“People in power, they’ll do anything to keep their crown.” — Mary Gauthier, “Mercy Now”
In 1978, the FBI launched an undercover investigation designed around a fictional Middle Eastern company seeking permits for casino operations in Atlantic City. The case didn’t start out targeting federal officials, but soon seven members of Congress bellied up to the trough and accepted bribes in exchange for influence and favors. Indictments and convictions followed, and the legislative branch was left red-faced.
The apparent eagerness with which a significant number of congressmen engaged in risky behavior left the embarrassing perception that maybe such corruption was more commonplace than realized. Certainly, some reasoned, additional investigation was merited to determine how widespread criminal activity among members of Congress might be. But that never happened. There has been no similar proactive FBI investigation at that level of our federal government. According to retired FBI agents who worked the 1978 undercover case, Congress made it clear through back channels that the FBI’s budget and other authorities could be imperiled if the agency tried such shenanigans again.
Since then, however, the temptation for members of Congress or other senior government officials to line their pockets by directly violating federal statutes probably has abated. The lure of a bribe has been replaced by other sketchy ways to get rich that don’t usually land you in jail.
Federal laws traditionally used to deter and prosecute political corruption are few and narrow in scope. Our public officials have adapted by fostering a profitable operating environment that allows for arguably corrupt personal enrichment without running afoul of the law. The creative ways that a public official can trade on his or her authority, influence, and insider knowledge for personal gain are plentiful and either technically legal or hard to prove otherwise.
If we can reimagine restrictions on police authorities, maybe we can reimagine restrictions on lawmakers who turn modest government salaried jobs into cash cows.
When do the personal enrichment strategies of officeholders and other high government officials become questionable? The answer should be simple: when those strategies conflict with what’s best for the American people. Examples have been well publicized and should be enough to make everyone nervous across our fractured political spectrum.
Insider “Influence” And/or “Trading”
According to a site that monitors congressional investors, members of Congress, and/or their families who traded stocks in 2021, on average, out-performed comparable samples within the S&P 500, making over 3,500 transactions totaling $555 million in value, with an average hold of a little over 100 days. Thankfully, only about a fifth of Congress or their families actively trade, according to required disclosure filings. But the ones who do are in positions of influence in both parties. The top Democrat investor family is that of House Speaker Nancy Pelosi (D-CA), with returns of nearly 50 percent in 2021. Pelosi defended her family’s right to invest while she had special access to interesting information. Well, of course, she did — the Pelosis are killing it. Copying Pelosi family investments looks like a good strategy.
Not far behind is Senate Minority Leader Mitch McConnell (R-KY), who has floated between majority and minority leader for years. He made around a 30 percent return on his investments in 2021.
How can we be assured that politicians who can shape legislation and influence regulations are doing so in the best interests of the country and not the best interests of their investment portfolios? We can’t be sure. Not much stops them from taking investment positions, for example, in Pfizer or Moderna or certain powerful tech companies doing business in China. The only way to eliminate this potential conflict of interest is to reimagine direct trading prohibitions on politicians while they are in office. This is not unfair; they weren’t elected to make money.
Trading in equities while aware of non-public information is not the only way some government officials cash in. Those federally elected cannot convert campaign war chests, which now are quite substantial, to personal use. That money can be used, however, to hire relatives and friends or to fund a nonprofit organization in the office holder’s name.
Congress also allows members to enjoy lobbyist-funded junkets designed to influence legislative action. Many members go on to join lobbying firms or snag lucrative board positions with companies seeking continued influence. These opportunities have grown substantially over time and can make the election to Congress a ticket to riches. How can we be sure that a member is acting in our best interests and not on behalf of a company or industry group where he or she later might enjoy the reward of a high-paying job?
Again, we can’t be sure. But we can reimagine restrictions and prohibitions on certain post-elected office opportunities. Perhaps members would not stay in office for decades if we removed incentives for them to build robust networks that can lead to lucrative jobs.
Direct influence peddling by government officials is particularly distasteful. While Hillary Clinton was Secretary of State, foreign governments and organizations paid her husband, Bill Clinton, eye-watering sums of money for speeches and other appearances. The Clintons increased their net worth dramatically during this period. Their Clinton Foundation also benefited financially. This wasn’t because the former president is a snappy dresser; it was because of the perceived influence he could provide through his wife. It’s no coincidence that when she left office, the gravy train largely dried up.
