12 November 2011

Credibility Trap: US Congressmen and Their Staffs Regularly Engage In Insider Trading

These dozen Congressmen are just the ones that would brag about it openly to Jack Abramoff.

Trading in insider information amongst the Congress and their staffs is a form of soft bribery that undermines the character of the legislation, and is a relative side dish compared to the huge amounts of lobbying funds being thrown around by corporate special interests.  And both parties are in on it to varying degrees.

It can seem an odd corruption to the average person, given the lavish benefits and pensions granted to members of Congress. What is shocking is not that officials sell themselves, but rather, that they sell themselves so brazenly and often for so little. But it makes sense if one understands the attitude of privilege and the insatiable nature of greed.

Corruption of public officials is not news. But when it becomes epidemic, and when powerful interests can use even relatively petty offenses to blackmail representatives, when lobbyists write the legislation designed to reform their industry, and when enormous financial frauds result in show investigations and big talk but no prosecutions, then it is news. And it is a shame and the decline of the rule of law.

Big corruption starts to crowd out petty corruption, which is its seedbed. Once corruption becomes institutionalized, the morally ambivalent all aspire to be in the one percent club, as a symbol of status and power.  If this is the age of greed, then not to be corrupt is to be out of step with fashion, because greed is inherently corrupting.  Reformers and progressives are out of touch, and tedious.  Squares.

As is so often the case amongst men in crowds, life imitates high school.

And this distortion of values becomes a self-perpetuating credibility trap, which is what the US is caught in today.

But when the status quo has lost its creative energy, is dwindling, and even become dead wood, there is always hope in the relative outsiders and the young. Life awaits the coming of Spring. Fashions change, and honor and liberty are renewed. And this may be the significance of the protests that are springing up around the country, and the world, today.

The invisible community of the mind and the spirit is resilient. Rising and falling in cycles, it sometimes hides underground beneath the surface, as the seeds of growth and freedom, ready to rise up once again.  Over and over. Always.

Congress Members Took Part in Insider Trading: Abramoff
By Eamon Javers
Friday, 11 Nov 2011

As many as a dozen members of Congress and their aides took part in insider trading based on foreknowledge of market moving information on Capitol Hill, disgraced Washington lobbyist Jack Abramoff told CNBC in an interview.

Abramoff, who was once one of the wealthiest and most powerful lobbyists in Washington before a corruption scandal sent him to federal prison for more than three years, said that many of those members of Congress bragged to him about their stock trading prowess while dining at the exclusive restaurant he owned on Pennsylvania Avenue.

But Abramoff, whose black trench coat and fedora became one of the most notorious images in recent Washington history after his fall from grace, said he didn't play the stock market himself — he considered it an inherently unfair "casino" in which the house had far more information than the players. Abramoff made most of his fortune representing — and, as it turned out, duping — Native American tribes rich with cash from casino operations.

The former lobbyist said the amounts members of Congress earned trading off their inside knowledge ranged from as little as $2,000 to, as much as "several hundred thousand dollars," that was claimed by one member of Congress.

Abramoff declined to name the members of Congress.

"It was more, 'Look at me, I'm a real great stock trader,'" Abramoff told CNBC of the congressional bragging. "All of a sudden somebody from a background maybe in law, maybe in some other unrelated business area, all of a sudden is picking winners and losers in the market."

"I was making far more money than they were," Abramoff recalled. "So I wasn't as impressed as perhaps they thought I'd be."

At the time, Abramoff, who was involved in an extensive corruption ring, didn't think much of it. But after years in prison to reflect on the culture of corruption in Washington, Abramoff says he thinks trading based on inside Congressional knowledge is wrong.

"These people should not be using whatever information they gain as public servants to benefit themselves, any more than they should be taking bribes," he said.

Generally, however, legal analysts say that Wall Street insider trading laws do not apply to Congress. As an open and public institution, the legal assumption has long been that any member of the public can have access to information about how Congress works. In practice, though, that's simply not true, as powerful members of Congress come into contact daily with market-moving tidbits. That gap between the law and the reality has made Capitol Hill a virtual free-fire zone for insider trading. Over the years, academic studies have found that members of the House of Representatives beat the market by as much as six percent per year and members of the Senate do even better than that...

"In this serious hour in our Nation's history when we are confronted with grave crises in Berlin and Southeast Asia, when we are devoting our energies to economic recovery and stability, when we are asking reservists to leave their homes and their families for months on end and servicemen to risk their lives--and four were killed in the last two days in Viet Nam--and asking union members to hold down their wage requests at a time when restraint and sacrifice are being asked of every citizen, the American people will find it hard, as I do, to accept a situation in which a tiny handful of steel executives whose pursuit of private power and profit exceeds their sense of public responsibility can show such utter contempt for the interests of 185 million Americans."

John F. Kennedy, April 11, 1962

"If a free society cannot help the many who are poor, it cannot save the few who are rich."

John F. Kennedy, January 20, 1961