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Well, There's Your Problem Right There ... Insider Trading Rules Don’t Apply To Congress
Well, there's your problem right there ...
I've repeatedly pointed out that Wall Street executives are incentivized to lie, cheat and steal. So - of course - they will continue to lie, cheat and steal.
I've repeatedly noted that Wall Street owns the politicians:
- Lobbyists
from the financial industry have paid hundreds of millions to Congress
and the Obama administration. They have bought virtually all of the
key congress members and senators on committees overseeing finances and
banking. The Congress people who receive the most money from lobbyists
are the most opposed to regulation. See this, this, this, this, this, this, and this.
- Obama received more donations from Goldman Sachs and the rest of the financial industry than almost anyone else
- Summers and the rest of Obama's economic team have made many millions - even in the first few months of being appointed, or right beforehand - from the financial industry
- Two powerful congressmen said that banks run Congress
- Two leading IMF officials, the former Vice President of the Dallas Federal Reserve, and the the head of the Federal Reserve Bank of Kansas City have all said that the United States is controlled by an oligarchy
The chairman of the Department of Economics at George Mason University
(Donald J. Boudreaux) says that it is inaccurate to call politicians
prostitutes. Specifically, he says that they are more correct to call
them "pimps", since they are pimping out the American people to the
financial giants:
Real whores, after all, personally
supply the services their customers seek. Prostitutes do not steal;
their customers pay them voluntarily. And their customers pay only with
money belonging to these customers.
In contrast, members of Congress routinely truck and barter with other people's property...
Members
of Congress are less like whores than they are like pimps for persons
unwillingly conscripted to perform unpleasant services.
***
Politicians
force taxpayers to pony it up -- just as the services rendered for a
pimp's customers are rendered not by that pimp personally, but by the
ladies under his charge. The pimp pockets the bulk of each payment; he's
pleased with the transaction. His customer gets serviced well in
return; he's pleased with the transaction. The only loser is
the prostitute forced to share her precious assets with strangers whom
she doesn't particularly care for and who care nothing for her.
Also
like the ladies under pimps' power, taxpayers who resist being
exploited risk serious consequences to their persons and pocketbooks.
Uncle Sam doesn't treat kindly taxpayers who try to avoid the
obligations that he assigns to them. Government is a great deal more
powerful, and often nastier, than is the typical taxpayer. Practically
speaking, the taxpayer has little choice but to perform as government
demands.
So to call politicians "whores" is to unduly insult
women who either choose or who are forced into the profession of
prostitution. These women aggress against no one; like all other
respectable human beings, they do their best to get by as well as they
can without violating other people's rights.
The real villains
in the prostitution arena are those pimps who coerce women into
satisfying the lusts of strangers. Such pimps pocket most of the gains
earned by the toil and risks involuntarily imposed upon the prostitutes
they control. No one thinks this arrangement is fair or justified. No
one gives pimps the title of "Honorable." Decent people don't care what
pimps think or suppose that pimps have any special insights into what
is good or bad for the women under their command. Decent people don't
pretend that pimps act chiefly for the benefit of their prostitutes.
Decent people believe that pimps should be in prison.
Yet
Americans continue to imagine that the typical representative or
senator is an upstanding citizen, a human being worthy of being feted
and listened to as if he or she possesses some unusually high moral or
intellectual stature.
It's closer to the truth to see
politicians as pimps who force ordinary men and women to pony up
freedoms and assets for the benefit of clients we call
"special-interest groups."
But it's not only that the politicos have been bought and paid for. They - like Wall Street titans - are incentivized to lie, cheat and steal.
Specifically, Congress members and Senators can trade on inside information.
As Forbes' blogger Kyle Smith notes notes:
One
thing you can do as a member [of the House or Senate] is study pending
legislation and regulatory changes, call up your broker and instruct
him to trade on that nonpublic information. Do this as often as you
want; you will suffer no penalty. There is no limit to how much money
you can earn on insider trading in the House or Senate. Lawmakers and
their staffers are specifically exempted.As you might expect, those who work in the hallowed halls are not shy about availing themselves of the opportunity. A Wall Street Journal analysis
published more than six months ago that has thus far provoked no
particular sense of shame on Capitol Hill found that at least 72
Congressional aides in both parties had recently traded shares of
companies that their bosses helped regulate. In 2009, while Senate
Banking Committee member Mike Crapo, a Republican from Idaho, was
involved in discussing “stress tests” on banks such as Bank of America,
his aide Karen Brown traded the company’s stock on several occasions
in the weeks before May 7, 2009 — when BofA surged thanks to a press
release on its stress-test result, assuring Ms. Brown a nifty profit.
Asked by the Wall Street Journal
to explain, Sen. Crapo’s office said the trades weren’t really made by
Karen Brown but by her husband, who had no knowledge of what was going
on in the banking committee. Would you go to your compliance officer,
much less the SEC, with that line? True, these folks do need a good
laugh now and again, and the SEC has to be in a jolly mood after the
jury in the Galleon case all but repeated the verdict from The Producers: “We find the defendants incredibly guilty.”
