Ed says:

Buy it!

“Many voters also see members of Congress as knaves. Witness the recent piece on60 Minutes on CBS-TV about two weeks ago reporting on members of Congress who, while enacting laws bearing upon the stock market, used inside information — not available to the public — to purchase or sell stocks, making profits in the millions in some cases. Former Speaker Nancy Pelosi was alleged to be one such member. Apparently, members of Congress are not subject to insider information restrictions that apply to everyone else. It seems to me there is an easy way to prevent that abuse. Congress should require its members to place their stock portfolios in blind trusts, so members cannot use their insider information for themselves or others. Also passing whatever laws are needed to apply existing insider information rules to Congress, as well as the public.”

The full story is here.

MSNBC offers an important analysis of what is going on in Washington over the problem of congressional insider trading.  As they point out,  the big problem is going to be enforcing the law.  The bottom line however is that the STOCK Act in my opinion does not go nearly far enough.  It will not stop lucrative IPOs which are simply a form of legal bribery,  and the act will do nothing about land deals.   And do we honestly think that the Securities and Exchange Committee (SEC) or any agency is going to take on a powerful member of congress?

What do you know? Bachus (R., Ala.) and others NOW think a ban on congressional insider trading would be a good thing!

Lawmakers in both parties began rallying to the bill this week after CBS’s “60 Minutes” aired a program Sunday highlighting the lack of clear insider-trading rules for members of Congress and their aides.

…Rep. Louise Slaughter, the New York Democrat who proposed the insider-trading ban in 2006, says she now has 61 cosponsors for her bill. She had nine on Monday.

Check out the WSJ/Brody Mullins article here.

Be sure to read the great follow-up reporting from Newsweek on how Congresswoman Pelosi and her husband got those IPO shares.  As Newsweek shows,  it was all about courting Pelosi to get what they wanted. Clearly this was all about who she was as a politician.

The story is here.   A teaser:

“The effort began in earnest in late 2007. Ogilvy, one of Visa’s outside lobbying firms, picked off one of Pelosi’s government-affairs advisers, Dean Aguillen, who had close ties in the speaker’s office. Aguillen quit the speaker’s team and went to Ogilvy in December 2007. By law he was unable to lobby his former boss for a year, but he immediately registered to lobby Congress on the credit-card issue, offering guidance to other lobbyists on Visa’s team during strategy sessions, according to a lobbyist present in strategy deliberations.

Thanks to everyone who has sent me their comments on the 60 Minutes piece.   I continue to be amazed by the reaction of Nancy Pelosi who seems to believe that the story and  my book is about her.  The book is about politicians who enrich themselves by using their position of power. I name dozens of people from both parties.

Attack the messenger remains the Pelosi strategy.  Why attack the messenger?  Because the facts,  which were confirmed by 60 Minutes, aren’t in dispute.  The facts are simple:  Pelosi and her husband received IPO shares in Visa.   Check out the financial press at the time.  These were impossible to get,  even for large institutional investors. They received preferential treatment.  The IPO shares were highly profitable.  Based on obtaining 5,000 IPO shares and seeing their value jump by more than $20 a share in one day,  Congresswoman Pelosi and her husband made more than $100,000 very quickly.   There was credit card legislation that was damaging to Visa that she did not support or bring to the House floor for a vote.  The Minority Leader and her staff continue to obscure this, hoping you won’t pay attention.  The credit card reform bill that did pass out of the House had very little to do with Visa.  It hurt the banks that issue the cards,  not Visa.  Visa does not make its money from the interest rates you pay on your cards.  They make it on merchant fees.  The legislation she touts as having passed did nothing about merchant fees.  Bills that did deal with merchant fees had bipartisan support.   As I highlight in the book,  there was merchant fee legislation that passed out of committee with strong bipartisan support from liberals and conservatives.  For two years as Speaker she prevented the bills from getting a hearing on the House floor.  When merchant fee legislation did pass,  it was two years later and was a result of Dick Durbin’s efforts in the Senate.  Congresswoman Pelosi had nothing to do with it. I go into the details in the book.

This is ultimately not just about Nancy Pelosi: there’s a problem with IPOs for every member of congress.  They don’t need to disclose them as IPOs and they are hard to uncover.  In the case of Congresswoman Nancy Pelosi,  I have found 10 IPOs that she and her husband have participated in over the course of her career.  I’m sure there are plenty of others out there yet to be uncovered.

Why did I write this book?

First let me tell you why I didn’t. This is not a book about corrupt political leaders. It is instead about a compromised political system. The purpose of the book is not to single out certain individual members, but to look at a broad pattern of financial transactions and expose possible insider trading and conflicts of interest. The book reveals a pattern of suspicious stock trading by members of congress from both parties based on their financial disclosure statements and legislative activities.

Are these transactions simply a series of coincidences? Perhaps. I don’t claim to know who directed these trades, whether it was the political leadership themselves, a family member, or a financial advisor. And I don’t claim to know that they acted on the insider information they had access to. Without further investigation, we simply cannot know the answers to these questions. But we do know this: the political leaders named here are the beneficiaries of these trades and were anyone else in America to engage in these sort of trading patterns, they would likely receive scrutiny from the Securities and Exchange Commission (SEC). Indeed, private citizens might very likely go to jail were they to do this as it relates to their own jobs.

The real scandal is that in our current system of government, these trades are perfectly legal. We wouldn’t tolerate professional athletes betting on their games. So why do we let our leaders do it on something far more important?

Look for the book on your bookseller’s shelves on Tuesday the 15th, or purchase in advance online via the “Book Buying” tab. Also, tune in to CBS on Sunday for 60 Minutes for a feature on Peter, the book and its subject matter. Additionally, check news stands on Monday the 14th for Newsweek, where there will be a related cover story. Enjoy!