I'm going to link the national issue Congressional financial trading, with the very local issue of Baltimore political officials getting free concert tickets, but you'll have to be patient.
Last Thursday the House finally passed the long overdue STOCK ACT, or the Stop Trading on Congressional Knowledge Act.
Editors Note: Of course I wrote this right before last night's Daily Show focused on ripping apart this bill, so I will say this now for those who care, I did not do this to just run with their arguments, though a lot of what they poked fun at I will poke fun at as well.
The act simply spelled out what all crooks on the hill should have known was wrong in the first place. It prohibits federal employees (congressmen - I don't use PC terms like Congress People, just think of how stupid that sounds) from using "any nonpublic information derived from individual's positions as a Member[s] of Congress or employee[s] of Congress, or gained from performance of individual duties, for personal benefit."
In other words, if a congressman knew that some piece of impending legislation, or regulation, or budget allocation would either boost or hurt a company's stock holdings, he couldn't take that knowledge that is nonpublic and privy to him, and use it for his financial gain, by say quickly unloading a stock before a company takes a hit or benefits from said congressional action.
Or really, in other words, before this bill was passed, congressmen could LEGALLY participate in what otherwise would be prosecuted by the SEC as insider trading. In fact, this practice wasn't uncommon at all.
See this bill was first introduced by Washington state's Brian Baird and New York's Louise Slaughter back in March of 2006, where it died in committee, not surprisingly. It was tried again about a year later, and suffered the same fate.
In March of 2011, Tim Walz of Minnesota brought it back to the House, and he somehow got eight other legislators drunk enough to co-sponsor it by November.
Then, in another example of why we need to keep good journalism alive because who else is going to call these people on shit they so badly need to be called on, 60 Minutes did a fantastic piece, explaining the STOCK Act's long and mostly neglected Congressional history, actually asking tough questions to congressmen on both sides of the aisle about previous potential benefits from congressional financial knowledge, asking the status of the bill, and generally kicking ass in a way that if the rest of the news world did, we might not have such a whacked-out political environment.
So long story short, after a few more introductions and incantations, it being an election year and all, politicians realized how bad they looked in this mess, and they had one of those disingenuously landslide votes.
The drama and crisis of conscious of the proceedings was well described by Robert Pear in his piece for the New York Times. The patting one's own back may have best been captured by a quote from New York representative Kathy Hochul, who said, "we need to stop the insidious practice of insider trading, giving members of this body an unfair advantage over Americans who sent us here to represent them....Let us begin the long process of restoring the faith of the American people in this institution."
Well that long process, however, ended before the vote in the House even took place. See, while the House showed how in to this whole thing they are by passing it 417-2, they left out provisions that would regulate the collection of "political intelligence." (Insert oxymoron jokes here)
See the House realized it was obviously wrong for Congressmen to profit directly from insider information by using it to make moves with their own stock portfolios. But, if a congressman didn't touch his own stocks, but sold that insider information to a financial firm, collecting a handsome compensation for such services while the firm uses the knew knowledge to reap profits, well that is perfectly fine.
And the worst part is the bill didn't even outright outlaw it. It first just wanted to make all of those political intelligence firms have to register like lobbyist and be a little more open about how they do business and with whom. It would simply push for more open government, which any patriotic fan of democracy should want in spades. But Congress was comfortable cracking the window a little, but not letting full disclosure in. Because after all, government is evil, big and clandestine, that is, until you become a part of it.
So what can I say, my faith is obviously restored.
Now I won't deny there are some potential holes and issues with this bill, but the underlying idea is a good one, and one the country, and maybe more so the Legislature, needs. But to leave out such a huge loophole as the political intelligence provision just shows the contempt of those in the Capitol for those they govern. That is strong, but I can't think of a better word.
How else do you describe a bill that has the grand political theater of telling the public, "We want to be more open and honest with you, and eliminate ways that we can leverage our governmental positions, THAT YOU VOTED US INTO, for our own financial game.....to a point. I mean, we're not stupid like you, but this should appease you guys until football starts up again. GO STATE!!!"
But maybe contempt is too personal, or giving them too much credit. In some ways, to feel you are pulling one over on the common man, you have to remember what it is like to be the common man. And with incumbency rates high, and the general wealth of many who sit in office (since running a campaign isn't cheap), what may be seen is more of a culture of exceptionalism. They honestly don't see what is wrong with what they are doing. This is just how it is now for those in this position.
