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.

Obama Says He'll Sign Bill Banning Insider Trading on Capitol Hill

As many of you are aware, Peter Schweizer, Governor Palin's adviser and an editor for Breitbart, has been leading the fight in exposing the insider trading and abuse of power by the nation's lawmakers. To the surprise of many of us, President Obama took up the issue of insider trading on Capitol Hill in last night's State of the Union speech.

Consider me skeptical, yet encouraged by Obama's statement on this particular issue. The other 99% of his speech was just more of the same class warfare, leftist drivel that we've come to expect from the current commander-in-chief, and thus, not very encouraging at all.

Via BigGovernment:

In a State of the Union speech devoid of clarity or specifics, President Barack Obama offered but one shining exception: a direct call for members of Congress to send him a bill to ban congressional insider trading.

“Send me a bill that bans insider trading by members of Congress and I will sign it tomorrow,” President Obama said to applause. “Let’s limit any elected official from owning stock in industries they impact.”

Since the release of “Throw Them All Out,” Breitbart editor Peter Schweizer has been a one-man battalion fighting for members of Congress to abide by the same insider trading laws that apply to all Americans. President Obama’s speech Tuesday night is evidence that Schweizer’s battle against congressional insider trading and cronyism has scored a critical victory.

“It appears that our message has finally broken through,” said Schweizer in an interview Tuesday night with Breitbart News. “Thousands of citizens across America have called and written their representatives and the White House demanding a ban on congressional insider trading. The President’s speech tonight is proof that their efforts were not in vain. Now is the time to apply maximum pressure and get behind Rep. Sean Duffy’s (R-WI) RESTRICT Act. It’s the best proposal I’ve seen to date.”

The RESTRICT (Restoring Ethical Standards, Transparency, and Responsibility in Congressional Trading) Act (H.R. 3550) would require members of Congress to either establish blind trusts or submit to a three day public disclosure of any and all investments. According to Schweizer, the bill is preferable to other bills, such as the STOCK (Stop Trading On Congressional Knowledge) Act, which Schweizer believes do not go far enough to remedy the problem...

“There’s still much work to be done,” said Schweizer. “We need to get behind Rep. Duffy’s RESTRICT Act and let our leaders know that we will not stand idly by as members of Congress profit off of access to material, nonpublic information.”

You can read the entire piece by Wynton Hall here.

While this is indeed a "victory" in the fight against corruption in government, I'll believe that the president is serious about signing a bill when I see it. I'd also like to read any bill he does sign if it ever does land on his desk. Obama is good at selling one thing as another, and since the media rarely calls him out on this, why wouldn't he be?

One last thing that struck me about the president's comments was his sheer hypocrisy. Towards the end of the clip above, he says:

Let's make sure people who bundle campaign contributions for Congress can't lobby Congress, and vice versa – an idea that has bipartisan support, at least outside of Washington.

Yes it does, Mr. President. However, the same should apply to the executive branch, shouldn't it? If you recall, Obama's bundlers were at the heart of the Solyndra scandal.

From the Washington Post:

A major Obama fundraiser strategized with one of his associates last year about how to get White House and Energy Department assistance for a solar company in which his family funds had a substantial interest, according to e-mails released Wednesday by House Republicans.

Tulsa billionaire George Kaiser advised on how to press officials for federal contracts and additional loan assistance for Solyndra, the failed solar company that left taxpayers on the hook for $535 million in federal loans, the e-mails show...

Kaiser was a bundler for Obama’s 2008 campaign and has been a frequent White House visitor, using meetings with top officials to seek stimulus funds for Tulsa-based projects and to discuss his charitable projects, he has said. His family foundation was the biggest investor in Solyndra, but he has denied that he had any involvement in discussions of Solyndra’s 2009 federal loan...

The new e-mails suggest more contact between Solyndra officials and White House officials than was previously known. They suggest that Kaiser and his advisers had hopes that Solyndra would secure a second federal loan.

I do commend Obama for talking about the "corrosive influence of money in politics," I also recognize that the current administration is just as 'corroded' as Congress. My advice to voters is to do as the title of Schweizer's book suggests and "throw them all out" come November, and that includes Obama.

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.

