The STOCK Act would do little to address the problem of insider trading on Capitol Hill, says Hoover Institute fellow Peter Schweizer.
“My biggest concern is enforcement,” Schweizer told The Daily Caller.
He cited the example of former Louisiana Democratic Rep. William Jefferson, who famously stored $90,000 in cash bribes in his freezer.
“He had been taking bribes,” Schweizer explained. “The FBI heard about this, so they did everything they were supposed to do. They got a search warrant from a federal judge and they went in and searched his congressional office. … Congress went absolutely ballistic and said this was an infringement of constitutional rights and authority and there were actually threats to cut the FBI budget as a result of doing this.”
“I just don’t see the SEC wanting to have a fight like that,” said Schweizer. ”And that is why I think law is only as good as its likely or willing to be enforced.”
Remember, this is the SEC that was too busy taking bribes and watching porn at work to see the Mortgage/Banking Meltdown coming!!
Schweizer says the STOCK Act might do some good, but he prefers a bill called the RESTRICT Act, sponsored by Wisconsin Republican Rep. Sean Duffy.
“The RESTRICT Act basically says to members of Congress, number one, you need to put all of you assets into blind trust,” Schweizer explained. ”You know blind trusts aren’t perfect, but I think they are a help. And if you don’t want to do that then you have to disclose, I think on your website within three business days any financial transactions that you engage in.”
Schweizer says that transparency, above all else, is of paramount importance in wringing out lawmakers’ bad habits.
During congressional hearings on the STOCK Act, Schweizer noted, the Securities and Exchange Commission said that it has never charged a member of Congress with insider trading.
“If there was a health care bill going through Congress and people found out in real time that their congressman was trading stocks in the health care sector, I think they would be outraged and vote them out of office or take some sort of recourse,” he said. “The biggest issue is empowering individual voters in terms of disclosure, so I think the STOCK Act is important to pass because it makes clear that the same rules apply to members of Congress.”
The STOCK Act is insufficient because it doesn’t cover investments made in private companies, something he says has been a problem in the past.
In his book ”Throw Them All Out,” Schweizer discusses Colorado Democratic Rep. Jared Polis, who during the health care debate of 2009 bought millions of dollars’ worth of equity in BridgeHealth International, a private medical tourism company. Polis suspected, as did many, that health care reform would cause medical expenses to increase and that more people would seek medical procedures outside of the United States.
BridgeHealth is a private company, and therefore would not fall under the jurisdiction of the STOCK Act.
“He could go ahead and make that kind of trade and potentially use inside information, and he would not be prevented from doing that based on the way that this law currently exists,” Schweizer explained.
The STOCK Act also makes no attempt at guarding against conflict of interest in earmarks proposed by members.
“Bar is so low that basically so long as they can demonstrate at least one other person will benefit from the earmark, it is OK for them or their family members or whoever to profit from the use of taxpayer monies in this way,” Schweizer said. “That is an abysmally low standard.”
Several leaders in Congress have repeatedly sought earmarks that benefit their personal investments. Nancy Pelosi pushed for a $20 million earmark in 2005 “for waterfront redevelopment only two blocks away from the Belden Street property. The earmark was killed in July of that year. The Pelosis increased their financial stake in the property, and the next year Pelosi asked for the earmark again and this time she succeeded,” Schweizer noted in his book.
Earmarks like the Pelosi redevelopment example would not be considered an abuse of insider information under the STOCK Act.
While examining trades made around the time of the 2003 Medicare overhaul, Schweizer experienced what he calls his “Holy crap!” moment. The legislation, which created a new prescription-drug entitlement, promised to be a huge boon to the pharmaceutical industry—and to savvy investors in the Capitol. Among those with special insight on the issue was Massachusetts Sen. John Kerry, chairman of the health subcommittee of the Senate’s powerful Finance Committee. Kerry is one of the wealthiest members of the Senate and heavily invested in the stock market. As the final version of the drug program neared approval—one that didn’t include limits on the price of drugs—brokers for Kerry and his wife were busy trading in Big Pharma. Schweizer found that they completed 111 stock transactions of pharmaceutical companies in 2003, 103 of which were buys.
“They were all great picks,” Schweizer notes. The Kerrys’ capital gains on the transactions were at least $500,000, and as high as $2 million (such information is necessarily imprecise, as the disclosure rules allow members to report their gains in wide ranges). It was instructive to Schweizer that Kerry didn’t try to shape legislation to benefit his portfolio; the apparent key to success was the shaping of trades that anticipated the effect of government policy.
