Jonathan Turley in USA Today:
The title of the article is"And It's All Legal." Well of course it is. They make the laws.
Congress has excluded investment income, such as stocks, from ethics limitations on income. The result is that members routinely make killings in the market in areas where they legislate. One study by the University of Memphis found that 75% of randomly selected members had"stock transactions that directly coincided with (their) legislative activity."
Members have the unique ability to predict or even manipulate stock prices. Another recent study by Alan J. Ziobrowski of Georgia State University and three colleagues showed that U.S. senators beat the market handily by 12 percentage points in their investments -- outperforming" corporate insiders" by eight points from 1993 to 1998.
Take Sen. Ted Stevens, R-Alaska -- the ultimate rags-to-riches story in Congress.
Stevens came to the Senate with modest means, particularly after heavy investment losses in the 1980s. In 1997, he had a Scarlet O'Hara"I'll never be hungry again" moment. According to a Los Angeles Times investigation, he decided to get"serious about making money" and contacted lobbyists about possible deals.
Real estate developer Jonathan Rubini arranged for Stevens to get into a deal in which he turned $50,000 into as much as $1.5 million -- and Stevens was the only investor not liable for any debts, the Times said. In the meantime, he muscled through a $450 million contract for Rubini from the military, despite the view of Air Force officials that Rubini"lacked capacity and adequate funding."
Of course, one does not actually have to invest to take money from lobbyists. Rep. Jim Moran. D-Va., took an unsecured $25,000 loan from a drug-company lobbyist and then pushed a bill that benefited the company.
Consider Karen Weldon, the 29-year-old daughter of Rep. Curt Weldon, R-Pa. The Pittsburgh Post-Gazette reported that despite her lack of foreign-policy experience, Karen was given a lobbyist contract of a quarter-million dollars from Serbian interests allied with accused war criminal Slobodan Milosevic, as well as a $20,000-a-month contract with a Russian aerospace manufacturer. Rep. Weldon later pushed to get visas for the Serbians and deals for the Russian company. Chet Lott ran a Domino's Pizza chain in Kentucky and played polo. Yet he was given a huge salary representing telecommunications and other interests, according to the Times stories. His father, Sen. Trent Lott, R-Miss., was majority leader. While ethics rules prohibit gifts and speaking fees, members routinely accept thousands of dollars in expenses and travel from lobbyists and business associations. These paid vacations are billed as"educational" for members of Congress, and they are clearly eager to learn.
For example, in 2002 Rep. Richard Burr, R-N.C., was"educated" at the expensive Bellagio Hotel in Las Vegas with first-class airplane tickets, an open bar for poolside drinks and other"educational" expenses paid for by the National Association of Broadcasters, according The Washington Post. The trip's purpose: a public policy conference. Burr later wanted to learn about the nuclear site in Nevada's Yucca Mountain. Not content to simply visit the Nevada desert, Burr and Rep. John Boehner, R-Ohio, arranged for a lobbyist to"educate" them and their spouses in Barcelona and Seville.
Former representative Tom Bliley, R-Va., then chairman of the Commerce Committee, had a tobacco company send him and his wife on the Concorde to London at a cost of $24,000 and then put them up at the famous Savoy Hotel at $1,000 a night. National Public Radio also said that they were then"educated" at the Wimbledon tennis finals with tickets costing roughly $3,000.
Of course, when private sector people buy and sell stock based on privileged information, it's called insider trading. When politicians buy and sell stock based on knowledge of pending bills and how they'll be voted on, it's called...well, I don't know what it's called. But it's legal. And that sucks. Because it raises the possibility that a politician could vote on laws affecting the entire country based on his/her own financial stake. And that's about a hundred times worse than insider trading.
It would be interesting to see how many of the politicians who rushed to condemn the Ken Lays of the world a few years ago bought and sold stocks in industries that benefited or were hurt by important votes in Congress. I saw Turley in an interview on Fox News earlier today. He said the Senator whose portfolio outperformed all others -- and significantly outperformed the average gains of Wall Street insiders -- was Barbara Boxer, someone whom I discinctly remember making herself heard during the corporate governance imbroglio.
I suppose it's possible that Sen. Boxer is also a gifted finance whiz, and none of her gains in the market were due to her buying and selling on information related to pending legislation...comments powered by Disqus