The best I can figure is that when the exposure of outrageous corruption will devastate power politicians in both parties, neither party, nor their partisan herds, nor their lackey journalist allies, see it as advantageous to look under that rock. Does anyone have a better theory? Because the fact that almost all Senators and members of Congress, and often their staffs, enrich themselves using their knowledge of what laws are about to be passed, and the fact not only is nothing being done about it, but that most of the public doesn’t even know about it and no one is working very hard to tell them, is maddening.
The latest chapter is typical of the hypocrisy and dishonesty in this long-running ethics fiasco.
In 2012, Congress passed the STOCK Act, a bill that was supposed to stop insider trading for lawmakers and their staffs. Of course, the laws making insider trading illegal should have already stopped the practice, and the ethics rules prohibited it as well with such phrases as “conflicts of interest” and “appearance of impropriety.” Lawmakers aren’t supposed to break laws, you see. No, really. They’re not!
There had been some embarrassing incidents in the past bringing the practice into the spotlight, like in 2005, when Senate Majority Leader Bill Frist (R-Tn) coincidentally dumped his substantial holdings in HCA, the hospital giant, just a month before its stock fell 9%. ( Insider tips are so much cheaper and tougher to trace than outright bribes, or even contributions to your family charitable foundation.) Then, before the Republicans took over the House, the dirty little secret about House Speaker Nancy Pelosi’s insider trading was flagged in a cringeworthy moment by CBS’s Steve Kroft:
In 2008, credit card giant Visa held among the most lucrative IPO’s of all time. Nancy Pelosi and her husband were granted early access as “special customers,” buying shares at the opening price, $44. They turned a 50 percent profit in just two days. Starting on March 18, the Pelosis made the first of three Visa stock buys, estimated at at least $1 million and as much as $5 million. This occurred just two weeks after legislation had been introduced in the House that would have allowed merchants to negotiate lower interchange fees with credit card companies.Visa opposed it. Pelosi blocked action on interchange fees for more than two years, during which the value of her Visa stock jumped more than 200 percent even though the stock market as a whole dropped 15 percent.
As Sen. John Kerry worked on passing the Affordable Care Act in 2009, he and his wife began buying stock in Teva Pharmaceuticals, purchasing nearly $750,000 in November alone. The more likely it looked that Obamacare would pass, the higher Yeva’s stock went; after all, the law, whatever else it might do, was sure to increase the demand for prescription drugs. As soon as Obamacare became law, the Kerrys realized tens of thousands of dollars in capital gains while holding on to more than $1 million in Teva shares.
The Republicans, their ranks swelled in 2012 by some new members of Congress who were not thoroughly corrupt yet, seized on these incidents to pass STOCK . “We all know that Washington is broken and today members of both parties took a big step forward to fix it,” said Rep. Bill Johnson, (R-Ohio), upon passage of the law.
Right.
Muckraking journalist Glenn Greenwald just dug up a brief missed —or perhaps ignored—by the mainstream media that was filed last summer after the Securities and Exchange Commission announced its first major investigation of political insider trading. Kerry Kircher, the House General Counsel by Speaker John Boehner, argued in that brief that any SEC investigation of congressional insider trading was unconstitutional, because lawmakers and their staffs are protected from such inquiries by the Separation of Powers provision of the Constitution.
In other words, Congress passed a law against their own insider trading, but it can’t be enforced.
Let me be clear: insider trading as well as stock buys based on anticipated legislation that they control is far more unethical when done by members of Congress than ordinary insider trading.It warps our laws and policies, as elected officials vote to enrich their business cronies and themselves at the same time. Any member of Congress who engages in this practice—and the data suggests that many do—should be not only thrown out of office, but into prison.
Officials of both parties are guilty. The only thing worse about Democrats is that they have the gall to demagogue the issue of income inequality while exploiting their position for illicit wealth. At least the Republican have, if not shame, better taste.
Oh, I almost forgot! Do you know who wrote the definitive expose on this scandal, exposing Republicans and Democrats alike?
Why, Peter Schweizer, the author of “Clinton Cash,” who Democrats are now claiming is a GOP hit man with an agenda! By the evidence of his previous book, “Throw them all out: HOW POLITICIANS AND THEIR FRIENDS GET RICH OFF INSIDER STOCK TIPS, LAND DEALS, AND CRONYISM THAT WOULD SEND THE REST OF US TO PRISON,” I’ve concluded that his “agenda” is the same as mine.
We both want to stop the U.S. from being led by sleazy, dishonest hypocrites.
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Sources: Free Republic,Washington Times, First Look,
Ethics Alarms 
From a furriner’s view… a) It’s a bit late, by at least 150 years and b) Such an attitude as yours is positively UnAmerican.
