Crony Capitalism and Insider Trading in Congress

Discussion in 'Politics' started by BluePhantom, Nov 14, 2011.

  1. BluePhantom
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    BluePhantom Educator (of liberals)

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    From the Washington Post no less.

    Crony capitalism exposed - The Washington Post

    Insider trading is illegal — except for members of Congress. A Wall Street executive who buys or sells stock based on insider information would face a Securities and Exchange Commission investigation and quite possibly a federal prosecutor. But senators and congressmen are free to legally trade stock based on nonpublic information they have obtained through their official positions as elected officials — and they do so on a regular basis.

    On Sunday night, CBS News’ “60 Minutes” looked into this form of “lawful graft.” The “60 Minutes” story exposed, among others, then-House Speaker Nancy Pelosi for participating in a lucrative initial public offering from Visa in 2008 that was not available to the general public, just as a troublesome piece of legislation that would have hurt credit card companies began making its way through the House (the bill never made it to the floor). And it showed how during the 2008 financial crisis, Rep. Spencer Bachus (R-Ala.) — then-ranking Republican on the House Financial Services Committee — aggressively bought stock options based on apocalyptic briefings he had received the day before from Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson.

    The report was based on an explosive new book by Peter Schweizer that will hit stores on Tuesday. It’s called “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.” (Full disclosure: Schweizer is a close friend, a former White House colleague and my business partner in a speechwriting firm, Oval Office Writers.

    The “60 Minutes” story only scratches the surface of what Schweizer has uncovered. For example, Bachus was not the only member of Congress trading on nonpublic information during the financial crisis. On Sept. 16, 2008, Schweizer writes, Paulson and Bernanke held a “terrifying” closed-door meeting with congressional leaders. “The next day Congressman Jim Moran, Democrat of Virginia, a member of the Appropriations Committee, dumped his shares in ninety different companies . . . [his] most active trading day of the year.”

    Rep. Shelley Capito (R-W.Va.) and her husband “dumped between $100,000 and $250,000 in Citigroup stock the day after the briefing,” Schweizer writes, and “at least ten U.S. senators, including John Kerry, Sheldon Whitehouse, and Dick Durbin, traded stock or mutual funds related to the financial industry the following day.” Durbin, Schweizer says, “attended that September 16 briefing with Paulson and Bernanke. He sold off $73,715 in stock funds the next day. Following the next terrifying closed-door briefing, on September 18, he dumped another $42,000 in stock. By doing so, Durbin joined some colleagues in saving themselves from the sizable losses that less-connected investors would experience.” Some members even made gains on their trades, at a time when ordinary Americans without insider knowledge were seeing their life savings evaporate.

    Schweizer also documents numerous examples of how members of Congress of both parties — including Pelosi, Senate Majority Leader Harry Reid and former House speaker Dennis Hastert — have used federal earmarks to enhance the value of their own real estate holdings. They have done so, Schweizer shows, by extending a light-rail mass transit line near their property, expanding an airport, cleaning up a nearby shoreline, building roads and bridges, and beautifying land and neighborhoods nearby — in each case “substantially increasing values and the net worth of our elected officials, courtesy of taxpayer money.”

    Perhaps the most disturbing revelations come from Schweizer’s investigation into the Obama Energy Department and its infamous “green energy” loan guarantee and grant programs, a program Schweizer calls “the greatest — and most expensive — example of crony capitalism in American history.” The scandal surrounding Solyndra — the now-bankrupt, Obama-connected solar power company that received a federally guaranteed loan of $573 million — is well known. But Solyndra, Schweizer says, is only the tip of the iceberg.

    According to his research, at least 10 members of President Obama’s campaign finance committee and more than a dozen of his campaign bundlers were big winners in getting tax dollars from these programs. One chart in the book details how the 10 finance committee members collectively raised $457,834, and were in turn approved for grants or loans of nearly $11.4 billion — quite a return on their investment.

    In the loan-guarantee program alone, Schweizer writes, “$16.4 billion of the $20.5 billion in loans granted went to companies either run by or primarily owned by Obama financial backers — individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party.” That is a staggering 71 percent of the loan money.

    Schweizer cites example after example of companies that received grants or loans and documents their financial connections to the Obama campaign and the Democratic Party. And he shows how “the [Energy] department’s loan and grant programs are run by partisans who were responsible for raising money during the Obama campaign from the same people who later came to seek government loans and grants.”

    There is much, much more, which means that when Schweizer’s book hits stores Tuesday, heads in Washington are going to explode.
     
  2. Vaard
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    Vaard Active Member

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    one thing i didnt see is how long has this been going on........

    when was congress made exempt from these laws?
     
  3. mskafka
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    mskafka Silver Member

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    Having insider information prior to the stock market tanking, and buying put options. Does it get any better than that? That's better than going to a casino, betting against the shooter at craps, and the stickman loading the dice for you to roll 7.

    This is sickening; and it's time for it to stop. It's crossed my mind before, but I never thought there would be this many. Like many others, I thought it was illegal for them, just like for the rest of us.
     
  4. BluePhantom
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    BluePhantom Educator (of liberals)

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    It is illegal for them. It's completely illegal. If you or I did that we'd be in jail and they should be too...Republican or Democrat (and it happens on both sides) they should be prosecuted.
     
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  5. mskafka
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    mskafka Silver Member

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    I concur. I don't give a rat's ass which party they belong to. That borders on evil.
     
  6. B. Kidd
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    B. Kidd Gold Member

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    IPO's.....Initial Public Offerings, when it comes to stock. Congressman have the inside track. Also, if you caught the whole gist of this report, a whole new service called 'Political Intelligence' has sprung up, tipping off hedge-fund operators of potential laws being passed that can give them an inside track on investments.
    Our votes really no longer count whomever gets elected, and if elected to Congress, you'd be an idiot NOT to partake of our current corrupt system.
     
  7. BluePhantom
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    BluePhantom Educator (of liberals)

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    Well it's tough for me to bitch about someone dumping their stock on an inside tip. I mean what are you supposed to do? Just let stand there and watch your money get pissed down the drain? I guess that's what everyone else has to do, but I can understand that a lot more than going and buying stocks on privileged Congressional information. That's flat out bullshit.
     
  8. mskafka
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    mskafka Silver Member

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    I mentioned in another thread that I would be tempted to do it as well. Yes, I saw the "political intelligence" part, and my blood pressure shot through the roof.

    Talk about opportunistic. The rest of us have to read the numbers and the news to decide what to invest in. It's no wonder so many of them are filthy rich. Hell, we would be too, if we had that advantage. Options would be a cinch, if you had insider information.
     
    Last edited: Nov 14, 2011
  9. BluePhantom
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    BluePhantom Educator (of liberals)

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    Well shit...that's just the start. Why do you think companies make all these campaign contributions? A little overlooked thing is that when a politician retires they get to keep all the money left over in their campaign fund. So what happens is a company gives $100 million in a bundle contribution to politician A. That politician then arranges a government grant or loan or subsidy, or whatever for $200 million. That covers what the company needs plus what was contributed to their campaign fund. Then the the politician spends $20 million campaigning and pockets the $80 million left over. What they have essentially done is launder $80 million in taxpayer funds straight into their pockets.
     
  10. Lovebears65
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    Lovebears65 Gold Member

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    This is why all these MFers get rich in Congress. Just like the gambler . They know when to hold them know when to fold them.
     

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