Palin in USA Today: Congress, It’s Time to Stop Lining Your Pockets

Palin gets ready to hammer Congress

Sarah Palin yesterday called for legislation to keep Congress honest. She called the Brown & Gillibrand legislation weak and full of loopholes. An excerpt below:

Does anyone really think the SEC under current law will have the courage to investigate the insider trading in Congress? Remember that this corruption (and failure to deal with it) encompasses both sides of the aisle. We fool ourselves thinking we can trust an agency dependent on Congress for its budget to investigate Congress.

I hate the idea of more laws, but because our politicians have shown a failure of ethical leadership, we must reassert the rule of law through strong new legislation that holds Congress accountable and prevents retaliation against whistle-blowers and regulatory agencies investigating corruption. Legislation has been put forward, but there are serious concerns that these bills contain major loopholes in stopping congressional insider trading and the gifting of IPO stocks from companies seeking to influence policy. In fact, Robert Khuzami, the SEC’s director of enforcement, testified that the bills as written only make stock transactions related to pending or prospective legislation illegal, not any other insider information trading; and they only cover stock transactions, not options trades, exchange traded funds or mutual funds.

The bills by Sens. Scott Brown, R-Mass., and Kirsten Gillibrand, D-N.Y., are particularly weak. Members of Congress should disclose all trading activities immediately, not after 90 days as their bills propose. More immediate disclosure deadlines (similar to the strict deadlines corporate executives adhere to when trading certain amounts of stock) are imperative for real transparency.

Members of Congress must be required to put their assets into blind and “deaf” trusts. Deaf because we must make it illegal both to trade on non-public government information and to pass on such information. It does no good to set up a blind trust run by a friend, family member, or acquaintance and then casually pass on information to that person. Technically, members of Congress can claim they weren’t actually making the trade or ordering another person to make the trade; they were simply “having a conversation” concerning information any competent trader would know what to do with.

Doesn’t this sound like  something an old-time, pre-Obama-era Dem would write? Or maybe that’s just me deluding myself. Right now Palin is the only one saying this, and she considers herself an Independent registered as a Republican.

The whole article is here. She will keep hammering this issue until the GOP takes notice, because even though she is not running for President (yet), she is still the specter in the corner. GOP politicians at all levels would like her endorsement, but more, they fear her censure.

This entry was posted in Uncategorized. Bookmark the permalink.

11 Responses to Palin in USA Today: Congress, It’s Time to Stop Lining Your Pockets

  1. votermom says:

    PDSers going crazy over an unsourced Hollywood Reporter story that Palin & Mark Burnett pitched a reality show about Iron Dog and didn’t get any takers.

  2. votermom says:

    Related: WSJ

    (I will paste the whole thing since it might go behind their firewall)
    http://online.wsj.com/article/SB10001424052970203413304577088881987346976.html

    Congress’s Phony Insider-Trading Reform
    The denizens of Capitol Hill are remarkable investors. A new law meant to curb abuses would only make their shenanigans easier.
    By JONATHAN MACEY

    Members of Congress already get better health insurance and retirement benefits than other Americans. They are about to get better insider trading laws as well.

    Several academic studies show that the investment portfolios of congressmen and senators consistently outperform stock indices like the Dow and the S&P 500, as well as the portfolios of virtually all professional investors. Congressmen do better to an extent that is statistically significant, according to studies including a 2004 article about “abnormal” Senate returns by Alan J. Ziobrowski, Ping Cheng, James W. Boyd and Brigitte J. Ziobrowski in the Journal of Financial and Qualitative Analysis. The authors published a similar study of the House this year.

    Democrats’ portfolios outperform the market by a whopping 9%. Republicans do well, though not quite as well. And the trading is widespread, although a higher percentage of senators than representatives trade—which is not surprising because senators outperform the market by an astonishing 12% on an annual basis.

    These results are not due to luck or the financial acumen of elected officials. They can be explained only by insider trading based on the nonpublic information that politicians obtain in the course of their official duties.

    Strangely, while insider trading by corporate insiders has long been the white collar crime equivalent of a major felony, the Securities and Exchange Commission has determined that insider trading laws do not apply to members of Congress or their staff. That is because, according to the SEC at least, these public officials do not owe the same legal duty of confidentiality that makes insider trading illegal by nonpoliticians.