Newsweek Highlights More Revelations from "Throw Them All Out"

In this week’s edition of Newsweek, Peter Boyer takes a look at the new book by Peter Schweizer, “Throw Them All Out” and uncovers even more revelations about the way US lawmakers conduct their own personal business from their seats of public “service.” He writes:

While examining trades made around the time of the 2003 Medicare overhaul, Schweizer experienced what he calls his “Holy crap!” moment. The legislation, which created a new prescription-drug entitlement, promised to be a huge boon to the pharmaceutical industry—and to savvy investors in the Capitol. Among those with special insight on the issue was Massachusetts Sen. John Kerry, chairman of the health subcommittee of the Senate’s powerful Finance Committee. Kerry is one of the wealthiest members of the Senate and heavily invested in the stock market. As the final version of the drug program neared approval—one that didn’t include limits on the price of drugs—brokers for Kerry and his wife were busy trading in Big Pharma. Schweizer found that they completed 111 stock transactions of pharmaceutical companies in 2003, 103 of which were buys.

“They were all great picks,” Schweizer notes. The Kerrys’ capital gains on the transactions were at least $500,000, and as high as $2 million (such information is necessarily imprecise, as the disclosure rules allow members to report their gains in wide ranges). It was instructive to Schweizer that Kerry didn’t try to shape legislation to benefit his portfolio; the apparent key to success was the shaping of trades that anticipated the effect of government policy.

Senator Kerry’s office responded:

“Senator Kerry does not buy, sell, or trade stocks,” says Jodi Seth, Kerry’s spokeswoman. She notes that Kerry’s holdings are in family trusts and managed by independent trustees with whom he does not communicate. Further, Seth says, Kerry is not a beneficiary of Teresa Heinz Kerry’s trusts, which were established before they were married. In any case, Seth adds, Kerry was running for president when the Medicare bill was passed, and he missed much of the debate.

Schweizer replied:

“It’s not that I think John Kerry is calling up his broker, on health care, and saying, ‘Buy this company, sell that company,’?” Schweizer says. “The issue is one of a double standard.” He notes that if the executive of a health-care company were in discussions with the White House over pending legislation that would affect his industry, and then made a series of unusual stock transactions related to the industry, the SEC might well open an insider-trading investigation. “The only group in America that we exempt is politicians, who are probably the last people about whom we should be saying, ‘Oh, we’ll take their word for it,’?” he says. “That’s what’s so amazing to me.”

The article continues:

The Kerry trustees’ impeccable timing in drug company trades was evident again in 2007, when the federal government was weighing whether to discontinue Medicare reimbursement for certain anemia drugs used by cancer patients. When the government announced that it would limit reimbursements, shares in Amgen, one of the drugmakers at issue, dropped 15 percent. Kerry’s wife happened to be an Amgen stockholder but avoided losses; her shares, valued at between $500,000 and $1 million, were unloaded more than a week before the government’s announcement.

Schweizer, an unabashed conservative and a foreign-policy adviser to Sarah Palin, has written books about Reagan and the Bushes as well as polemics about the ruinous ways of liberalism. But this latest book is not an overtly partisan work; as the title, Throw Them All Out, suggests, it should discomfit conservatives and liberals, Democrats and Republicans, alike…

Boyer then moves on to the underhanded activities of Rep. Spencer Bachus, of Alabama:

One of the more dramatic episodes in the book recounts the trading activity of Republican Rep. Spencer Bachus, of Alabama, who, as the ranking member of the House Financial Services Committee, was privy to sensitive high-level meetings during the 2008 financial crisis and proceeded to make a series of profitable stock-option trades.

Bachus was known in the House as a guy who liked to play the market, and in fact he was pretty good at it; one year, he reported a capital gain in excess of $150,000 from his trading activities. More striking is that Bachus boldly carried forth his trading in the teeth of the impending financial collapse, the nightmarish dimensions of which he had learned about first-hand in confidential briefings from Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke. On Sept. 19, 2008, after attending two such briefings, Bachus bought options in an index fund (ProShares UltraShort QQQ) that effectively amounted to a bet that the market would fall. That is indeed what happened, and, on Sept. 23, Bachus sold his “short” options, purchased for $7,846, for more than $13,000—nearly doubling his investment in four days.

