Peter Schweizer Reacts to the STOCK Act Passing in the Senate

Last Thursday, the US Senate passed the STOCK Act, legislation that would ban members of congress from insider trading. From CBS News:

Members of Congress are already subject to insider trading laws. But it is currently within the law for a lawmaker to buy a company's stock after learning, for example, that an upcoming bill will grant that company a large government contract.

The ultimate fate of the STOCK (Stop Trading On Congressional Knowledge) Act, which comes in the wake of a "60 Minutes" story on potential congressional insider trading, remains unclear - though its prospects are relatively good. Passage in the Senate was complicated by a flurry of amendments added to the legislation, including a proposal that senators be prevented from owning individual stocks unless they are in a blind trust, and another that senators who become lobbyists lose their pensions. Some lawmakers expressed skittishness at the efforts to broaden the scope of the legislation...

One criticism of the original legislation - raised by House Majority Leader Eric Cantor - was that the original bill did not also focus on the executive branch. That issue seems to have been addressed: An amendment to extend the new rules to cover the executive branch passed on Thursday 58-41.

In a statement following the vote, Cantor said he was "pleased" with the Senate action -- but added that that the version of the bill passed Thursday still needed to be reviewed. The Virgina Republican said the House would take up the legislation next week; if the House passes an amended version of the bill, it will have to go back to the Senate for another vote.

C4P readers are familiar with Peter Schweizer's work, shining a spotlight on members of Congress for abusing their positions. In a piece published at The Daily Beast on Friday, Schweizer reacts to the STOCK Act bill's passage in the Senate:

The STOCK Act to ban insider trading by members of Congress has sailed through the Senate, 96-3, and many members of the U.S. Senate were no doubt kicking and screaming as they voted for it. Heck, some of the most prominent cosponsors were people that I identified in my book, Throw Them All Out: How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of Us to Prison, as having stock-trading activities that correlated nicely with their legislative work.

But let’s not let any of that sour the moment. The U.S. Senate has finally passed an important piece of legislation that reminds us all that members of Congress should abide by the same rules the rest of us do, including those involving insider trading.

I’ve made a lot of enemies in Washington over the past three months. I’ve been called names (by members of both political parties) and threatened with litigation. (My response was “go right ahead.”) But let’s take a moment to talk positively about some of those who made a difference in making this happen. After all, the American West was won by wagon train, and it took a team of dedicated and courageous people to bring us to this point.

The media: There were three news outlets that were determined to get to the bottom of this story regardless of who they ticked off: one on TV, another in print, and a third online. 60 Minutes producers Ira Rosen and Gabrielle Schonder, as well as correspondent Steve Kroft, got a lot of heat when they were working on this story. But despite distorted attacks by very powerful people in Washington, who took an “attack the messenger approach,” they didn’t blink. Bravo. Newsweek’s Peter Boyer (The Daily Beast is the online home of Newsweek magazine) was equally committed to getting to the truth and fought for this story to get out and took a lot of ground fire for it. If these individuals don’t win journalism awards for their work, there is no justice. Online, Andrew Breitbart (with whom I work), was all over this story from the beginning and was willing to go wherever it led, which meant going after both Democrats and Republicans, conservatives and liberals. He was essentially alone on this story. The actions of all of these individuals stand in stark contrast to many members of the Washington media who simply ignored the story or actually attacked it in an effort to curry favor with the Washington establishment. Unfortunately, there are a lot of lapdogs and too few watchdogs.

The politicians: The STOCK Act was introduced several years ago, but could never garner more than nine co-sponsors. Congressmen Louise Slaughter (D-NY), Walter Jones (R-NC), Tim Walz (D-MN) , and Brian Baird (a Democrat who represented Washington state, but who has since left) were doing the early lifting on this bill. They were against congressional insider trading before it was cool. They should be applauded. Once the battle was on, Sen. Scott Brown (R-MA) introduced a similar bill and became one of the most fierce in making sure the issue would not go away. Another warrior is Rep. Sean Duffy, a freshman from Wisconsin who recognizes that the STOCK Act is not nearly strong enough by itself and has proposed the RESTRICT Act, which must be passed next.