    The embarrassing inconsistency was ignored for years. All of this changed on Nov. 13, 2011, after insider trading on Capitol Hill was the focus of CBS’s “60 Minutes.” The previously moribund “Stop Trading on Congressional Knowledge Act” (H.R. 1148), first introduced in 2006, was pulled off the shelf and reintroduced. The bill suddenly had more than 140 sponsors, up from a mere nine before the show.

    The “Stock” Act, as it is called, would make it illegal for members of Congress and staff to buy or sell securities based on certain nonpublic information. It would toughen disclosure obligations by requiring congressmen and their staffers to report securities trades of more than $1,000 to the clerk of the House (or the secretary of the Senate) within 90 days. And it would bring the new cottage industry in Washington, the so-called political intelligence consultants used by hedge funds, under the same rules that govern lobbyists. These political intelligence consultants are hired by professional investors to pry information out of Congress and staffers to guide trading decisions.

    Publicly, House members echo bill sponsor Rep. Louise Slaughter (D., N.Y) in saying things like: “We want to remove any current ambiguity” about whether insider trading rules apply to Congress. Or as co-sponsor Rep. Timothy Walz (D., Minn.) put it: “We are trying to set the bar higher for members of Congress.”

    On closer examination, it appears that what Congress really wants is to keep making the big bucks that come from trading on inside information but to trick those outside of the Beltway into believing they are doing something about this corruption. For one thing, the rules proposed for Capitol Hill are not like those that apply to the rest of us. Ours are so broad and vague that prosecutors enjoy almost unfettered discretion in deciding when and whom to prosecute.

    Congress’s rules would be clear and precise. And not too broad; in fact they are too narrow. For example, the proposed rules in the Stock bill are directed only at information related to pending legislation. It would appear that inside information obtained by a congressman during a regulatory briefing, or in another context unrelated to pending legislation, would not be covered.

    At a Dec. 6 House hearing, SEC enforcement chief Robert Khuzami opined that any new rules for Congress should not apply to ordinary citizens. He worried that legislators might “narrow current law and thereby make it more difficult to bring future insider trading actions against individuals outside of Congress.”

    This don’t-rock-the-boat approach serves the interests of the SEC because it maximizes the commission’s power and discretion, but it’s not the best approach. The sensible thing to do would be to rationalize the rules by creating a clear definition of what constitutes insider trading, and then apply those rules to everyone on and outside Capitol Hill.

    If the law passes in its current form, insider trading by Congress will not become illegal. I predict such trading will increase because the rules of the game will be clearer. Most significantly, the rule proposed for Congress would not involve the same murky inquiry into whether a trader owed or breached a “fiduciary duty” to the source of the information that required that he refrain from trading.

    If enacted, the law of insider trading will remain one of many where one reality applies to Congress and an uncomfortable and insecure reality applies to everybody else. Just as Congress is protected from the vicissitudes of ObamaCare, Congress will remain safe from the vagaries of insider trading law. The rest of us will still be vulnerable.

    Mr. Macey is a law professor at Yale and a member of the Hoover Institution Task Force on Property Rights.

    • dorkle says:

      Sarah Palin is on the money with this issue, it seems.

      That can’t be right, though, because she’s just so pedestrian. /snark

      BTW, great post. I’m tentatively hoping some candidate will be vote-worthy, because at this rate I may decide to sit out which will be my first time ever. Granted that I’ve only been eligible to vote in the last three elections. lol

  3. yttik says:

    Well done Palin. Keep hammering away at them!

    It’s pretty astounding that congress is exempt from insider trading laws. They are literally white collar criminals doing what would put anybody but a congresscriter in jail. Poor Martha Stewart, she went to jail, not for insider trading herself, but for refusing to spill the beans on someone else. I guess congressional ethics is an oxymoron.

  4. DandyTiger says:

    This whole issue is sort of everything wrong with congress in a nutshell. And the fact that they don’t want to talk about it or provide real solutions is not surprising. I hope Palin keeps hammering until they can’t ignore it any longer.

  5. votermom says:

    Is it just me or does the pic I used for this post keep disappearing?

  6. Karma says:

    I bet the O-DNC is kicking themselves every time Palin speaks, without the constraint of the Gov’s office, that they decided to swamp her with lawsuits. 😉

    O/T but about Palin.

    http://blogs.ajc.com/jay-bookman-blog/2011/10/07/top-mccain-aide-we-might-have-stripped-palin-of-office/

Comments are closed.