Around the time Congress and the Bush administration worked out a TARP bailout, Bachus made another options buy and again nearly doubled his money. The House turned down the TARP proposal, and Bachus’s own Financial Services Committee remained clued in to revisions of what became the final TARP package. In the earlier closed-door briefings, Bernanke had warned the congressional members that a “meltdown in the global financial system” was imminent and that it would spill over into the broader economy if something wasn’t done. With TARP completed, Bachus seemed confident in its effect, now buying options that effectively bet that the market would rise—to mixed results.

Bachus was hardly the only member of Congress trading as the government was coming to grips with the financial crisis. After the first briefing from Bernanke and Paulson, brokers for Democratic Congressman Jim Moran, of Virginia, and his wife sold their shares in 90 companies, dodging the losses that others who stayed in the market would soon face. Republican Rep. Shelley Capito, of West Virginia, sold between $100,000 and $250,000 of Citigroup stock the day after the first meeting, recording capital gains on Citigroup transactions in that rocky period.

Let me just say that I stand with Andrew Breitbart and call on Representative Bachus to resign. Had he been a member of the general public, he would be going to prison for his actions. He’s a disgrace to this nation, as are all other members of Congress who engage in this behavior.

May I also remind C4P readers that Rep. Bachus was the man who blamed Governor Palin for the GOP not taking over the Senate in 2010. Never mind his twisted reality, at least we now know why he took that cheap shot at her… He’s one of them.

You can go here to read the entire Boyer article where he also covers more detail concerning Nancy Pelosi’s very profitable Visa IPO.

Peter Schweizer Exposes More of Obama's Green Corruption

Yesterday, I posted a piece about this weekend's episode of 60 Minutes on CBS which will highlight insider trading on Capitol Hill and showcases the new book written by Governor Palin's adviser, Peter Schweizer.

Today, Schweizer released an excerpt from his new book that will also be available in this weeks edition of Newsweek. In this portion, he goes far beyond the the Solyndra scandal and gives Americans a detailed picture of just how the Obama administration operates, and how they manage to hand over BILLIONS of tax dollars to cronies for political kickbacks. He writes:

Where did green-energy cash go? Straight to campaign donors. Read more about Peter Schwiezer’s Throw Them All Out in the new Newsweek on sale Monday.

When President-elect Obama came to Washington in late 2008, he was outspoken about the need for an economic stimulus to revive a struggling economy. He wanted billions of dollars spent on “shovel-ready projects” to build roads; billions more for developing alternative-energy projects; and additional billions for expanding broadband Internet access and creating a “smart grid” for energy consumption. After he was sworn in as president, he proclaimed that taxpayer money would assuredly not be doled out to political friends. “Decisions about how Recovery Act dollars are spent will be based on the merits,” he said, referring to the American Recovery and Reinvestment Act of 2009. “Let me repeat that: decisions about how recovery money will be spent will be based on the merits. They will not be made as a way of doing favors for lobbyists.”

Really?

It would take an entire book to analyze every single grant and government-backed loan doled out since Barack Obama became president. But an examination of grants and guaranteed loans offered by just one stimulus program run by the Department of Energy, for alternative-energy projects, is stunning. The so-called 1705 Loan Guarantee Program and the 1603 Grant Program channeled billions of dollars to all sorts of energy companies. The grants were earmarked for alternative-fuel and green-power projects, so it would not be a surprise to learn that those industries were led by liberals. Furthermore, these were highly competitive grant and loan programs—not usually a hallmark of cronyism. Often fewer than 10 percent of applicants were deemed worthy.

Nevertheless, a large proportion of the winners were companies with Obama-campaign connections. Indeed, at least 10 members of Obama’s finance committee and more than a dozen of his campaign bundlers were big winners in getting your money. At the same time, several politicians who supported Obama managed to strike gold by launching alternative-energy companies and obtaining grants. How much did they get? According to the Department of Energy’s own numbers … a lot. In the 1705 government-backed-loan program, for example, $16.4 billion of the $20.5 billion in loans granted as of Sept. 15 went to companies either run by or primarily owned by Obama financial backers—individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party. The grant and guaranteed-loan recipients were early backers of Obama before he ran for president, people who continued to give to his campaigns and exclusively to the Democratic Party in the years leading up to 2008. Their political largesse is probably the best investment they ever made in alternative energy. It brought them returns many times over.

