Congressional Representatives’ Conflict of Interest in Regulating Wall Street

The Most Popular Stock in  Congress

“One-fifth of the members of Congress own this company’s stock, making it the most popular investment among members of the House and Senate.

A) Apple (Nasdaq: AAPL)

B) Bank of America (NYSE: BOA)

C) ExxonMobil (NYSE: XOM)

D) General Electric (NYSE: GE)

E) Microsoft (Nasdaq: MSFT)

Have a friend that loves trivia? Pass it on!  Does anyone feel there may be a conflict of interest when lawmakers are invested in stocks of [Wall Street] companies that may (and do) fall under the regulatory oversight of the government?

One-fifth of the members of Congress own this company’s stock, making it the most popular investment among members of the House and Senate.

ResultsThe correct answer is “D”: General Electric (NYSE: GE) is the most popular stock in Congress.  Thanks to a series of rules in 1968 that required lawmakers and aides to publicly disclose information about their finances, anyone can now see exactly what our representatives are buying and selling.  House members outperform the average investor by 6.8% a year, so it’s safe to assume that they must be doing something different, right?

Actually, the most popular stocks held by Congress aren’t some “super secret” investments owned only by those in Congress with some inside knowledge of a future breakthrough. Instead, they’re large multinational corporations that make up the bulk of many average investors’ portfolios.

Click here to learn which Capitol Hill hot shots have the highest net worth: The 5 Wealthiest Members of Congress.

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By DEADLY CLEAR

Does anyone feel there may be a conflict of interest when lawmakers are invested in stocks of [Wall Street] companies that may (and do) fall under the regulatory oversight of the government? How can a lawmaker regulate or make unbiased laws regarding a company he is in bed with?

Congress has written laws that allow them to make investments. When you sit on top of information that controls business and economy – and you make investments, isn’t that insider trading?  How can you not be influenced by the information you obtain?

Financial forms depict rich lawmakers

House Speaker John Boehner doesn’t have as many millions as his predecessor, Nancy Pelosi, but like many new committee chairmen and other leaders, he has holdings in companies that have major financial stakes in the actions of Congress. For Boehner, that includes a portfolio of stocks in oil companies, financial firms, communication companies and pharmaceuticals. Holdings among other lawmakers include farmland, real estate and investments in high tech companies.

None of this violates congressional ethics rules. The rules state that members can’t use their official positions for personal gain and limits to $26,100 what they can earn as a director of a business or for actual work performed outside Congress. They, however, do not limit personal investments, a source of considerable wealth for many lawmakers.

What a great job!  Wouldn’t you love to take a job that allowed you to use inside information to make millions that was paid for by the taxpayers?  Depending upon your mindset you could become filthy rich while in office, wined and dined by lobbyists and then write a book about it.

OMG – we should all run for office and spread the wealth! Maybe that’s why Congressional House representatives were only given 2-year terms – maybe they need to change every 2 years and our forefathers knew it! 

The framers of the Constitution designed the House of Representatives to be the most democratic body of the national government, as responsive as possible to the popular will. Compared to senators, members of the House represent smaller numbers of voters and serve shorter terms. The framers’ idea was to make congressmen more accountable to voters, and thus more representative of public opinion at any particular moment in time.

Think about it – take a hard look at your Congressional representatives, House and Senate, this year.  Look at their investments, income and assets… Maybe they’ve made enough money from their inside information and it’s time to replace them with someone who doesn’t yet know how the game is played and might really do some good…. like regulate derivatives.

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3 thoughts on “Congressional Representatives’ Conflict of Interest in Regulating Wall Street

  1. Pingback: Congressional Representatives’ Conflict of Interest in Regulating Wall Street | Foreclosure News Online

    • I respectfully disagree with you. These derivatives are the root of the credit crunch. Why? Unlike all other property paper, derivatives are not required by law to be recorded, continually tracked and tied to the assets they represent. Nobody knows precisely how many there are, where they are, and who is finally accountable for them. Thus, there is widespread fear that potential borrowers and recipients of capital with too many nonperforming derivatives will be unable to repay their loans. As trust in property paper breaks down it sets off a chain reaction, paralyzing credit and investment, which shrinks transactions and leads to a catastrophic drop in employment and in the value of everyone’s property. Let’s face it – when the derivative figures reach $600 Trillion plus – they’ve gotten a little carried away. Even at $62 Trillion – it’s a bit much.

      This summer Brazil took measures to regulate derivatives. “The securities commission will gain greater powers to regulate derivatives trading, while companies will be obliged to be more transparent,” said Finance Minister Guido Mantega at a news conference, following release of new rules.

      Under the new rules, Brazil’s securities commission will oblige all participants in that market to register their transactions in an effort to create greater transparency. The new rules target derivatives trading for the first time, in line with Brazilian government suggestions in recent years at international forums. Among the new rules is a 1% financial transactions tax on investors with short-dollar positions. Mantega called such positions “speculative.” Mantega added that, under the new rules, the government could raise the tax to as much as 25% at any time. “For now, the rate is set at 1%,” he said.

      The new rules also include a provision that will charge a 6% financial transactions tax on companies that pay off short-term loans ahead of schedule. The 6% tax on loans of two years or less was put in place earlier this year. Mantega said the new rule was simply “closing a loophole regarding short-term loans.” The commission could also set limits on the volume per investor of short-dollar positions.

      Governments can no longer tolerate the use of opaque and confusing language in drafting financial instruments. Clarity and precision are indispensable for the creation of credit and capital through paper. Western politicians must not forget what their greatest thinkers have been saying for centuries: All obligations and commitments that stick are derived from words recorded on paper with great precision.

      Above all, governments should stop clinging to the hope that the existing market will eventually sort things out. “Let the market do its work” has come to mean, “let the shadow economy do its work.” But modern markets only work if the paper is reliable.

      The Government can also tighten and increase the penalties. You lie, misrepresent, mislead, commit fraud, aid & abet, fail to inspect and perform significant due diligence – you pay AND go to jail. Period. You fail to report or blow the whistle – you are an accomplice, you too pay fines and go to jail. Mortgage-backed securities were KNOWN in the industry to have inflated property appraisals, systematically abandoned underwriting guidelines and over-rated bonds. These material misrepresentations were unknown to the borrowers and to the actual investors, the workers whose retirement and pension funds were gambled away. Broaden the securities laws to enable borrowers, whose collateral was inflated used to bait investors, to file suit against the culprits for fraud.

      Yeah, I think government can and by all means should regulate derivatives. Frankly, I don’t think Americans would even wince if a prison were to be built in the Marshall Islands and these banksters hauled off for 5-10 years. It certainly didn’t work to de-regulate them.

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