The American public: In all the people I spoke to about this problem, not one thought that members of Congress should be allowed to do this. And there were plenty of people who went further than simply being angry: they took action. In Birmingham, Ala., more than 100 Tea Party protesters showed up at Rep. Spencer Bachus’s office to protest his stock-options trading. Within two hours of doing so, Bachus declared his desire to hold hearings on the matter. He is now facing a serious primary challenger.

The passage of the STOCK Act in the Senate is just the first battlefield victory in this war for reform. The STOCK Act makes congressional insider-trading illegal. But let’s be clear: it alone doesn’t go nearly far enough to deal with the problems of cronyism and corruption that we face. It deals only with publicly traded stock, not equity buys in private companies. It does nothing to close the sweetheart deals involving IPO shares that can make politicians more money in one day than a bribe ever could. And insider-trading cases are very hard to win. On top of that, the Securities and Exchange Commission and Justice Department are unlikely to go after a powerful politician. Just look at what happened to the FBI when they were investigating Rep. William Jefferson, who famously took bribes and put the money in his freezer. There were threats to cut the FBI budget!

Schweizer then mentions importance of passing Rep. Duffy’s RESTRICT Act and the need to apply these same ethical standards to the executive branch.

You can read the entire article here.

New York Times Pushes Ban on Congressional Insider Trading

The New York Times published an editorial today supporting a bill banning the common practice of insider trading on Capitol Hill. They wrote:

A long-languishing bill to ban stock trading on inside information that lawmakers glean at private hearings and discussions has begun moving toward passage. The bill was lifted from hibernation by a new study from the Hoover Institution and a report on “60 Minutes” detailing the apparent freedom lawmakers have long enjoyed from the insider trading ban that applies to the rest of America.

The reports question the trading practices of leading legislators in the House like Speaker John Boehner, Nancy Pelosi, the Democratic minority leader, and Spencer Bachus, chairman of the House financial committee, when issues like health care reform and the financial crisis occupied center stage. All deny any wrongdoing but, with many others, are jumping aboard legislation offered five years ago by Louise Slaughter, a Democrat of New York.

Ms. Slaughter first proposed the bill when a Republican staffer privy to inside information was discovered making thousands of day trades from his office. The measure gathered dust and only nine co-sponsors — until the “60 Minutes” report was broadcast Nov. 13. Since then, more than 130 other members have signed up.

That report complemented research by Peter Schweizer of the Hoover Institution tracking the stock profits and legislative activities of lawmakers who wind up millionaires. Earlier university studies had found stock-trading legislators smartly outperforming the market by 6 percent to 12 percent in the 1980s and 1990s.

The potential for trading on insider information from the halls of Congress is undeniable and needs to be policed. Indeed, Congress should have protected itself long ago.

Read the entire piece here.

Peter Schweizer discussed the bill on Fox News Business, but doesn't believe it goes far enough. He doesn't think that the SEC will prosecute congressmen once the bill is passed out of the fear of having their own budget cut.

CBS, Jack Abramoff Interview Highlights DC Corruption

Recently, when I sat on a panel during the first ever Grizzly Fest Summit, I spoke about being "disillusioned" with the state of politics and Washington DC prior to learning about Governor Palin in 2007. Disgraced former high-power DC lobbyist Jack Abramoff had a lot to do with that because as the Washington Post described back in 2006 (emphasis):

Former Republican lobbyist Jack Abramoff was sentenced to five years and 10 months in prison on March 29, after pleading guilty to fraud, tax evasion and conspiracy to bribe public officials in a deal that requires him to cooperate in an investigation into his relationships with members of Congress. Sources familiar with the federal probe have told The Post that half a dozen lawmakers are under scrutiny, along with Hill aides, former business associates and government officials.

Which is one reason I gained admiration for Governor Palin after reading about her record. I wasn't turning a blind-eye to corruption in DC just because the players involved had R's next to their names, and neither did she back in her home state. In fact, she risked everything to expose corrupted officials in her own party, which I knew at the time is exactly what it would take to clean up government at every level.

Sunday night, CBS conducted a fascinating interview with Jack Abramoff in which he gave details about how he was able to "influence politicians and their staffers through generous gifts and job offers." CBS reported that:

As a Republican lobbyist starting in the mid 1990s, he became a master at showering gifts on lawmakers in return for their votes on legislation and tax breaks favorable to his clients. He was so good at it, he took home $20 million a year.