Not that you shouldn’t try, but it’s getting worse, not better, and the trend is accelerating. I think we passed the point of no return decades ago.
I’d say less than 50.
All it takes is the right leader, and they find their moments.
While I don’t challenge your point about Congress being corrupt, the chart you use at the beginning is poorly constructed and misleading.
To have any kind of validity, the date ranges need to be the same across the four different groups. Otherwise it’s just too easy to cherry-pick one period where Congress did well and another period where Average Households did poorly. Even picking the same period across groups runs the risk of purposely picking a period that was good for Congress vs. Avg. Joes, but as it’s set up now it’s just stupid.
Yeah, I used it as a graphic illustration, not as a substantive chart. That’s why the post never references it.
I don’t think that the data presented here necessarily suggests insider trading (at least on its own). There are a number of factors — some of them reasonable and ethical, some of them not — which could account for (or help account for) it.
US congresspeople are a highly select, well-educated, intelligent (if oft foolish), and wealthy group by and large — certainly far more so than the general population. Further, succeeding in a political career to the extent that any US senator has demonstrates a wide variety of skills — many of which are applicable to things like the stock market. That’s without getting into the fact that US congresspeople (especially the subset of US Senators), as a group, represent a rather small sample — and representatives who invest are a smaller one. Your charts and discussion don’t even include basic confidence intervals so that I can do a proper Bayesian (or frequentist) analysis.
On top of this, the data you’re using is twenty years old (it’s based on records from 1993-1998, as cited in an article written in 2004); you can find it published at http://insidertrading.procon.org/sourcefiles/abnormal.pdf . If nothing else, the composition of the chambers has changed quite a bit in the interim.
It doesn’t suggest an absence of insider trading, of course. It’s just that you’re reasoning from pretty sketchy — and critically incomplete — data.
That’s why an investigation would be reasonable. Insider trading is notoriously difficult to prove, as in the Pelosi and Frist examples. It’s circumstantial…but strongly evocative.
Well, yes, but you refer to it as an “ongoing scandal” and argue based on nearly-twenty-year-old data. You also cite an example (Pelosi) which proves a good bit about corruption, but not insider trading, per se (what happened there was cronyism and corruption, sure, but not exactly insider trading: what she got was access and preferential treatment, not insider information).
Just to be clear, I wouldn’t object that much if you’d opened with the bit about the SEC investigation and talked about the general history of congressional corruption and cronyism. Instead, you refer to a “scandal” about insider trading, specifically. The evidence you cite doesn’t support that — and the scandal has yet to truly break.
I’ll provisionally agree. Here in DC, the insider trading of Congress is more or less brushed off as a “of course they do it—how else do these guys get so rich?” “Throw Them All Out,” which I read, has many more stories that are very suspicious—and suspicious = “appearance of impropriety.”
Why do you think Pelosi’s actions don’t qualify as insider trading? The crime is taking advantage of information not available to the public. Her intentions regarding blocking legislation is such information. The fact that the inside trading is mixed with cronyism, conflicts of interest, self-enrichment and government ethics violations makes it more than an insider trading scandal, but that would be the easiest way to distinguish it.
Your summary of her initial action: “Nancy Pelosi and her husband were granted early access as “special customers,” buying shares at the opening price, $44.”
This isn’t insider information — it’s privileged access to a product, a de facto discount, and effectively a bribe. Following this, Pelosi blocked legislation that would hurt their investments, which is (as you noted) self-enrichment and cronyism (not to mention the ethics violations).
Calling this “insider trading” is a stretch. Calling it corruption is not. As you noted, Pelosi’s “investment” into Visa almost immediately rose dramatically in value. She could have sold it immediately for a substantial profit. She didn’t need insider information to realize that, either: it’s pretty standard for IPOs. That she then abused her powers as Speaker as to profit further from this is merely icing on the cake — perhaps simply her siezing on an opportunity or the like. I don’t know.
I also don’t really care: Even just the initial incident is proof that she is corrupt and provides a strong argument that she should have been brought up on charges.
No no no.
I work in DC, and whenever I have taken a new job (whether government or private), I have to go through an extensive financial check before I can start my job. If I own any stocks that would be considered a conflict of interest, I have to dump those stocks. Similarly, I am prohibited from purchasing stocks for any company that is a client of the firm — and I am prohibited from using information gleaned from my job to purchase stock in a competitor. For example, if I know that a merger is happening (which I frequently have), I can’t purchase a dime in stock. I can’t tell friends, family members, nobody.
