Legalized Corruption

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Texas Representative Charlie Gonzalez announced his retirement this weekend past. “I’ve been in Congress for 14 years and I want to do something else—what that is, I really don’t know,” the chairman of the Congressional Hispanic Caucus explained. “But financially, I would like to be productive and have the resources to make a better life.”

The second-generation legislator may reconsider should he get his hands on Peter Schweizer’s 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 Prison. Schweizer posits that the six-figure congressional salary isn’t the preferred way to get rich in Congress. Instead, unscrupulous legislators profit over inside, investment-guiding information about imminent policy shifts, land development, and corporate favoritism. As the author bluntly notes, “U.S. public policy is a marketable commodity.”

It’s a commodity marketed by everyone from former Democrat House Speaker Nancy Pelosi to former Republican House Speaker Dennis Hastert. And when not marketed in the uncouth manner of Randy “gold-plated-toilet-seat” Cunningham or William “cash-in-the-freezer” Jefferson, it’s perfectly legal. “Politicians are often extraordinarily good investors—too good to be true,” Schweizer writes. “They may not have figured out how to help our economy prosper, but the Permanent Political Class is itself prosperous to a degree that should make us all suspicious.”

Take, for example, Massachusetts Senator John Kerry. Schweizer contends that the richest senator has made himself richer through his office. His stock transactions showan uncanny knack for anticipating coming legislation. When pharmaceuticals stood to gain through the prescription drug plan, for instance, Kerry’s portfolio loaded up on them. “By far the most aggressive congressional trading of pharma stock during the debate was done by Senator John Kerry and his wife,” Schweizer observes. “Oversight of the prescription plan would fall to Kerry’s committee in the Senate, so he was intimately familiar with the law and its ramifications.” When medical-device manufacturers stood to lose through ObamaCare, Kerry’s portfolio dumped them.

But the politicians’ profits prove a pittance next to the take of the moneymen who bankroll their campaigns. Obama supporter Warren Buffet demonstrates that investments in candidates and lobbying are money well spent. Schweizer details the Oracle of Omaha’s intense advocacy of the Troubled Asset Relief Program (TARP), which meant a financial windfall for his private holdings. “Berkshire Hathaway firms received $95 billion in bailout cash,” Schweizer points out, with TARP-bailed out companies comprising a full 30 percent of Buffet’s stock portfolio. His subsequent profits in just one company, Goldman Sachs, peaked at $3.7 billion. “Warren Buffet is a financial genius,” the author quips. “But even more important for his portfolio, he’s a political genius.”

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  • Joann Balfour

    I am reading this now. This certainly answers the question "how does a regular "schmoe" get elected, basically with few dollars in the bank, retire a multimillionaire? Turns out "SOP" is to buy/sell holdings while legislation is in their committee, land deals with Fed. transport dollars 'Earmarked" to enhance personal invests and commercial property, selling stocks BEFORE the crash, etc.etc.
    Makes me sick. It's an easy compilation of info everyone can track online, but is already researched for you. Just a sampling. I want to stop and vomit about every ten pages.
    These people (R & D) are definitely in for their own personal profit!

    • Maxie

      Some years ago I worked on a campaign for a sitting Republican candidate for the House of of Rep's for our district. His opponent was a neophyte woman (D) who spent a million dollars of her family's money to help get her elected. This for a job that then paid $135,000. She won and has since moved up in the CorruptoCrat hierarchy and no doubt has made her investment back many times over. It was a gamble but she obviously knew she would be in fat city if she won.

      • Bamaguje

        It's called "investment."
        Seriously, whatever happened to the concept called "conflict of interest" that is supposed to guide politicians?
        This exposé reads like something from a 3rd world banana republic rather than the United States.

    • canobs.

      An insider lobbeyists banksters club working for the multinationals (oil and armament) at the expense of the worker-taxpayers and going around the constitution. MORE at : __ __ __ __

  • concerned

    Even Powerline, a relatively right wing site said in their review of the book accepted that Senator Kerry's demand that they be retracted had merit. The reason is that all the transactions were made by the Heinz family trust, set up long before Teresa married Senator Kerry. Teresa is one of the beneficiaries, but not a trustee.

    Not to mention, there are blatant errors in the accusations. The book says Kerry was chairing the Health subcommittee of the Finance committee in 2003 when the prescription drug plan was passed. In fact, the Republicans had all the chairs as they controlled the Senate. In addition, far from leading the effort to craft the bill, Kerry spoke against it and voted against it. As to "insider information", it was common knowledge that Bush and the Republicans were working to pass this bill.

    In 2009, the effort to pass comprehensive healthcare reform was a major story all year. As to "insider information", it was not clear even at the end of the year that the Democrats would succeed. Even in 2010, there were reports that Rahm Emanuel thought it was impossible and was pushing for Obama to push for something smaller.

    It is also silly that the book computes % gains from 2003 to 2004 and 2009 to 2010 and then argues the gains are suspicious. Yet the Dow Jones increased 57% from the bottom of the market in march 2009 to April 2010 when Healthcare passed. Anyone invested in a diverse portfolio made huge gains in that interval although they were likely still below the September 2008 high.

