live like the people do.

NO Congress or Senate critter should be exempt to any law they pass onto you. No more exemptions from Social Sec. nor from ObamaCare, nor anything. It is the shame of them all that they are not pitchforked in public, for this alone.

Schadenfreude on June 24, 2012 at 4:11 PM

No blind trusts.

Divest the holdings prior to swearing in, or recuse themselves from any and all hearings and votes that effect an investment they have.

“Even the appearance of impropriety must be considered”

BobMbx on June 24, 2012 at 4:13 PM

OmahaConservative on June 24, 2012 at 4:07 PM

Heh. Can’t seem to get rid of the damn things. Had to manually delete it for this post.

a capella on June 24, 2012 at 4:16 PM

Bmore on June 24, 2012 at 3:52 PM

a capella still seems to have the banhammer…

OmahaConservative on June 24, 2012 at 4:07 PM

Lol! Lucky bastard! Yeh I spoke to soon its broke again. It has something to do with the coding for java. Ads?

Bmore on June 24, 2012 at 4:17 PM

Now it’s working again. Oh boy?

Bmore on June 24, 2012 at 4:18 PM

How does someone like Al Gore turn $1 million or so in net worth into his current empire without some inside track? He is either the luckiest investor alive or he is a financial guru that should make Warren Buffet envious.

http://www.fiscalwars.wordpress.com

stout77 on June 24, 2012 at 4:18 PM

All congressional members should have to use blind trusts like presidents, it’s the only fair way to do it. It should be illegal unconsitutional for congress to exempt themselves from the laws they pass.

Mini-14 on June 24, 2012 at 4:19 PM

re-elect NO ONE!!

……and then make them do the perp walk like they dream about with Bernie Madoff, Ken Lay, Bernie Ebbers, etc.

is there anyone, anything, more corrupt than political officials locked into perpetual power and influence?

PappyD61 on June 24, 2012 at 3:50 PM

BobMbx’s perfect world solution to public servant corruption:

All elected officials serve a single term. At the end of that term, they are stripped of all worldly possessions and entitlements which forces them to re-start their lives under the rules (and coincident circumstances that apply to everyone) they made while in office.

“So, you thought that 4,000 page bill was a good one? Now you get to live with it as if you just arrived”

BobMbx on June 24, 2012 at 4:20 PM

Test

a capella on June 24, 2012 at 4:20 PM

a capella on June 24, 2012 at 4:16 PM

What browser are you using?

OmahaConservative on June 24, 2012 at 4:21 PM

People having Java issues! Are you using Firefox by any chance?

Cindy Munford on June 24, 2012 at 4:21 PM

a capella on June 24, 2012 at 4:20 PM

I thinkk they only come up when you do a quote…

OmahaConservative on June 24, 2012 at 4:22 PM

Now the iPad thing is working. What a mess. Lol!

Bmore on June 24, 2012 at 4:24 PM

What browser are you using?

OmahaConservative on June 24, 2012 at 4:21 PM

IE. I’d switch over to Firefox but I forgot my password(blush). I might just use my time honored technique, sign off and go watch a ball game. That usually works.

a capella on June 24, 2012 at 4:24 PM

Put me down for blind trusts. This is unacceptable.

rbj on June 24, 2012 at 4:24 PM

It would be practically impossible to say members of Congress cannot own, buy, or sell stock in companies who lobby Congress because there aren’t any major companies who don’t in one form or another. If we prohibited it, it would be one more way of keeping good people from running.

The problem can be addressed in two ways, one in the rules and one in philosophical approach. First, full disclosure of congressional transactions while in office every 30 days, within 30 days, so that no trade is unreported for more than 59 days.

Second, get Congress out of the business of micromanaging the economy so that influence isn’t being sought, bought, or sold.

The latter, of course, will require the hanging of all Democrats and most serving Republicans but as President Obama said, “Everyone has to have some skin in the game.”

Adjoran on June 24, 2012 at 4:24 PM

I thinkk they only come up when you do a quote…

OmahaConservative on June 24, 2012 at 4:22 PM | Delete | Delete and Ban

Yep. I promise to only use this mighty power for good in the world. Where’s yeasty?

a capella on June 24, 2012 at 4:26 PM

a capella on June 24, 2012 at 4:24 PM

Password? For Firefox?

OmahaConservative on June 24, 2012 at 4:26 PM

OmahaConservative on June 24, 2012 at 4:26 PM

I think he means his Hot Air password which is saved in his IE log on. I copied and pasted mine into an email and saved it in a file, plus wrote it in my address book. I will not be caught HotAirless.

Cindy Munford on June 24, 2012 at 4:29 PM

Password? For Firefox?

OmahaConservative on June 24, 2012 at 4:26 PM | Delete | Delete and Ban

Naw. HA. Don’t want to go all the bother of getting a new one so I can run both browsers. Easier to go watch a ball game. But, I sure would like to find yeasty before it gets fixed!:)

a capella on June 24, 2012 at 4:31 PM

a capella on June 24, 2012 at 4:31 PM

I forgot my password for Michelle Malkin’s site and WordPress emailed it to me. Try logging in with FF with a bad password, and you’ll get a temp pw, which you can then change. I hate IE with a passion…

OmahaConservative on June 24, 2012 at 4:40 PM

So let’s put it up for discussion here: is it time for all members of Congress to either get out of the market or put their money into a blind trust like presidents must while they are in office?

