Do politicians personally profit from their business ties?
Insider Trading: Illegal for Thee, Not for Me
60 Minutes did a story in 2011 on high-level government officials who profit from insider trading, making government deals and investing accordingly before the information is public. For those not in this protected class, this is considered insider trading and illegal. This revelation manufactured outrage in Washington, DC and our fearless leaders passed the “Stop Trading on Congressional Knowledge” Act or the “STOCK” Act. You know someone gets paid a lot of money to come up with acronyms in Washington? It’s an “essential” job in these economic troubled times.
Congress passed the bill; everyone patted themselves on the back and bought themselves face time on TV. That was, until, they realized enforcing the new law would be hard. So, on the DL (down-low), the so called do-nothing Congress, both Democrats and Republicans, quickly passed an amendment on April 12 and 13, 2012, that gutted key provisions of the act and President Obama signed it into law the next week. If only Washington could move so fast to address the people’s needs.
Essentially the amendment to the STOCK Act removed requirements to create a searchable database that listed disclosures of high-level officials and to file their disclosures electronically for all to see. This makes oversight virtually impossible. Yes, insider trading is still illegal, especially for you and me, but without critical oversight, who knows which politicians and their political allies profit off the stock market or the economy whether they go up or down? A lot of money is made from short selling, so money can be made when the market goes either direction, especially if you know which way the market or economy will go.
Insider trading was illegal prior to 2011 and clearly the oversight and adherence to the original law was questionable. This makes us wonder if politicians still profit off of the market and economic volatility they create with the government shutdowns, debt deal negotiations, and passages of laws, invasions, war and peace.
You Buy Me, I Buy You
It’s virtually impossible for any presidential candidate to win without significant backing of major political donors. Major political donors expect a reward for their generosity; otherwise they wouldn’t be so generous.
Though she speaks a populist message when it’s convenient, Hillary Clinton is cozy with Goldman Sachs, an investment bank the Financial Crisis Inquiry Commission held partly accountable for the 2008 financial crisis we’re still recovering from today. For those inclined to brush this off as a Clinton problem, know that President Obama is called President Goldman Sachs for a reason. Goldman Sachs employees contributed nearly $1 millions to Obama’s 2008 campaign, more than Enron employees gave to George W. Bush’s first campaign. By the close of 2009, Obama had already given governments appointments to five Goldman Sachs employees and Goldman Sachs was the recipient of $20 billion in taxpayer cash as part of the bank bailout. As we already alluded, George W. Bush was just as cozy with Enron as Obama and Clinton are with Goldman Sachs. We don’t feel the need to rehash Bush and Cheney’s ties to Halliburton.
There’s a legal term called “the appearance of impropriety”. Politicians and employees of the heavily regulated investment world are advised to avoid any appearance of impropriety. That is to say, avoid even the slightest possibility that something they say or do suggests anything illegal. There’s, also, the term “hiding in plain sight”. It suggests that what someone does out in the open is absolutely okay; otherwise they wouldn’t do it in broad daylight.
Now that the never-ending election cycle will pick up even more steam in the next couple of months, we wonder if politician’s profits are still guaranteed regardless of what today’s economics is. We wonder if America can find a leader who won’t be bought and sold to the highest bidder.
David Auten and John Schneider are The Debt Free Guys™. After paying off over $51,000 in credit card debt, they have dedicated themselves to helping people live debt free, have fun and be Money Conscious. They are the authors of four books including 4: The Four Principles of a Debt Free Life available on Amazon now.