Thread: BOOK REVIEW : THROW THEM ALL OUT

BOOK REVIEW : THROW THEM ALL OUT



Book Description

Publication Date: November 15, 2011

One of the biggest scandals in American politics is waiting to explode: the full story of the inside game in Washington shows how the permanent political class enriches itself at the expense of the rest of us. Insider trading is illegal on Wall Street, yet it is routine among members of Congress. Normal individuals cannot get in on IPOs at the asking price, but politicians do so routinely. The Obama administration has been able to funnel hundreds of millions of dollars to its supporters, ensuring yet more campaign donations. An entire class of investors now makes all of its profits based on influence and access in Washington. Peter Schweizer has doggedly researched through mountains of financial records, tracking complicated deals and stock trades back to the timing of briefings, votes on bills, and every other point of leverage for politicians in Washington.

The result is a manifesto for revolution: the Permanent Political Class must go.

Congress: Trading stock on inside information?

Congress: Trading stock on inside information?

Washington, D.C. is a town that runs on inside information - but should our elected officials be able to use that information to pad their own pockets? As Steve Kroft reports, members of Congress and their aides have regular access to powerful political intelligence, and many have made well-timed stock market trades in the very industries they regulate. For now, the practice is perfectly legal, but some say it's time for the law to change.

The following is a script of "Insiders" which aired on Nov. 13, 2011. Steve Kroft is correspondent, Ira Rosen and Gabrielle Schonder, producers.

The next national election is now less than a year away and congressmen and senators are expending much of their time and their energy raising the millions of dollars in campaign funds they'll need just to hold onto a job that pays $174,000 a year...

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Throw Them ALL Out

by Tony Lee

11/14/2011


Congress’s approval ratings are at all time lows. So are President Obama’s. Mainstream media organizations are losing more of the public’s trust by all measures. The Republican presidential field is not capturing anyone’s imagination. Those associated with the Tea Party movement and Occupy Wall Street protests (at least those who are not murderers, rapists, and spreaders of contagions) have expressed their frustrations at a system in which the playing field is by no means level.

A new book by Sarah Palin​’s adviser Peter Schweizer appropriately titled, Throw Them ALL Out, documents the inner workings of Washington that many have always suspected.

Last night on CBS’s 60 Minutes​, the revelations of Schweizer’s book were detailed. Nancy Pelosi​’s purchase of VISA stock while she was overseeing legislation that would directly impact the stock’s value was chronicled. Former Speaker Dennis Hastert’s land dealings were discussed. Alabama Congressman Spencer Bachus’s stock trades, with access to information that the public did not have during the TARP debate, were mentioned--as conservative firebrand Andrew Breitbart​ has called for Bachus to resign from Congress. Senator Judd Gregg was not spared. Neither were John Boehner​ and John Kerry’s trades in healthcare stocks.

As Schweizer writes in Throw Them ALL Out:

Politicians have made politics a business. They are increasingly entrepreneurs who use their power, access, and privileged information to generate wealth. And at the same time well-connected financiers and corporate leaders have made a business of politics. They meet together in the nation’s capital to form a political caste.

In short, the Permanent Political Class has clearly figured out how to extract wealth from the rest of us based solely on their position and proximity to power. If you have a seat at the table, you are in for a feast. If you don’t have a seat at the table, you are probably on the menu. Exactly how crony capitalists are consuming public wealth and fattening themselves is the subject of this book.

In his book, there are even more revelations about Pelosi. Consider this:

For years, Nancy Pelosi has pushed for earmarks to construct and ultimately extend San Francisco’s so-called Third Street Light Rail Project. In 2004, she boasted to her constituents that she had secured more than $120 million in federal money for the project. Third Street is one of the most expensive light rail projects ever, costing $660 million for just a six-mile route.

According to Schweizer, those earmarks had the effect of directly benefiting the commercial property holdings the Pelosis had near those lands where federal money was doled out for these projects.

Schweizer also details how Pelosi, perhaps like Pete Rose​ betting on his team to win, often supported policies and green energy programs in the name of promoting liberal leaning policy objectives that would also conveniently benefit her stock holdings.

