Why Congress Can't Stop Stealing
Salary of rank-and-file members of the U.S. Congress: $174,000.
Average annual Civil Service Retirement System benefits for retired members as of 2007: $63,696.
But the profits they can make by trading on inside information?
For years, we've railed against corruption in Washington. We've called out the congressmen who fired up printing presses to bail out AIG (NYS: AIG) , Citigroup (NYS: C) , Bank of America (NYS: BAC) , and their ilk -- then turned around and shorted the U.S. dollar in the sure knowledge it would fall. We've pointed fingers at the congressional staffers who, taking a cue from their bosses, invested in SunPower (NAS: SPWR) and Energy Conversion Devices (NAS: ENER) as they worked up legislation to subsidize the solar power industry. We've ranted. We've railed -- all to no avail.
But that's all about to change.
Democracy in action ... or democracy inaction
In multiple columns, on multiple occasions, The Motley Fool has urged readers, and voters, to contact their members of Congress and urge passage of the Stop Trading on Congressional Knowledge Act. (That's right -- the "STOCK Act.") This law, if passed, would forbid anyone working on Capitol Hill from trading stocks based on information acquired from their involvement in the passage of laws.
A lot of you responded. In fact, at last count our petition through Change.org had tallied 1,821 signatures supporting passage of the STOCK Act. Unfortunately, 1,821 signatures plus nearly six months in which to consider the bill still hasn't added up to any movement on the bill. At last report, the STOCK Act remains stuck in the same committee that's ignored it since March. Chances are, it would have stayed there, too, but for the intrepid reporting team at 60 Minutes, which on Sunday shined new light on this scandal -- and embarrassed the heck out of some very powerful people in Washington.
You've got 60 Minutes to mend your ways
People like Rep. Spencer Bachus, R-Ala., who according to 60 Minutes used the 2008 financial crisis as a means of inflating his personal piggybank by trading shares of General Electric (NYS: GE) during the financial meltdown.
People like Rep. John Boehner, R-Ohio, whom I urged to take action on the STOCK Act when he took over as House speaker. Problem was, according to 60 Minutes, Boehner himself was buying shares of health insurance stocks at the same time his party was busy trying to water down Obamacare to minimize the restrictions on how these same health insurers conducted their business.
People like the woman who held the speaker's job before Boehner -- Rep. Nancy Pelosi, D-Calif. -- who somehow managed to get a piece of the 2008 Visa (NYS: V) IPO at its ultralow offering price. An IPO that I suspect a lot of us would have liked to get in on had only we known that the way to do that was to first get ourselves elected to Congress. (Visa's shares rocketed nearly 50% over the two days post-IPO, by the way, and have more than doubled since.)
In short, from the congressional rank-and-file like Bachus, all the way up through the very top echelons of House leadership (both of the last two speakers -- sheesh!), a lot of folks had vested interests in maintaining the status quo in Congress and ensuring that 1,821 (and counting?) citizen complaints against corruption in Congress went nowhere fast. I wonder if such blatant self-interest has anything to do with the astoundingly low level of the popularity of Congress today.
"I am not a crook!" -- Richard M. Nixon
If you live in the United States of America (and statistically speaking, if you're reading this article, you probably do), then chances are you're familiar with the theory that "all politicians are crooks." And I admit -- there's something to that. But here's the good news: As of this week, more than 10% of the members of the U.S. House of Representatives are doing the right thing.
Now that this story has moved from the Web pages of one well-intentioned website and onto the mass market airwaves of CBS, it appears that Congress is finally taking notice ... of the fact that other people have noticed what they're up to. Nearly overnight, the number of co-sponsors of the STOCK Act has leapt from five (where it stood back in March) to 65 (where it stands as I write this).
It's not a majority, but it's a start. At long last, the movement has momentum. And I for one want to extend a hearty "thanks" to CBS for lending its mass media muscle to get the ball rolling.
What can you do to help keep the ball rolling? Two things:
- First, shoot us a blank email to firstname.lastname@example.org to let us know that trading on inside knowledge of upcoming laws in Congress is not OK with you. We'll keep you updated on all the Fool's efforts to fight for reform on Wall Street and elsewhere in the legislato-financial complex.
- And second, don't let the movement lose momentum. Add your voice to the petition urging Congress to get off its keister and pass the STOCK Act now!
At the time this article was published Fool contributor Rich Smith does not own (or short) shares of any company named above, but The Motley Fool owns shares of Bank of America and Citigroup, and Motley Fool newsletter services have recommended buying shares of Visa. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.