Yes!! It is long past time to make this rule

Dollayo on June 24, 2012 at 4:51 PM

It’s as if these shysters have sworn to avoid even the appearance of ethical behavior. This is an absolutely unconscionable abuse of public trust.

horatio on June 24, 2012 at 4:57 PM

Colburn bought Bonds…not stocks. That means he does Not have an equity interest in the firm, and therefore does not benefit from profits from future business.

wapo is a rag with which to slime Rs who do not cozy up to the Left.

I’m sure Colburn is one of their most wanted.

r keller on June 24, 2012 at 4:57 PM

Too many “conservatives” defend this crap.

Wall Street + Congress = cess pool of corruption and arse covering.

Where are the 20 year jail terms for the CEOs who knowingly participated in facilitating the financial crash?

Mitt Romney is another establishment hack who wont call Congress or his Wall Street buddies on this garbage. Obama has already proven his establishment cred by shoveling more taxpayer cash to the cronies and corruptocratson the Street and in Congress.

rickyricardo on June 24, 2012 at 5:00 PM

What sacrifices to Congress people make in return for their service? Why should any Congressperson come ome richer than when they arrived to Congress?

If they want to serve than serve their constituency, if they want to get rich, get a farking job in the private sector.

If they want to be lobbyists, then they should be banned from serving in congress or give up the right to lobby for life if they choose to seve.

Extract something from these theives.

rickyricardo on June 24, 2012 at 5:12 PM

There’s probably a market for pitchforks and torches in here somewhere.

crosspatch on June 24, 2012 at 5:19 PM

As an old time stock broker, I’d demand that at the least all congressional trades be required to be flagged and reported immediately on the exchanges and in the WSJ.

Call it the Martha Stewart Revenge Law!

Don L on June 24, 2012 at 5:32 PM

It is well past time for them all to be in blind trusts…

Khun Joe on June 24, 2012 at 6:04 PM

If we don’t allow this insider trading, that will make the job of being a Senator or Representative much less lucrative. It will mean fewer lifetime careers in Congress, and a higher turnover rate. Do we really want a Congress where the principal impetus is to serve the nation rather than get rich?

slickwillie2001 on June 24, 2012 at 6:33 PM

This is insider trading and their assets should all be in blind trusts.

It is bad enough that this happens with connected donors (Soros’ underwater position in BOA ‘miraculously’ seeing a huge 24 hour turnaround, ahem) who can claim arms-length distance. But these people pass laws and regulations every bit as significant as important in terms of company values as company board members and senior executives.

To pretend otherwise is an absolute farce.

Btw – insider trading laws reach far wider than company officers. They reach family and friends too.

Anyone on here who is a company officer knows full well what would likely happen if he told his son / wife / son / brother in law to buy shares in an ailing firm that the officer’s company was going to announce a merger with tomorrow.

Enough already. One set of rules for all of us.

CorporatePiggy on June 24, 2012 at 6:48 PM

When I see and hear a Congressman who is supposed to represent his constituents and not doing their job my blood boils because they have a staff that’s unbelievable and maybe this site will get your blood temperature up to mine. http://en.wikipedia.org/wiki/Congressional_staff

mixplix on June 24, 2012 at 7:05 PM

If you are elected to Congress you and your significant other should be barred from trading on Wall Street due to executive privilege and access to information the public does not have. I work for a public company and cannot trade our stock during several windows, and I can never trade the stock based on inside information. Given the power and influence members of Congress have I believe that they should have to forgo the privilege of stock trading while serving.

TheLoudTalker on June 24, 2012 at 7:43 PM

Blind Trusts and term limits

Rio Linda Refugee on June 24, 2012 at 7:54 PM

A simple form of anti-nepotism, anti-corruption law would go like this: any Congressman from either House who has family that are employed by a company or have financial interest in a company that gets federal funds will lose the amount of those funds from their own accounts if they offered amendments for such companies or voted on such legislation.

Do that and you soon don’t have this problem. The Congressmen either learn not to put in such amendments and vote on such bills, or they start losing a lot of money out of their own hide.

I don’t care if you own stock or interest in a company.

I do care if that skews what you want in federal bills and if you vote on bills where you or your family has direct, fiscal interest.

Leave it up to the individual Congressmen of both Houses to decide if they want to take the risk of amending and voting on such things.

Self-clearing when you start to get past a few million bucks. I bet at the billion range you get real nice, clean bills with very little in the way of financial kick-backs as well. Note that there is not statute of limitations on this and if it is found you did this after you left office… then you pay up.

ajacksonian on June 24, 2012 at 9:03 PM

I agree with Stanford University Hoover Institute conservative scholar Robert Schweizer “THROW THEM ALL OUT.

Then Audit The Federal Reserve.

Then take the Federal Reserve back to its legislative charter (that most Congressman didn’t read and were not allowed to read by Congressman tied to the “Money Power”) of 23 December, 1913 where the Fed could not buy government debt or buy into the stock market.

Then we can decide we really don’t need a Fed – and get rid of it!

Falcon46 on June 25, 2012 at 12:43 AM

Or, failing that, do we really expect them to pass a law which could wind up with a significant number of them being arrested?

I vote for this one! Seems the one that gains us the most.

GWB on June 25, 2012 at 9:05 AM

Of course, just reducing the reach of federal legislation to those items scoped in the Constitution would elminate almost all of this. If they don’t have authority over it, then no one will bribe them about it, and there won’t be any “insider” information to trade on.

See how easy that is? /eyeroll/

GWB on June 25, 2012 at 9:08 AM