What’s even more frustrating to Schweizer is that none of these activities, many of which would be illicit in other industries, are perfectly legal. As Schweizer writes, that is a main reason why politicians who come to Washington without too much money end up becoming millionaires many times over by peddling access and information. Schweizer writes:

Access to government information is critical. And being on good terms with the gatekeepers of that information — elected officials, political appointees, and bureaucrats — can make all the difference between getting rich and getting hammered in the market.

Obama is not spared in the book either. Much of Obama’s venture socialism has been on display recently with revelations coming out every day about Obama’s “green loansâ€

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This review is from: Throw Them All Out (Hardcover)

It's good to be a Congressman. Prove it's possible to get rich trading options without knowing about technical analysis. Always get out of the market just before TSHTF (that's a standard survival preparedness expression - it's in the vernacular). Life is fair - for some people.

If I weren't already a Declinist, this book would make me so. When I go to the election booth, I don't see the option, "None of the above," below the candidate names. If Peter Schweizer's research is correct, I never stood a chance.

How do our nation's top politicians exit office with millions more than credible based on their salaries and perhaps some patient investing? Nobody has directly and fully answered that question until Throw Them All Out was published.

The club Schweizer calls the `Permanent Political Class' makes rules for itself. Members with no time to meet small business constituents do not spare any trouble to legally enrich themselves through earmarks, real estate deals, securities violations, trading on inside information, self-dealing with stimulus funds and literally every budget item.

This gets into the purpose of the nation's Capital from the perspective of elected officials. DC is a profit center for them and all that support them in various capacities. They use government to enforce sophisticated pay-to-play and don't-make-no-waves rules. There is little incentive for them to leave Washington, which is one reason they became the permanent political class.

Schweizer cites popular officials that play the IPO (Initial Public Offering) game. For example, he shows how Nancy Pelosi, the 60th Speaker of the United States House of Representatives with an estimated net worth of $58 million, bought 5,000 shares of V (Visa) at the privileged IPO price $44. This trade showed a profit immediately. The shares reached about $88 in a matter of days. However, Pelosi worked on major related legislation was killed in the body she led. This helped avoid a strong negative affect on the price of the stock, and she benefited. The rest of us can't do it because we're subject to conflict of interest rules, unlike lawmakers. Plus, we're not invited to participate in IPOs until after the price is run up.

Schweizer points out that if you're an elected official and you sit on an important committee, you are allowed to trade on information that comes your way. These officials can even help shape decisions that have economic consequences and then participate in the winnings. It stands to reason that if you're on the banking committee, you probably trade bank stocks, playing it both long and short. If you're a staffer, you may accumulate sensitive non-public information and sell it to hedge funds.

This book is a manual on ways to give money legally to elected officials. The Pay-to-Play regime and the flow of insider information can be used by even the most novice traders using an online brokerage account. One big story is how Congressman Spensor Bachus used a private meeting with Fed Chair Bernanke and Treasury Secretary Paulson. Bachus was in the role of Ranking Member on the House Financial Services Committee. He used the dire information presented to him in this meeting to bet heavily that the market would go down, using option trades. Bachus, working with Bernanke and Paulson from July 2008 to November 2008, scalped $50K out of the falling market. The book has lots of war stories like that.

Here are some politicians cited without their titles for brevity in Part One in this book (Part Two gets into their cronies):
Chapter 1 - John Kerry; Tom Carper; Melissa Bean; Jared Polis; James Oberstar; Jeb Bradley; John Boehner; Jim McDermott; Amo Houghton.
Chapter 2 - Max Baucus; Jim Moran; Dick Durbin; Rahm Emanuel.
Chapter 3 - Nancy Pelosi; Gary Ackerman.
Chapter 4 - Dennis Hastert; Carolyn Maloney; Judd Gregg; Ken Calvert; David Hobson; Heath Shuler; Bennie Thompson; Maurice Hinchey; Jerry Lewis; Harry Reid.

Congressmen are big winners in the stock market. They cultivate companies in their loyalty structure from whom they get insider information often at the committee level. There are many ways they get rich while serving constituents, especially if you know what big deal Warren Buffett will do and when. Many names are given in this book of successful inside information operators within Congress.

While Throw Them All Out is our wake up call, it is also a potential training guide for future politicians. After all, Congress is unlikely to change the substance of rules that allow them to make a killing year on year. We should not aspire to do what they do. This would land the rest of us in prison and earn their contempt for us.