Hunter Biden’s emails have revealed a family business that would bring a smile to Vito Corleone’s face. Hunter leveraged the influence of his father, Joe, while the latter was in and out of elected office. Joe Biden’s son enjoyed remarkable access and business opportunities with China, and elsewhere, that he couldn’t have dreamed of without the Biden name.
His emails further reveal discussions of payments out of his China business deals from a grateful son to his old man. At a minimum, this creates concerns about the potential for compromised foreign policy toward China.
What Can We Do Reasonably?
Unfortunately, any reimagined restrictions that would be necessary to curtail all of this questionable activity rests in the hands of a legislative body that derives direct benefit from the status quo. Still, that shouldn’t discourage the American electorate or the news media from asking current and prospective members of Congress where they would stand on new restrictions.
What can “We, the People” do about all this? Congress holds the unilateral power of the purse. That means they are the sole arbiters of their compensation, expense accounts, and restrictions on monetary matters. It would be wonderful if Americans could reason directly with their elected officials to reach some agreement regarding “realistic” compensation for those lawmakers. But there’s one specific thing that most Americans are in full-agreement must be stopped: members of Congress using direct or even indirect information obtained from “inside” sources for the express purpose of slipping to the front of the line for great stock and other financial boondoggles unavailable to average Americans.
I see only two possible options that would make these “representatives” do ONLY that when in office. After all, they each campaign in their states and districts begging for our support so they can enhance financial opportunities for their constituents back home. What are these suggestions?
No trading of stock while in office is the easiest way to stop the “Pelosi Rule” from being necessary. With the ability to buy and sell in the financial markets while in office, human nature takes over almost every time some financial opportunity shows up. If members are allowed to transact in the markets, even with egregious restrictions, it’s virtually impossible to monitor such trades and certainly gain easy access to the details of such transactions. But members of Congress would refuse to allow such a process to be initiated.
House Speaker Nancy Pelosi scoffed at the idea of banning congressional lawmakers and their spouses from owning shares of individual companies, despite the possibilities for conflicts of interest between their legislative duties and personal finances.
“No,” Pelosi (D-CA), told reporters at a news conference where she was asked whether she would support such a prohibition. “We’re a free market economy,” she said. “They should be able to participate in that.”
Pelosi’s dismissal of the idea of a stock purchase ban came in response to a question about a Business Insider investigative report this week on share ownership by lawmakers, and after controversies over stock purchases by a number of senators since the beginning of the Covid-19 pandemic. The Business Insider series found that 49 members of Congress and 182 senior-level congressional staffers had violated the so-called STOCK Act, which requires public disclosure by themselves and family members within 45 days of sales or purchases of individual stocks, bonds, and commodity futures.
The Stop Trading on Congressional Knowledge Act, which became law in 2012, is supposed to prevent lawmakers and staffers from engaging in trading on information they glean from their jobs, as well as conflicts of interest. But here’s the problem: such a “rule” that sounds good at stopping the use of inside information for personal enrichment by public servants would require Congress to enact a prohibitive measure containing provisions that would eliminate such trading with the use of information unavailable to their constituents.
Is it realistic for Americans to trust their members of Congress to pull the financial plug because taxpayers want to keep Congressional members from stock trading while serving? That answer is a big, fat “No.”
Remember this: “The love of money is the root of all evil.” (I Timothy 6:10)
“Money” is NOT the root of all evil; the LOVE of money is. People do strange things to accumulate money. It’s sad that this trait must be considered in crafting a way to remove that “love of money” so they’ll just do their jobs.
If lawmakers refuse to listen to voters when the People make it clear that trading in stock or other financial markets will no longer be allowed while they serve in office, we should force them to leave office. Currently, there is no mechanism for doing that. But I am certain it wouldn’t be hard to find enough citizens that will agree on such a process.
It will take the grit and determination of voters. Members of Congress have NEVEF seen the People rise up in that way. And the People need to speak loudly and constantly to send the message to the members that says, “We the People demand that the members of Congress forego any opportunity while serving in Congress to use the power of their positions to enhance themselves financially in any way while in office.
Can we accomplish such a task? Sure we can, but it’s the only way to remove the point of lust for money. And that’s why there MUST be a total ban on such trading.