Lesley Stahl opens the interview by getting Abramoff to go into detail about his business leading up to his arrest:

Stahl: Can you quantify how much it costs to corrupt a congressman?

Abramoff: I was actually thinking of writing a book - "The Idiot's Guide to Buying a Congressman" - as a way to put this all down. First, I think most congressmen don't feel they're being bought. Most congressmen, I think, can in their own mind justify the system.

Stahl: Rationalize.

Abramoff: --rationalize it and by the way we wanted as lobbyists for them to feel that way.

Of course they did.

Abramoff then goes on to describe how he spent over $1 million on tickets to sporting events lobbying public officials. Purchasing box seats for them and all of their guests and discussing the fact they didn't care if it was legal or not.

Then Abramoff discloses what felt was "best way" to get an official to do what he wanted them to do (emphasis):

Abramoff: But the "best way" to get a congressional office to do his bidding - he says - was to offer a staffer a job that could triple his salary.

Abramoff: When we would become friendly with an office and they were important to us, and the chief of staff was a competent person, I would say or my staff would say to him or her at some point, "You know, when you're done working on the Hill, we'd very much like you to consider coming to work for us." Now the moment I said that to them or any of our staff said that to 'em, that was it. We owned them. And what does that mean? Every request from our office, every request of our clients, everything that we want, they're gonna do. And not only that, they're gonna think of things we can't think of to do.

I think that speaks to how our elected officials operate. If they mindlessly allow their compromised staffers the ability to dictate their actions, they never were who they claimed to be while getting elected. It's disgraceful.

The interview continues:

Abramoff: At the end of the day most of the people that I encountered who worked on Capitol Hill wanted to come work on K Street, wanted to be lobbyists.

Stahl: You're telling me this, the genius of figuring out you could own the office by offering a job to the chief of staff, say. I'm having two reactions. One is brilliant. And the other is I'm sick to my stomach.

Abramoff: Right. Evil. Yeah. Terrible.

Stahl: 'Cause it's hurting our country.

Abramoff: Shameful. Absolutely. It's the worst thing that could happen. All parts of the system.

Leslie Stahl also interviewed former congressman Bob Ney for this segment. Ney resigned in 2006 and served 17 months in federal prison after pleading guilty to charges of conspiracy and making false statements under oath in relation to the Abramoff scandal:

Stahl: Did he own you?

Bob Ney: Oh, I don't believe Jack Abramoff owned me. But were we involved in the culture of corruption together? Absolutely.

I wanted to be speaker of the House and Jack Abramoff was the beautiful light of day for me to get to the person who I had had some conflicts with, Tom Delay.

But I will still tell you, at that point in time, in order to get a drink at Signatures ["Signatures" was a bar and restaurant owned by Jack Abramoff] you had to shove White House staffers of George Bush the heck away from the bar. And it was packed with people. And there were members. Now that doesn't mean everybody did everything for Jack. But if you wanna talk about strict interpretation of violation of the-- of-- of the laws of drink and food, Katey bar the door, she was wide open, two shotguns blarin'.

Abramoff then delivers specifics about he would help his clients - the people paying him to corrupt officials:

Abramoff: So what we did was we crafted language that was so obscure, so confusing, so uninformative, but so precise to change the U.S. code.

Stahl: Here's what you tried to get tacked on to this reform bill.

Abramoff: Yeah.

Stahl: "Public law 100-89 is amended by striking section 207 (101 stat. 668, 672)."

Abramoff: Right. Now isn't that obvious what that means? It was perfect. It was perfect.

Stahl: So that's what you tried to get inserted?

Abramoff: Yes.

Stahl: And that was gonna provide for a casino?

Abramoff: Yes.

Stahl: And who on earth is gonna know that?

Abramoff: No one except the chairmen of the committees.

Stahl: Who stuck it in there?

Abramoff: Yes.

Stahl: And that's one of the things you used to do?

Abramoff: Yes.

Stahl: And it was deliberately written like that?

Abramoff: Precisely. Yes.

Stahl: And that's done a lot?

Abramoff: Members don't read the bills.

Abramoff says something that is hard to hear but it's something that needs to be heard by every taxpayer in this country (emphasis):

Stahl: Was buying favors from lawmakers easy?