    It is not suspicious that a profession manager of a trust would in ANY year buy and sell healthcare stocks.

    It may be that, as sloppy as the book is, it may have succeeded in raising the issue enough that legislation that has been sitting going nowhere might have a chance of at least getting a vote. Louise Slaughter, a NY representative has pushed legislation since 2006.

    • truckwork

      While I have not read the book, and I don't know if the Senator was this sub-committee chairman or not, I believe that Mr. Kerry was indeed a member of the Healthcare Subcommittee of the Finance Committee in the 108 Congress.

      While the Dow did indeed increase from March 2009 till April 2010, the average stock trader/investment company doesn't come anywhere close to the success that these people have had in the time that they are employed by the Citizens of the United States.

      Finally the Heintz family trust has two small funds managed by Ms. Heintz-Kerry's son's who are close to the Senator; Sustainable Technologies and Rosemont Capital, neither of which are blind trust funds. Which if the Senator would like to avoid all possible conflict of interest accusations, could be easily set up, thereby making all of this mute. Even when he was reminded by other in government back when he ran for President that he should do, he chose not to. If I remember correctly, those medals he threw over at the Capital building weren't his either right? Sorry, but please paint me skeptical.

      • concerned

        You could easily find that he was not the chair – NO DEMOCRAT was – the Republicans controlled the Senate – as you can easily see in your link. This was a Republican bill that was part of Bush's agenda – Kerry voted and spoke against it. That is significantly different than being the lead writing it. Incidentally, the bills were written in the Full committee, not the subcommittee.

        The fact is that the Kerrys were asked to do more than any other couple when they were running. You might remember that it was a huge issue that he could not get more from his wife than the standard maximum contribution. As Kerry explained in his letter, the Heinz trusts were blind until 2004 when they were made public because people demanded to see it. The transactions mentioned were not in the stepsons' funds. The fact is that Kerry is not a beneficiary of the Heinz trusts.

        As to the medals, Kerry told the Boston Globe reporter who was with hi that day that the ribbons he threw were his, but the medals were ones others asked him to throw. That was his answer the day it happened and is still what he says. What was used against hi was that once a few years later when he was attacked for throwing his medals by a reporter, he did not correct him. Instead he spoke of the eaning in what was done. Would you have preferred that he had given a "I didn't enhale" type response – that he hadn't thrown his medals?

        • truckwork

          Whether he was the chair or simply a member of the subcommittee makes no difference. He has access to information that you and I didn't have and the investment activity that the Heintz Family Trust made at that time is highly suspicious. I doubt that if you and I had the same type of arrangement we would now be having a hard time with the SEC folks.

          Kerry had all the time in the world to release his military records and failed to do so during the election. I believe that it significantly hurt him during the election.

          And as far as "Slick Willy Clinton" his predilictions certianly preceeded his election to office with little to no press coverage and certianly not the press coverage that Mr. Cain has received with far less evidence.

          Of course that's not new with the Lame Stream Media and ANY Democrat canidate for office.

  • StephenD

    One more reason why we can allow for the newest batch to stay and throw everyone else out. There ought to be term limits, no life time benefits, and half the salary. As in days of old, it ought to be an honor to be a Congressman in service to the country. All they should be taking away from the job is a sense that they contributed to the welfare of the country and the prestige that goes with it.

  • sedoanman

    Let us not forget Cattlegate, the saga of how a politician and commodities trading neophyte converted $1,000 to $100,000 in one month.

    • Maxie

      Topped only by Chinagate, Filegate and Waco as corruptio nand abuse of power defined. But if you're a Republican and you jaytwalk watch out! Double Standard? Nah!

  • tagalog


    Go to Washington, D.C.

    Enter the Houses of Congress. Take the congressmen by the scruffs of their weaselly necks and escort them out into the public square.

    Tar and feather them and ride them out of town on a rail. Tell them it will go worse for them if they come back.

    Follow this with an Occupy the Supreme Court and White House episode, just to be sure our feelings are widely-known and there's no chance of a misunderstanding.

    Put people in Congress who will listen to the will of the people.

    The first law should outlaw lobbying and influence-peddling and make them felonies punishable by several years in federal prison at hard labor, without parole.

    It is better for the public weal if our leaders fear us than if we fear them.

  • alexander

    Mr. Flynn wrote: "it’s perfectly legal". No, it is not.
    It is insider's information; it is ILLEGAL.
    But who is going to prosecute them? I hear Pelosi or FuBAR Ack yelling at us: "how dare you…!!!"
    Whatta circus.

  • concerned

    The gain in the Dow was seen by anyone invested in mutual funds. I know that my 401K fell in September 2008 and was sadly diminished by March 2009 and then recovered. I have absolutely no connections to anything. People who needed to use their money between September 2008 to some time in late 2009 lost a lot of money. Those who left their money in the market ended up close to where they were in 2008. This is not magic.

    Note that it is not Kerry's family trust, but the Heinz family trust set up long before they were married.