Last week a study of some 16,000 stock transactions carried out by House members was published in the journal Business and Politics.
This detailed analysis showed that the investment portfolios of House
members beat the market by about six points a year. (Democrats did
especially well, outperforming by some nine points a year, while
Republicans topped the average investor by only two percent annually.)
Senators apparently do even better: “their portfolios show some of the
highest excess returns ever recorded over a long period of time,
significantly outperforming even hedge fund managers,” noted the
journal, citing a previously published study.
So Congress members make money if they bail out the big banks which they have invested in.
One of the main reasons that Congress members have approved worldwide, perpetual war is because they benefit from it. The big defense contractors are huge campaign donors.
And - as Mish explains - politicos trade on inside information concerning the defense industry:
I found a Washington Post article written December 19, 2010 entitled Senate panel ban seen as double standard
The
Senate Armed Services Committee prohibits its staff and presidential
appointees requiring Senate confirmation from owning stocks or bonds in
48,096 companies that have Defense Department contracts. But the
senators who sit on the influential panel are allowed to own any assets
they want.And they have owned millions in interests in these firms.
The
committee's prohibition is designed to prevent high-ranking Pentagon
officials from using inside information to enrich themselves or members
of their immediate family.But panel
members have access to much of the same inside information, because
they receive classified briefings from high-ranking defense officials
about policy, contracts and plans for combat strategies and weapons
systems.The prohibition is representative of how members of Congress set strict rules on investing for others in sensitive posts in the corporate world and government while allowing themselves to manage their finances however they please.
Nineteen
of the 28 senators on the Senate Armed Services Committee held assets
in companies that do business with the Pentagon between 2004 and last
year, according to an analysis of financial disclosure forms by The
Washington Post. Those holdings were worth a total of $3.8 million to
$10.2 million.Ethics laws
allow senators to hold stocks in industries they oversee. They also
may push and vote for programs that could improve the bottom lines of
companies in which they own stock. They are precluded, however, from
taking official actions that could boost their personal wealth if they
are the sole beneficiaries.***
Gordon Adams, who
oversaw military spending as a top official at the Office of
Management and Budget in the 1990s, said committee members and
staffers have virtually unfettered access to the highest-ranking
officials at the Pentagon, which, with an annual budget of nearly $700
billion, is the largest part of the government."You get a
great deal of information about the Pentagon's intentions for the
future," said Adams, a foreign policy professor at American
University. "As a member, you have vastly more information than the
average Wall Street adviser or investor."
War
is good for big defense contractors. When new wars are launched, the
defense contractors (and their recipients/investors in D.C.) make a
killing.
Don't expect the politicos to fix the problem. They're part of the problem:

- advertisements -


"We must not look to government to solve our problems. Government IS the problem."
Ronald Reagan
Jefferson, Goldwater and Hayek and knew that the governments, banks and oligharchs will steal the world's wealth, if not restrained.
"We are working hard with the President to cut the deficit." Nancy Pilosi June 3, 2011.
While the Democrats seek $2,400,000,000,000 in additional debt.
And they are.
You seem pretty simpathetic towards whores. Managing property, I've had many apply that I found out were or are whores. They are just as dishonest as the pimps. They often are shoplifters and thieves, and not for food, usually just things they want. They usually have a past or present issue with drugs and violence.
We're not whores. Congress, the senate, the executive branch are filled with them. Their pimps, large coporations, promise them protection during and after their service via ideas to push bills through that make them both wealthy up front (as you said) and also lobbying jobs (sales jobs) afterwards Ie. Greenspan, Rubin, etc.
How can I invest in a Congressman's portfolio? Sounds like some sweet returns.
it all works very well with an awol judicial branch.
Cynical me...we been de' whores for a long time; Tax mules; sheeple...Free yourself. No one will do it for you.
The increasingly whiny bitchy tone of (G)utless (W)imp's posts make me wonder if he's about to go postal ...or if he's just got terminal PMS.
In typical PMS fashion (G)utless (W)imp just whines and bitches, telling us nothing we don't already know, making no point, providing no underlying analysis, offering no forward projections, offering no workable solutions, things that would indicate some true intelligent thought and analysis.
It takes no talent to do a google search, find example after example after example of fraud and crminality, and cite them in his unique "this, this, this, this, and this" fashion. A 5th grader could do it ...which leads me to wonder if (G)utless (W)imp is smarter than a 5th grader.
But let's get back to his PMS-style whining and bitching. What are people like (G)utless (W)imp going to do when things get really bad? Lose their friekin minds? Go postal on us?
Is that what the REAL George Washington did? Just whine and bitch about how bad things were under British rule?
I disagree with you ... I appreciate all contributions on ZH and the ensuing discussions ...
However it is true that mosts of the posts tend to generalize .... for instance, it would be good to know, in addition to what the problem is, if there are any people in congress fightinh the status quo and putting forth proposals to deal with this ... I mean concrete proposals ....