60 Minutes Catches Nancy Pelosi with Her Dress Down

This past Sunday night, Steve Croft of “60 Minutesâ€

Pelosi aide calls '60 Minutes' report a 'smear'

Carolyn Lochhead, Chronicle Washington Bureau

Tuesday, November 15, 2011

Washington -- House Minority Leader Nancy Pelosi's office accused the news program "60 Minutes" of omitting key information from its report Sunday on how members of Congress use privileged information to profit from stock trades.

Pelosi spokesman Drew Hammill also called the report "a right-wing smear" based on a new book by conservative author Peter Schweizer of the Hoover Institution, a think tank based at Stanford University. The book is titled: "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 Jail."

Pelosi, a San Francisco Democrat, was highlighted in the report along with House Speaker John Boehner, R-Ohio, and House Financial Services Committee Chairman Spencer Bachus, R-Ala., among others.

In an interview Monday, Schweizer said the "most egregious" allegations of insider trading concerned Bachus. At the height of the 2008 financial panic, Bachus participated in private briefings by Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson warning that the financial system was about to collapse.

The next day, "60 Minutes" reported Sunday, Bachus bought a stock fund designed to rise in value when the market sank.

Studies led by Georgia State University Professor Alan Ziobrowski found that stock portfolios of senators beat the market by 12 percent annually, while those of House members by about 6 percent, returns he called abnormal.

"There is no law that says a congressman can't go into the cloakroom, hear some information that is about to have an important impact on a company and then, before it becomes public, go right to his stockbroker and trade," Ziobrowski said. "It is a tremendous temptation."

The "60 Minutes" segment suggested Pelosi had a conflict of interest because she and her investor husband, Paul Pelosi, bought stock in Visa, the credit card company based in San Francisco, in March 2008 while a bill that would limit the fees credit card companies could charge merchants was pending in the House.

Three purchases

The Pelosis bought Visa stock three times in 2008: 5,000 shares at $44 each in an initial public offering March 18; 10,000 shares after the IPO at $64 on March 25; and 5,000 shares at $86 on June 4.

The credit card fees bill, by then-House Judiciary Committee Chairman John Conyers, D-Mich., passed his committee on Oct. 3, 2008, but did not reach the full House. Pelosi was speaker at the time and controlled which legislation came to the floor.

Pelosi's office said Monday that "60 Minutes" should have reported that Oct. 3, 2008, was the same day the House was voting on the bank bailout known as the Troubled Assets Relief Program, amid a crisis atmosphere on the last regular day the House was in session. Its leaders were trying to round up votes for the bank rescue, and no other bills had much chance of reaching the floor.

The month before, Pelosi led House passage of the Credit Cardholders Bill of Rights, a bill also considered hostile to the industry. It was opposed by the Bush administration and died in the Senate, but was enacted in 2009.

A version of the Conyers fee limit became law in 2009 as part of a larger regulatory overhaul.

Pelosi spokesman Hammill said "60 Minutes" relied heavily on a "discredited conservative author who has made a career out of attacking Democrats," citing Schweizer books such as "Do as I Say (Not as I Do): Profiles in Liberal Hypocrisy."

Schweizer accused Pelosi of trying to shoot the messenger rather than address stock trading by members of Congress and their staffs.

"The issue is what the facts say and whether people think there's a problem with a senior member of Congress, whoever they are, taking IPO shares of corporations that have legislation sitting in front of them," Schweizer said.

Stopping trading

A bill by Rep. Louise Slaughter, D-N.Y., called the Stop Trading on Congressional Knowledge Act, or STOCK, would ban congressional insider trading. It had just nine sponsors until Monday, when nine more joined, none from California.

Donna Nagy, an Indiana University law professor, said members of Congress could be prosecuted under current Securities and Exchange Commission rules if they commit fraud involving violation of a fiduciary trust or silence about relevant non-public information.

"I would argue, and I would hope the government would argue, that the federal government and its citizens are defrauded and deceived if a member of Congress trades securities on the basis of material non-public congressional knowledge," Nagy said.

E-mail Carolyn Lochhead at clochhead@sfchronicle.com.

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