Abramoff: I think people are under the impression that the corruption only involves somebody handing over a check and getting a favor. And that's not the case. The corruption, the bribery, call it, because ultimately that's what it is. That's what the whole system is.

Stahl: The whole system's bribery?

Abramoff: In my view. I'm talking about giving a gift to somebody who makes a decision on behalf of the public. At the end of the day, that's really what bribery is. But it is done everyday and it is still being done. The truth is there were very few members who I could even name or could think of who didn't at some level participate in that.

The interview ends with with Abramoff giving his view of the current state of the systemic corruption in Washington DC and then lends some advice about what he feels is the best way to curb it (emphasis):

Stahl: Could you do the same thing today? I'm asking you whether you think the system's been cleaned up?

Abramoff: Could do the same thing that I? Yeah. No, the system hasn't been cleaned up at all.

Stahl: At all.

Abramoff: There's an arrogance on the part of lobbyists, and certainly there was on the part of me and my team, that no matter what they come up we, we're smarter than they are and we'll overcome it. We'll just find another way through. That's all.

If you make the choice to serve the public, public service, then serve the public, not yourself. When you're done, go home. Washington's a dangerous place. Don't hang around.

Abramoff believes that the best way to end this drag on our government is to find a way to prohibit members of Congress and their staffers from working on K Street once their terms are over.

The self-policing of Congress hasn't worked. Only at times when it's politically expedient for them to do so, do we hear the hypocrites on one side of the aisle or the other complain about the corruption of the other party. What gets me is that those people like Nancy Pelosi who gained her seat of power by telling the American people that it was time to end the "culture of corruption" when she herself is vastly compromised.

Corruption is not going to go away by simply wishing it would or trusting elected officials in DC to eventually do the right thing. The American people have to take it upon themselves to educate their neighbors and DEMAND that the people we elect to represent us are held accountable once they get to DC. As Abramoff said "If you make the choice to serve the public, public service, then serve the public, not yourself."

It's up to us to make sure that our elected officials do just that. We need to elect people to serve us who have the moral backbone of Governor Palin. People who will not turn a blind-eye to this corruption. People who will serve the public, even if that means being unpopular with their peers.

You can read the entire CBS interview here.

NY Times: Palin’s Well-Timed Reminder to Freshmen

Did Governor Palin's well-timed Facebook post influence this afternoon's events on Capitol Hill? New York Times writer Michael Shear posted an article today pondering the matter. He wrote:

Sarah Palin has impeccable timing.

The former Republican vice presidential nominee took to her Facebook page Thursday afternoon to warn freshman Republicans in the House that they just might face primary opposition if they cave in to demands by their party to raise the debt ceiling.

“All my best to you, GOP Freshmen, from up here in the Last Frontier. Sincerely, Sarah Palin,” she wrote. “P.S. Everyone I talk to still believes in contested primaries.”

Just two hours later, House Speaker John A. Boehner was forced to postpone the vote on his proposal to increase the debt ceiling at the last minute, apparently facing a revolt among some of those very members.

The House delayed the vote on Mr. Boehner’s bill, moved onto the business of naming post offices, and eventually went into recess.

There is no proof that Ms. Palin’s online missive was even read by any of the wavering Republicans or played any role in helping to stir up the sheep in Mr. Boehner’s flock.

But the former Alaska governor is very good at capturing media attention when she wants it. And refusing to go along with what the establishment — especially the Republican establishment — wants is one of the ways she does it.

I do take issue with Mr. Shear's slight insinuation there, that the governor was looking for media attention. As was obvious from the Scott Conroy interview with CBS from earlier today, the "conventional wisdom" in Washington DC is that Governor Palin does things strictly FOR media attention. Just how ignorant is DC "conventional wisdom" anyway? Do these people not realize that Governor Palin could pick up the phone at any given time and call any reporter of her choosing to get some "attention" if that is what she wanted? No, Sarah Palin doesn't do things so people will feed her ego. That's a trait usually reserved for the non-hobbits who currently reside in the nation's capitol.

Beyond that, it is interesting the how things panned out today. GOP House leaders had been telling the media that their bill was as good as passed, then all of the sudden, it wasn't. Shortly after she republished her letter to the freshmen congress-members from last November, things in the House shifted. Her statement was a reminder about principles and it was a timely reminder, indeed.