Symptom of the Disease: Politicians and their investments (Example 2)
For my next Symptom of the Disease example we review politicians and their personal finances. When politicians are involved with the regulation of business, they automatically are privy to a defacto version of insider trading. Cleveland.com reports members of the House Financial Services Committee were buying and selling banking and financial service stocks last fall.
Nothing about this looks to be illegal at all, and I’d argue that politicians – just like everyone else – should be able to buy and sell stocks and bonds to improve their portfolio for normal financial planning needs.
But the story certainly is sexy, and is a great example of the symptom of the disease.
As financial markets tumbled and the government worked to stave off panic by pumping billions of dollars into banks last fall, several members of Congress who oversee the banking industry were grabbing up or dumping bank stocks.
Anticipating bargains or profits or just trying to unload before the bottom fell out, these members of the House Financial Services Committee or brokers on their behalf were buying and selling stocks including Bank of America and Citigroup — some of the very corporations their committee would later rap for greed, a Plain Dealer examination of congressional stock market transactions shows. …
“I don’t think that any of these people should be owning these types of financial instruments,” said Brian Biggins, a Cleveland securities lawyer and former stock brokerage manager. “I’m not saying they shouldn’t be in the stock market. But if they’re on the banking committee and trading in these kinds of stocks, I don’t think that’s right.”
The reason why politicians can’t win in a situation like this is unconstitutional spending and regulation by the federal government. It really is as simple as that.
If the banking committees in Washington D.C. did not have the abusive power they now have, we would have far fewer of these sexy stories that sell a lot of newspapers, keep you watching cable news channels, and reading political blogs.
Ed Morrissey at Hot Air proposes the blind trust solution, but I think this is just another treatment of the symptom. If you look back at the history for the Bush/Cheney administration, moving the investments into a blind trust certainly did not limit the conspiracy-bashing stories.
The people who serve on this committee and its analog in the Senate should have their portfolios in blind trusts. The US prosecuted inside-information traders in the 1980s and 1990s for similar transgressions, and the people trusted with power should have much more accountability for their actions. We didn’t elect them to position themselves to profit while the rest of us lost big chunks of our retirement funds. We can’t expect the House to clean its own house on this matter, but we can point out that Nancy Pelosi promised to end the “culture of corruption” — and instead it looks as though it has positively flourished under her leadership.
A politician’s blind trust may be blind to the politician, but the investors in charge do certainly know who the owner is and may/does try to keep investments in line with political leanings. Every time the financial reports are released, it only takes a few minutes of research to find a connection between a new regulation proposed by a member of congress and a buy/sell order that provided the politician a nice bump in their portfolio.
No matter how hard one tries, there is no way around this issue for those in national public office other than demanding politicians keep their money in their local bank’s savings and checking accounts. Good luck with that.
We know what the solution is. What say you? Since Republicans and Democrats can both be easily caught up in these scandals, it really helps no one, except media ratings.
Sen Durbin (IL) sells his stock after a confidential meeting with Sec. Paulson last fall. Pelosi is invested in wind power stocks, Gore is set to make a fortune if this cap n trade is passed. Hmmm, I just wonder if there might be a connection! Can't be…Pelosi said in 2007 that she will lead the most ethical congress ever!!!