These government grants and loan guarantees not only provided access to taxpayer capital. They also served as a seal of approval from the federal government. Taxpayer money creates what investors call a “halo effect,” in which a young, unprofitable company is suddenly seen to have a glowing future. The plan is simple. Invest some money, secure taxpayer grants and loans, go public, and then cash out. In just one small example, a company called Amyris Biotechnologies received a $24 million DOE grant to build a pilot plant to use altered yeast to turn sugar into hydrocarbons. The investors included several Obama bundlers and fundraisers. With federal money in hand, Amyris went public with an IPO the following year, raising $85 million. Kleiner Perkins, a firm that boasts Obama financier John Doerr and former vice president Al Gore as partners, found its $16 million investment was now worth $69 million. It’s not clear how the other investors did. Amyris continues to lose money. Meanwhile, the $24 million grant created 40 jobs, according to the government website recovery.gov.

[...]

The Government Accountability Office has been highly critical of the way guaranteed loans and grants were doled out by the Department of Energy, complaining that the process appears “arbitrary” and lacks transparency. In March 2011, for example, the GAO examined the first 18 loans that were approved and found that none were properly documented. It also noted that officials “did not always record the results of analysis” of these applications. A loan program for electric cars, for example, “lacks performance measures.” No notes were kept during the review process, so it is difficult to determine how loan decisions were made. The GAO further declared that the Department of Energy “had treated applicants inconsistently in the application review process, favoring some applicants and disadvantaging others.” The Department of Energy’s inspector general, Gregory Friedman, who was not a political appointee, chastised the alternative-energy loan and grant programs for their absence of “sufficient transparency and accountability.” He has testified that contracts have been steered to “friends and family.”

Friends indeed. These programs might be the greatest—and most expensive—example of crony capitalism in American history. Tens of billions of dollars went to firms controlled or owned by fundraisers, bundlers, and political allies, many of whom—surprise!—are now raising money for Obama again

There will be a lot of revelations coming out in Schweizer's new book, which hits shelves this Tuesday. For now, you can read the entire released excerpt here.

CBS Report to Expose Insider Trading on Capitol Hill

This Sunday on CBS, 60 Minutes will air a report by Steve Kroft highlighting the insider trading that takes place on Capitol Hill. It will show how America's lawmakers legally buy stock based on non-public information. The report also features Governor Palin's adviser Peter Schweizer, who has a new book on this topic called "Throw them All Out."

CBS reports:

Martha Stewart went to jail for it. Hedge fund honcho Raj Rajaratnam was fined $92 million and will go to jail for years for it. But members of Congress can do the same thing -use non-public information to make stock trades -- and there's no law against it. Steve Kroft reports on how America's lawmakers can legally make tidy profits on information only they know, simply because they won't pass a law against themselves. The report will be broadcast on Sunday, Nov. 13 at 7 p.m. ET/PT.

Among the revelations in Kroft's report:

* Members of Congress have bought stock in companies while laws that could affect those companies were being debated in the House or Senate.

* At least one representative made significant stock purchases the day after he and other members of Congress attended a secret meeting in September 2008, where the Fed chair and the treasury secretary informed them of the imminent global economic meltdown. The meeting was so confidential that cell phones and other digital devices were confiscated before it began.

If senators and representatives are using non-public information to win in the market, it's all legal says Peter Schweizer, who works for the Hoover Institute, a conservative think tank. He has been examining these issues for some time and has written about them in a book, "Throw them All Out." "[Insider trading laws] apply to corporate executives, to Americans...If you are a member of Congress, those laws are deemed not to apply," he tells Kroft. "It's really the way the rules have been defined...[lawmakers]have conveniently written them in such a way as they don't apply to themselves," says Schweizer.

Efforts to make such insider trading off limits to Washington's lawmakers have never been able to get traction.

You can read the whole preview for the report here.

Don't miss 60 Minutes, this Sunday at 7 PM PST/EST and be sure to pick up a copy of Peter Schweizer's new book which will be on shelves this Tuesday.