When I say "corrupt" that is not a metaphor.
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.
What part of "conflict of interest" isn't clear here?
Compare and contrast that to people who work at places like the FDA. If you work there, you are forbidden from holding stocks in any company that MIGHT have business in front of the FDA. In fact, you can't even hold mutual funds that have more than 50% of their stocks in companies that MIGHT have business in front of the FDA.
So while everyone is out to beat public employees about the head and shoulders, 130 members of congress are using their inside knowledge to make a killing. The real sad news here is this probably will fall down the memory hole faster than you can say "conflict of interest."
So who are these 130 people and why is this a problem? Good question.
Turns out, according to a recent Washington Post investigation looking at 45,000 individual congressional stock transactions that 1 out of 8 intersected with legislation pending before the person making the trade. This was done while bills were passing through committees or legislation was pending before Congress. That comes out to about 43 transactions per person. And you thought DC council members were dirty. Hah...they are bush league by comparison.
This is not a party problem, which is why you won't see this getting a lot of mileage on the news. The split is about 50/50 for both Democrats and Republicans. This is the sort of thing that leads me to say the real two-party system in this country is not Democrats vs. Republicans so much as Incumbents vs. Challengers. Lieberman really cinched that for me...what the hell is "Independent Democrat" if not another name for "Corporate Shill"?
People are going to pretend that the Stock Act (barring lawmakers and staff from trading on inside info) took care of this problem. As I mentioned, if you work at FDA you can't trade in a stock for a pharmaceutical, even if you have nothing to do with it. All the Stock Act does is bar you from using "insider information" ... but legislation and pending legislation is not "insider information" so you can use that to trade all you want.
If anyone calls you on it (as the post did with several legislators) you can always defend it as "coincidental" that you traded stock in X when they were lobbying your committee. For example, take Tom Coburn, he put a hold on a piece of legislation in 2007 on the Genetic Information Nondiscrimination Act, a bill that limits how insurance companies and employers could use genetic info to discriminate. After he got what he wanted, Coburn lifted the block on April 22, 2008. That same day, he went out and bought $25,000 in bonds from a company lobbying on the legislation. The day after the transactions cleared, he voted for the bill.
When you look at the performance of legislators, you find they are consistently outperforming the markets in these trades. That should come as no surprise, really. Consider the infrequent and highly profitable trades of Ed Whitfield. He had stocks in GE that he had held for 12 years, but suddenly got the urge to sell right before he and his Republican colleagues killed the carbon cap bill that would have profited GE. The stock lost about 20% of its value a few days after he executed his trade.
Total coincidence.
This isn't an isolated incident. There were hundreds of millions of dollars traded on stocks and bonds in 323 companies that were actively lobbying Congress. We are talking at almost 15% of the total stock transactions made by these guys. No wonder these guys are outperforming the market! This is what corruption looks like. No one is holding a gun to anyone's head, but if you think this isn't having a corrupting influence then you never had someone tempt you with a wad of hundred dollar bills.
A lot of folks think they can be immunized from the appearance of conflict by letting their spouses trade the stocks. As Bush's former chief ethics lawyer noted, "your wife isn't a blind trust. Your financial adviser isn't either."
I only wish the folks who did the work at the Post had published more details about the various transactions they uncovered. Or even if they could put them online in a searchable format. By focusing on Republicans, you can count on this getting buried by FOX and enablers like Drudge. Nonetheless, this is a serious, pernicious, deeply embedded, and growing problem. Add the revolving door and cushy jobs for staffers in lobbying firms and the real shocking news is only one third of congress is corrupt.