That's like having a room full of regular drunkers in a bar being told to investigate how they can stop drinking. Will they ever really care about trying to stop drinking as a whole? Is making less than $100,000 a year worth the headaches of the job without a bonus at the end of the rainbow? Why would you go to a bar as a drunk if they were going to stop allowing drinks to be served?
Martha Stewart should have been a congressman.....
I sure that all this congressional wealth will trickle down.
For sure it will!!. It is in transit to you right now ... as in it is transitory. The euphoria you are felling now courtesy of the abundant optimism provided by the "full faith and credit of the US Gov't" is what is transitory. After all, they are simply expainding the faith and credit facility offered to them by the US Gov't. Why not take advantage of it?
The whole 'faith and credit' bit takes on a whole new meaning now, doesn;t it?
We should give these people unlimited power over us. They will NOT use it for their personal gain. They can wisely regulate all industry, commerce and human interactions to OUR benefit, not their own. Socialism-collectivism-statism rocks! Just give me more stuff as you get richer and it's all good.
Checking Nancy Pelosi's husband's timing asnd returns would be a good start.
and Diane F. husband Dick Blum
"... Wall Street owns the politicians."
I disagree. Wall Street doesn't need to buy them... they volunteered!
Some folks join the financial elite through their college degrees and the jobs those degrees get them. Others have degrees from the wrong schools and therefore must rise through the ranks. I have become convinced that many (most?) on Capitol Hill ran for office with the expressed purpose of taking the third path to the financial elite -- DC insider.
These are not noble public servants, corrupted. They are larval financial titans, newly minted Masters of the Universe, and they went to DC with that goal in mind. The rest of the congressional work is just something they have to do to get to where they wanna be.
Nobody was bought; nobody corrupted. They were on Wall Street's side from the get go... they wanna be there too.
They're both the same people, just in different stages of development.
I do very much like the way you put that.
GW, great post. The only thing you didn't do was close the umbilicle chord back to the big broker campaign donations (aka bankers owning/pimping Members of Congress from the getgo). You didn't make the link that the Congressional 'inside information' is tranferred to the brokers upon contact by Members.
This then avails the 'brokers' with the inside information also, giving them an equal front running. You honestly don't expect them to pass on the gift horse? Hence the gratitude of the donations is more an unsigned bilateral agreement. What's that? But the donation was not expected to be repaid in kind?
You would then only have to spend 5millseconds tracing the contacts of all these members as to which brokers they might contract with to handle their growing fortunes, and then link the performance of those brokers also profiting from the information.
e.g. here's a $10M campaign donation, if you'll simply agree to use us for any investment requirements you might have during your tenure. We'll even make sure you don't pay commissions and set up a direct line to you.
The first phone call alone will reward the broker with more windfall to more than pay for the campaign donation. Link complete, all legal, ponzi front running with zero lag at the expense of Dimwit Citizen and his superannuation contributions.
This has been happening for many decades, and would not require rocket science to investigate.
edit: ... and then I forget to mention .... Al Gore, climate change, carbon trading, climate exchange trading. Al Gore has created his own gift horse with none other than GS. But Gore's not doing it for the money. /sarc off
Serious though, it doesn;t take much to realise the collusion between brokers and Congress to realise massive profits in supporting and then funding legislation. What hopefully makes more people stand to attention to is that the remarkable insight behind successful "research" is nothing more than this insider frontrunning reaching maturity.
ergo: There isn't a single broker linked to Congress that has made their own 'independent appraisal' of 'new opportunities' without 100% confidence and insider tip that US Congress is going to back it. Exhibit 1: climate change.
My thought as well. What broker getting an order from a congressional insider isn't going to spread the news to his own "expert network"?
We knew beyond a shadow of a doubt , that we were finally abandoned by Congress and Senate with the passage of TARP , against the overwhelming objection by constituents . We the people , had the nail driven in our representative coffins on that day . It was the day that turned the tide against us . So WHY THE SURPRISE , that we are ruled by corrupt thieves . Gullible , greedy ,foolish men ( and women)whom WE voted in . Quitherbitchin! Vote em out or shut up and find another country less corrupt . Good luck!! If one is not part of the solution , he is part of the problem .
Who do you vote for? The "other guy" is just as corrupt. It's the party that has to go. I want 535 independent thinkers up there.
"Exhibit 1: climate change"
CONSPIRACY THEORY!!!!!!!!!!!!!!!!!!!!!!!!
LOL!!
Risk??? Mais Non! That's for the little people...
Now, since we all know this has been going on forever - it's probably not all that remarkable. However - what bugs me is these same jokers telling everyone that they love public service...yadda yadda...
A good trader using inside info would beat the s&p by 600%. Come on GW, these guys ARE stupid or you are leaving out some data
Read Gretchen Morgenson's new book "Reckless Endangerment" for a good discussion of such pesky little problems.
Gee people of wealth and power stacking the deck in their favor??? Whodathunk it...
CONSPIRACY THEORY! CONSPIRACY THEORY! CONSPIRACY THEORY! /sarc
+1 Really Good Stuff George. You got to wonder what their next move is since they have the money now.
come on, 98% give the other 2% a bad name
+100 Haven't seen that one before. HAHA