OPINIONS: What would land you in jail makes Congress rich

It’s time for that to change.

Of course, writing about the ills of Congress is the editorial equivalent of hitting the ball off a tee. It’s pretty easy to make contact. We all know there are real problems.

However, it’s doubtful that many people truly understand that members of Congress enjoy a system set up for plain-as-day institutional graft. There is one set of rules for citizens of the nation. There is a completely different set for Congress. What would land a citizen — even a famous one like Stewart — in jail, enriches members of Congress, who have nothing to fear legally.

First, it’s worthwhile to look back at why Stewart was sent to jail. According to U.S. Securities and Exchange Commission (SEC), the television personality and magazine publisher avoided a loss of $45,673 by selling all 3,928 shares of her ImClone Systems stock on Dec. 27, 2001, after receiving non-public information from her broker at Merill Lynch. The stock value fell 16 percent the next day.

She spent five months in prison for insider trading. She was publicly shamed.

Too bad she wasn’t in Congress.

Steve Croft, of 60 Minutes, reported this past fall on how Congress members pad their pockets with insider information they receive as public representatives. They use this information to make well-timed stock trades on the industries they regulate. In fact, there’s even an industry around Congress dedicated to squeezing out as much insider political information as possible. Hedge fund managers pay big bucks for such insider tips. It can be the difference between first or last in trading.

The 60 Minutes report was a classic. It showed that both parties engage in this form of graft. It is a systemic problem, not a partisan one. It hurts us all.

And the examples of shady dealings on both sides of the aisle were egregious. For example, Croft noted that in mid September 2008, congressional leaders met behind closed doors with the treasury secretary and the federal reserve chairman, learning that a global financial meltdown could occur within a few days.

Alabama Representative Spencer Bachus, then the ranking Republican member on the House Financial Services Committee and now its chairman, used this information about the impending doom to make himself much richer. He certainly had a great stock tip. And he used it.

“While Congressman Bachus was publicly trying to keep the economy from cratering, he was privately betting that it would, buying option funds that would go up in value if the market went down,” Croft reported. “He would make a variety of trades and profited at a time when most Americans were losing their shirts.”

Bachus’ actions were perfectly legal — for him, not for you.

While Congress considered new regulations on credit card companies, then House speaker Nancy Pelosi made a handsome profit off Visa stock. She and her husband received access to initial public stock offerings of Visa. Croft describes those options as “the opportunity to buy a new stock at insider prices just as it goes on the market. They can be incredibly lucrative and hard to get.”

The Pelosis purchased the stock at $44 a share. Two days later it was trading at $64. And the credit card legislation failed to make it to the House floor.

Pelosi declined Croft’s interview request. So he attended her press conference.

“Madam Leader, I wanted to ask you why you and your husband back in March of 2008 accepted and participated in a very large IPO deal from Visa at a time there was major legislation affecting the credit card companies making its way through the-- through the House,” asked Croft.

Pelosi was wide-eyed and livid.

“The — y — I — I don’t know what your point is of your question,” she said. “Is there some point that you want to make with that?”

Croft also tried to set up an interview with John Boehner to ask him about his trades during the health care debate in 2009. He noted that just days before the “public option” provision in the health care bill was killed off, a plan that would have hurt insurance companies, Boehner bought health insurance stocks, all of which went up following his purchases.

“You made a number of trades going back to the health care debate,” Croft asked Boehner at his press conference. “You bought some insurance stock. Did you make those trades based on non-public information?”

Boehner said he didn’t engage in insider trading.

“I have not made any decisions on day-to-day trading activities in my account,” said Boehner. “And haven’t for years. I don’t — I do not do it, haven’t done it and wouldn’t do it.”

Does that pass the smell test?

Croft also pointed out examples of Congress members purchasing land cheap, then getting federal money for a project close to their land. They make a ton off the resale.

OK, perhaps you’re thinking, “Yadda, yadda, yes Congress is crooked. What are you going to do about it?”

Well, yes, there will always politicians seeking to enrich themselves through public office. But we could at least demand that they criminalize such behavior. Right now, they can do it legally. What is this, a third-world country?

Thanks to the outcry over the 60 Minutes report, the Senate is now actually considering the Stop Trading on Congressional Knowledge (STOCK) Act, which would subject members of Congress to prosecution for insider trading.

Let’s see if they actually go through with it. Can Congress actually force itself to part with its ill-gotten cash?

Well, many of them are probably hoping you aren’t paying attention. That’s their only out.

Zach Mitcham is editor of The Madison County Journal.