If I engage in insider trading, I would be fired and possibly lose my law license and go to prison. While I have no interest in politics, others in my old firm have gone into elected positions. Many members of Congress are attorneys — they know these rules and have had to live by them their entire professional lives. So what that they are a highly intelligent/wealthy group as you discussed above — that just means that they have to be more diligent with their conflicts process.
The only quibble that I have with Jack’s analysis above is the critique of Kerry. Anyone with access to a newspaper, radio, or TV knew that the ACA eventually was going to be passed. It was part of Obama’s platform! Purchasing stock in a pharma company (assuming you have the funds) was a no-brainer. The Pelosi conduct though is hideous.
Even if they can’t go to prison, any elected official who engages in insider trading should be kicked out of Congress for unethical conduct. At a minimum, we shouldn’t reelect them!
I agree, Beth, I think. Its inappropriate for Senator like Kerry to make investments based on his activities on behalf of the country. If he suddenly decided that the bill was fatally flawed—let’s say he decided to actually read it…I know that’s outlandish, but s’pose—and had millions already invested in its passage, he would have a classic conflict, and abstaining wouldn’t be a solution. What if every vote for Obamacare came from an official who has stock riding on its passage, and every vote against it came from an official who was investing in a new start-up for uninsured citizens with medical needs called “Cheap Doc R-Us.” What would that vote be all about?
And the law barely passed. Kerry had the power to derail it…any influential Democrat did, but especially one from Massachusetts.
But there are dozens of pharmas he could have invested in — I think any insider trading rules have to be tailored to conduct traced to a specific company. Anyone can watch CSPAN and invest in companies that would benefit generally from legislation or appropriations — energy, defense, etc.
But that’s the point. He shouldn’t be trading at all in that area. He had insider knowledge and his investment gives him a conflict of interest. What if someone introduced a section of the bill that would have reduced the profits of the pharmaceutical companies that Kerry invested in and save the US public a lot of money? Is he going to vote for his portfolio, or the best interests of the people? What if it was going to harm ‘his’ company more than others?
I own shares in John Kerry’s forehead; about 22 acres of prime beachfront, commercially zoned.
But there’s nothing IN Kerry’s forehead!
Salted earth. Or maybe more forehead. Or ketchup.
RIGHT! He’s privileged to work for the people of the United States…he shouldn’t, and shouldn’t want to, cash in.
The greed of the super rich is staggering. Why do the Kerry’s have to do this. And Bill Clinton needs to “pay the bills.”
Well, in Bill’s defense, he probably has a staggering hush money debt to stay on top of. Kerry has forehead maintenance expenses. Yes, I’m a huge Kerry fan.
Y’see, I don’t have any problem with calling the Pelosi conduct hideous — or corrupt, or a blatant conflict of interest, or any of a dozen other things. I just don’t think that “insider trading” is the correct term for what she did.
I also don’t have a problem with sending her to prison over it or drumming her out of Congress. Frankly, that sort of conduct deserves it — Hell, mandates it.
In my younger days, I used to wonder why really rich people went into politics. I thought, why bother with all the hassle and schmoozing and campaigning and glad handing and rubber chicken dinners?. The answer, of course, is… to get even richer, in a hurry. And it’s not for power. Power’s only useful in so far as it can make you richer.
Put them in gibbets, and let them rot. It will have to happen, sooner or later. 525 fat, gluttonous, selfish slobs are bleeding this nation for all it’s worth, making the rest of us miserable and our children’s futures bleak or worse. We’ve got it backwards; our “leaders” should be holding themselves to a HIGHER standard than the rest of us. So very, very, very tired of these cretins.
Well, after an e-mail-lashing from my noble volunteer proof-reader, I fixed no fewer than 7 dumb typos in this post—missing letters, “our” spelled as “oor” two key missing words. I need Maxwell’s Hammer to come down on my head, and quick.
I’m so sorry.
You are my example of a person who is clear thinking, smart, literate, and educated who still makes errors while writing well. The errors do not mean the writer is stupid. Keep making them for the sake of all of us who can neither spell nor type, but who have ideas that are worth airing anyway. I’d rather be a good thinker than a good editor. Although both would be better, of course.
The truth of it is that my Mom and Dad, both terrific typists, wanted me to learn to type. I hated it, I wouldn’t practice, it slowed my writing, and I still hunt and peck…and most of the typos come from that, combined with the fact that I have always been a wretched proofreader. Good editor! Bad proofer.
Correction: SILVER hammer.
Yikes, didn’t I write that? I’m afraid to check now and see what stupid thing I wrote instead. Copper hammer? Plastic hammer? Cheese hammer? Ugh. Here goes….
Oh, whew…I just left out the silver.
I couldn’t resist.
Figures.
And for what it’s worth…
This hyper-Free Market type is actually 95% confident that the stock market as a concept (not just a practice) is unethical.