It reminds me of one of my favorite bits of dialogue in any movie.
OK, now the abrupt jump 45 miles north to Baltimore, where the Baltimore Sun has delivered some engaging pieces during the past two weeks or so about some potential financial liberties or government perks that at best seem to subvert the ideas of free and open government and at worst may be ethical violations.
The first story I noticed was from Feb. 1, discussing $3,900 in expenses by police escorts who traveled with Baltimore Mayor Stephanie Rawlings-Blake. What seemed innocuous to most caught me as patently wasteful, and overt evidence of the culture of exceptionalism so many politicians revel in while in office.
Police officers traveling with city officials may not seem out of the norm. But why does the mayor need police escorts when she travels to conferences in Harvard, Aspen and Chicago? Besides the relatively low risk she is exposed to on these trips, NO ONE KNOWS HER in any of these cities. She is in no greater danger than any other person who might be walking down the street and for whatever reason does or doesn't look like a target. Couldn't a local officer in her destination be assigned to a security detail instead of incurring the expense of traveling with Baltimore officers, who could easily find more important stuff to do back in Charm City.
But what really got me with this story were the initial public reactions, and the Mayor's own explanation.
Originally commenters on the Sun were saying things like, "$3,900, that's no big deal." That seems inconsequential to me. So it is cool if it's $3,900, but not if it's $4,500, or $10,000, or $100,000? Once you take a dollar for your indiscretions, taking $10 seems a little easier to stomach.
But what is more offensive is that "Rawlings-Blake's spokesman declined to explain the need for police escorts to accompany the mayor to other cities, but pointed out that the custom was established by previous administrations."
There we have it folks, the culture of exceptionalism. She wasn't doing anything she saw as wrong. This is what the top cheese has done for a while, why would she mess with it? She doesn't need to think about if it is financially or politically expedient. She is the Mayor now, and this is how Mayor's roll.
Or as Mel Brooks would say, "it's good to be the king."
The picture wasn't painted any better for Rawlings-Blake in the Sun's next piece, but at least she got some company. In the Sunday paper's big piece exposed a pattern by Baltimore lawmakers of receiving perks like free tickets to concerts and sporting events, often from people involved with city business thus causing a conflict of interest, and typically with little to no disclosure.
While the potentially unethical behavior of some city officials was brought to light, what also became apparent was the lack of a system to police such possible transgressions. Local politicians are supposed to submit disclosure forms detailing gifts or perks, who they are from, how much they are worth, who paid for them, and other such details that would encourage open government. But the city doesn't have enough staff to police those practices, so many politicians don't bother, or don't fill the forms out thoroughly or correctly, and they know there will be virtually no consequence to willful or absent-minded disobedience of the law.
As director of the University of Baltimore's Hoffberger Center for Professional Ethics Fred Guy said:
"If the ethics committee does not receive these disclosure forms, what's the point of having them?....The system is a joke....[City officials] know how closely they can bend the rules without raising red flags....They know how disorganized and dysfunctional it is. Why bother submitting them? Why even have them?"
While Guy explained what some officials may think rather than justifying their behavior, his quote again hearkens the culture of exceptionalism that can creep into the political sphere. I'm supposed to use those forms, really? Well the rubes in the ethics oversight committee can't catch me, and my constituents don't need to know, so who cares?
Even for those who routinely fill out the required paperwork, there seems to be a mental incongruency between what perks they enjoy and what potential conflicts of interest they present, not to mention the general issue of fairness that arises when someone gets such benefits strictly because of the political office they hold.
The fact that so many interviewed by the Sun did not see this as a potential issue of ethics or trust with voters is alarming, and it again hearkens the exceptionalist view that what they are doing is OK, because, you know, it's them, and it's what happens, or it's how business is done; don't sweat it; you wouldn't understand.
And so we swing again back down the beltway to Congress. Whether it's getting a free ticket to a Ravens game or selling your insider political knowledge to a financial firm, it's all an incredible advantage you gain from holding your office. It is a perk you enjoy that your constituents don't.
But maybe the most surprising thing in all of this is how unsurprised I am, and how unconcerned these officials seem. Perks leveraged off of political positions and access that routinely avoid the scrutiny of disclosure don't sound so much like scandal as they seem like business as usual.
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