Remember, currently, Insider Trading will get YOU thrown in jail. It just makes Congressman richer. 🙂
Now that’s “fair” 🙂
Fast & Furious
Former Tucson Drug Enforcement Administration chief Tony Coulson told The Daily Caller that Attorney General Eric Holder either knew guns were walking during Operation Fast and Furious, or should have known about the deadly practice.
“[Fast and Furious] was driven locally and it was driven from Arizona, from the ground up, I mean it was not much oversight,” Coulson said in a phone interview. “And, I mean, I can only speak to the reporting, but people all the way up to the attorney general knew what was going on.”
Coulson, who ran the DEA’s Tucson office during Fast and Furious’ implementation, told TheDC he learned that the Bureau of Alcohol, Tobacco, Firearms and Explosives was letting guns walk back in 2009 or 2010. He said he learned this from people who were working in the Phoenix Immigration and Customs Enforcement office. He didn’t know it was called “Fast and Furious,” but said it was widely known guns were walking.
“Nothing that [ATF] was doing was running into what we were doing at DEA from the Tucson level,” Coulson said. “Now, Phoenix was a little bit different. They were, their targets kept running into DEA cases and I think that was reported out of the House letter last week. But in Tucson, we weren’t running into them. How I became aware of it was through Immigration and Customs Enforcement.”
“At the time, [ATF’s] boss here, Bill Newell, was the face and the voice of Alcohol, Tobacco and Firearms,” Coulson added. “If you go back during this time, he’s the one who’s on every major national news station. He’s talking about weapons in Mexico. You know, he was the voice of ATF. I mean, he was driving ATF’s policy. There was very little oversight at the time from anyone on what was going on. I became aware of it because ICE interceded on more than one occasion to seize weapons at the port of entry that ATF was trying to walk into Mexico.”
ICE falls under the Department of Homeland Security, and with the news that Holder hasn’t discussed Fast and Furious with its Secretary Janet Napolitano or Secretary of State Hillary Clinton, there are likely to be new questions into what, if anything, those cabinet officials were told of Fast and Furious.
And, contrary to the picture Holder has tried to paint during his congressional hearing appearances, Coulson said that “yeah, absolutely” law enforcement officials were widely aware the ATF was using gun-walking tactics in Arizona. Coulson went so far as to say he suspects Holder himself was aware of the tactic, or was willfully unaware — meaning he didn’t want to know and made sure he wasn’t informed of gun-walking.
“If someone brings something to your attention and not really all the facts are brought to your attention, yeah we’re sending guns into Mexico, if he [Holder] chooses not to ask the next question, and then makes a statement ‘I didn’t know about that then’ but did find out about it when it became a hot topic issue when he decided well, ‘I should ask that next question now: Are you really walking guns into Mexico?’” Coulson said. “That leads to the next question, which is: ‘Are the Mexicans seizing, recovering those weapons before they’re used in a crime?’ The answer is no.”
And with the widespread knowledge of gun-walking among federal officials in Arizona, Coulson said there’s “no way” people in Washington, D.C., at ATF headquarters and in the Department of Justice didn’t know what was going on.
“I don’t have any firsthand knowledge, but there’s no way people [in Washington, D.C., at ATF headquarters and Main Justice] can say they didn’t know,” Coulson said. “Whether they paid attention to it, whether they thought it was important, how much information exactly did they have? But, you know, at the time, ATF was really laying the story on about these weapons and how this is how they were following investigations to the next level, and how this was leading to ‘big arrests’ and Mexicans tracking guns, which was all kind of smoke and mirrors.”
Coulson also said most other law enforcement officials in Arizona knew Newell had a gun control agenda behind his actions with Fast and Furious and other operations. “Whenever Bill would make those [anti-gun rights] statements [with inflated gun trafficking statistics], everyone would roll their eyes and say, ‘when is someone going to call him on this?’” Coulson said. “That’s because it was only weapons which the Mexican government seized which they chose to trace back to the United States.”
“[Newell] is trying to make this political statement that there is this river of guns, which then the Mexican government picked up on, and said ‘it’s your guns, that’s why we’re having all this violence here,’” Coulson added. “And there’s never any accounting for the fact that probably a majority of the guns, in terms of what law enforcement generally knows, are coming up through Central America and they’re coming from other countries. The 90 percent figure has been debunked as you go along the way. It’s actually something considerably less. … They’re just picking a figure and saying 90 percent of the weapons they seized come from the U.S. Well, really, it’s 90 percent of the weapons that they choose to do a search on results in it originating from the U.S.” (Daily Caller)
So is Holder lying or incompetent or Both!