We Couldn’t Dream Of Accusing Congress Members Of Taking Advantage Of Their Position. They’re Just Lucky!
Do we even have to pretend this is a coincidence ? There’s a reason why so many politicians vote the interests of the wealthy and retire as millionaires — because they’re playing the system. Maybe it’s time for a new system, one in which their investments are put in a blind trust until the day they leave: Members of the House of Representatives considerably outperform the stock market in their personal investments , according to a new academic study. Four university researchers examined 16,000 common stock transactions made by approximately 300 House representatives from 1985 to 2001, and found what they call “significant positive abnormal returns,” with portfolios based on congressional trades beating the market by about 6 percent annually. What’s their secret? The report speculates, but does not conclude, it could have something to do with the ability members of Congress have to trade on non-public information or to vote their own pocketbooks — or both. A study of senators by the same team of researchers five years ago found members of the higher chamber even better at beating the market — outperforming it by about 10 percent, an amount the academics said was “both economically large and statistically significant.” “Being one of 435, as opposed to one of 100, is likely to result in a significant dilution of power relative to members of the Senate,” the researchers wrote.The researchers, Alan J. Ziobrowski of Georgia State University, James W. Boyd of Lindenwood University, Ping Cheng of Florida Atlantic University and Brigitte J. Ziobrowski of Augusta State University, noted that the circumstances are ripe for abuse . The House ethics manual clearly states that “all Members, officers, and employees are prohibited from improperly using their official positions for personal gain” and members must disclose their holdings annually. But the House’s official position is that demanding that members either divest themselves of potential conflicts or recuse themselves when there is a conflict is “impractical or unreasonable” because it “could result in the disenfranchisement of a Member‘s entire constituency on particular issues.” Ever since 2006, a small coterie of Democrats has been trying to officially prohibit members of Congress and their staffs from using non-public information to enrich their personal portfolios.The Stop Trading on Congressional Knowledge (STOCK) Act was most recently re-introduced in March by Reps. Louise Slaughter (N.Y.) and Tim Walz (Minn.) . It has not been heard from since. When I was a reporter, working on a story that a congressman was accepting financial benefits from an insurance company for which he earmarked legislation, I was flabbergasted to discover that it was perfectly okay with the House Ethics Committee. I learned that it is almost impossible to find a member guilty of anything, so when they boot someone on ethics grounds, rest assured it had to be pretty bad.
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on May 25, 2011. Filed under