After a few more hours of investigation I found some more interesting things and decided to update and repost this diary at a better time of day.
The Longview Daily News picks up a story about the connection between K Street and Wall Street that makes one wonder just how much money Republicans are making by controlling Congress.
U.S. Rep. Brian Baird on Friday stepped up his "crusade" to ban congressmen, their staff and a small circle of investors from profiting by lawmaker decisions not yet made public.
Baird said an article last spring in The Hill, a D.C. newspaper devoted to covering Congress, drew his attention to firms that pass "political intelligence" gathered on Capitol Hill to Wall Street investors.
The Hill story appeared in February this year. Who heard anything about
this?
Lobbyist Elliott Portnoy knew his inside information would have an effect on Wall Street before he hung up the phone. The New York-based client on the other end listened a few seconds and then excitedly translated Portnoy's news. "Go short!" the client yelled to his trading staff, according to Portnoy, who heads up the public policy practice at Chicago-based Sonnenschein Nath & Rosenthal.
With Congress passing laws the financial sector opposes, Wall Street "seems to be coming back [to Washington] with a vengeance," said Collender, who used to work as an analyst at Price Waterhouse and advised Wall Street clients such as Smith Barney on what Washington was up to. Social Security reform, which promises huge returns for Wall Street, and tax-cut efforts have contributed to the rise in interest in Washington, Collender added. "The information helps them figure out what the right trade is tomorrow," Collender said. "Even a 10-minute heads-up can be critical."
Given Sen. Frist's insider trading troubles it would be nice if we saw some MSM attention to this issue. There is a good reason for elected officals to have true blind trusts.
Update: I found this diary on DailyKos that referred to a report done by Dr. Alan Ziobrowski, Associate Professor of Real Estate at Robinson College of Business that discusses just how well Senators do in the stock market. According to the report
We test for abnormal returns from the common stock investments of members of the U.S. Senate during the period 1993--1998. We document that a portfolio that mimics the purchases of U.S. Senators beats the market by 85 basis points per month, while a portfolio that mimics the sales of Senators lags the market by 12 basis points per month. The large difference in the returns of stocks bought and sold (nearly one percentage point per month) is economically large and reliably positive.
The Georgia State University student newspaper has the best article on the report with this great quote from Doctor Ziobrowski,
When asked if there is any difference between a senator's actions and insider trading, Dr. Ziobrowski stated there is not. "Technically speaking, all of them deny they did anything," stated Dr. Ziobrowski. "None of them would want to acknowledge they are personally profiting from their positions."
and
Even though, the current public disclosure law requires the senate to report their assets and stock transactions, Dr. Ziobrowski stressed the need for the public to understand that the current system is only a cosmetic issue. "Theory was you could look at what they own and you could make a decision as to whether they were acting ethically or not, but that's not true," Dr. Ziobrowski said. "It tells me what they bought...I may know they own the XYZ company, but how will I ever know if they were doing anything to help out XYZ."
Professor Bainbridge, a corporate law professor at UCLA, on his website points out:
Given that the senators are producing returns that best even such stars as Peter Lynch and Warren Buffet, shouldn't they go manage mutual funds instead of running the country? Or are senators trading on the basis of inside information?
I work for a financial investment advisor and most of our clients are blue collar workers who have retired after spending 30 or more years working tough jobs. They don't have millions to play with and have to invest conservatively. I guess I will be telling my boss to check into creating a Senator's Special portfolio.