Thread: Lawmakers Invested in Bailed-Out Firms Conflict-of-Interest

Lawmakers Invested in Bailed-Out Firms
Conflict-of-Interest Questions Arise

By Paul Kane and Carol D. Leonnig
Washington Post Staff Writers
Thursday, June 11, 2009

Top House lawmakers had considerable holdings in major financial institutions that took billions of dollars in taxpayer bailouts at the end of last year, according to annual financial disclosure reports released yesterday.

From stock holdings to retirement funds to mortgages, more than 20 House leaders and members of the House Financial Services Committee had large personal stakes in the Wall Street powerhouses whose collapse last year led to an unprecedented government intervention in the marketplace. In some instances those lawmakers, like millions of other investors, sold their holdings at steep losses while others retained the stocks at greatly diminished value.

House Speaker Nancy Pelosi (D-Calif.) and her husband lost hundreds of thousands of dollars investing in American International Group, which has received $170 billion in government loans and cash injections, making it by far the largest recipient of federal bailout dollars. Republican Whip Eric Cantor (R-Va.) and his wife held stock, retirement plans and other investments worth at least $183,000 and as much as $495,000 in firms benefiting from federal government rescue efforts, including Goldman Sachs and Morgan Stanley.

At least 18 members of the House Financial Services Committee -- which oversees the banking and housing industries at the core of the economic meltdown -- held stock last year in firms that received federal bailout assistance, according to a review of the forms that were available yesterday.

The release of the annual disclosure forms was not scheduled to occur until tomorrow, but the House clerk's office briefly posted many of them online yesterday, apparently by accident. A firm called LegiStorm captured the data and posted them on its Web site. The Senate will release its forms tomorrow.

The disclosure forms require lawmakers to reveal a broad range of personal holdings and liabilities but not the precise value. Lawmakers are not required to disclose any information about their primary residence, only on rental properties that they own, and they do not have to reveal the terms of those mortgages. Also, Congress requires only that lawmakers list the place of employment and board memberships for spouses, not their annual salaries or director's fees received by spouses.

Some ethics watchdogs were critical of members of Congress for investing directly in companies they oversee. "You wonder if they're voting on things because it's good for the country or because it would increase their personal wealth," said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington.

But other legal experts said lawmakers, like thousands of other voters, are not receiving special treatment. "This illustrates one of the purposes of financial disclosure, and that is for the public to be able to judge whether they think that a particular interest creates at least an appearance of a conflict," said Robert L. Walker, the former chief counsel for the House and Senate ethics committees.

Rep. Barney Frank (D-Mass.), chairman of the Financial Services Committee, co-authored the $700 billion bailout legislation and continues to oversee its implementation.

Frank is one of the few lawmakers who go beyond what the law requires, disclosing more than 145 pages of month-to-month statements from his accounts with Citigroup Global Markets. Frank does not invest directly in stocks, instead concentrating largely on state and local bonds, with a small amount directed into mutual funds.

Frank's personal portfolio broke about even for 2008 -- at about $1 million -- because of steady gains in bonds. In an interview yesterday, the self-proclaimed "regular Sam Adams" said others should heed his investment advice: "I get a steady 4.5 percent, and I help my state in the process. I'm a patriot, and I'm making money, too."

Other lawmakers were not so fortunate.

The Pelosi family lost between $100,000 and $1 million as AIG's stock tanked last year. Pelosi's husband reported a partial sale of between $1,000 and $15,000 of AIG stock on the last day of December 2008. For all their stocks and other investments, taking the most conservative estimate, the Pelosis lost at least $730,000 as stocks nose-dived and other investments soured, but they made up those losses in other investment gains.

Pelosi, whose husband, Paul, runs the San Francisco investment firm Financial Leasing Services, remains one of the wealthiest members of Congress. Her 22-page disclosure revealed investments in San Francisco condos, a Napa Valley vineyard, a hotel resort in Rutherford, Calif., and a San Francisco limousine business. She reports $100,000 to $1 million in income last year from grape sales at the vineyard.

Some members of the financial services panel also took a hit on companies that required federal bailout dollars. Rep. Thaddeus McCotter (R-Mich.), a member of the GOP leadership and booster of his state's imploding auto industry, watched his holdings in Chrysler plummet. His disclosure forms for the end of 2007 showed he had between $1,000 and $15,000 in company stock, which by the end of last year fell to between $1 and $1,000 in value. After receiving more than $10 billion in federal assistance late last year, Chrysler was guided into bankruptcy by the Obama administration, which helped engineer this week's sale of Chrysler to the Italian carmaker Fiat.

Rep. Carolyn B. Maloney (D-N.Y.) sold all her holdings in Morgan Stanley in March 2008, cashing out her stock for between $15,000 and $50,000 -- holdings that a year earlier were worth between $50,000 and $100,000, records show.

Staff writers Ben Pershing and Philip Rucker, research editor Alice Crites and staff researcher Madonna Lebling contributed to this report.

http://www.washingtonpost.com/wp-dyn/co ... 65_pf.html

But other legal experts said lawmakers, like thousands of other voters, are not receiving special treatment. "This illustrates one of the purposes of financial disclosure, and that is for the public to be able to judge whether they think that a particular interest creates at least an appearance of a conflict," said Robert L. Walker, the former chief counsel for the House and Senate ethics committees




I'm sorry but please........

All financial disclosure does is give the criminals running this government the opportunity to rub their crimes right into the faces of the American people knowing damned well that nothing can, or will, be done about it.

They are laughing at us