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27 Oct, 2010 04:54

Shaking the money tree in DC

Capitol Hill insiders in the US are allegedly using and abusing their positions to make some extra pocket money.

According to The Wall Street Journal, many are taking advantage of their knowledge of markets which they often have direct influence over – and it is not even illegal.

The annual salary of members of the United States Congress is US$ 174,000.

The profit they can make by trading on inside information is priceless.

A number of US lawmakers and dozens of Congress staffers have reportedly traded thousands of dollars worth of stocks of companies for which they or their bosses have written laws. Under US law there is no conflict of interest.

“They’re violating the principles of fair play, they’re just playing cheating it’s not fair what they’re doing,” said Richard Smith of The Motley Fool.

Currently, all US lawmakers and their highest paid staffers have to do is disclose information once a year on their finances.

By the analysis of the Wall Street Journal, the US public servants have been phenomenally successful trading stocks.

At the peak of the Wall Street crisis, Senator Spencer Bachus, reportedly made tens of thousands of dollars betting against a market that his committee helps oversee. And he is the ranking member on the House Committee on Financial Services.

Chris Miller, a top energy policy advisor to the Senate Majority leader, Harry Reid, is alleged to have nearly doubled his bet when his boss helped pass legislation that wound up benefiting the firm.

After his staffer’s name was mentioned in a list of Capitol Hill stock traders, Mr. Reid is said to have reprimanded his aide.

RT’s attempts to talk to some of those involved were time-consuming and unsuccessful.

“We talk a lot about exporting democracy. One of the bedrocks of a successful democracy, I believe, is freedom from corruption. The sense is that elected officials are elected to serve the public, not to enhance their own wallets or that of their friends or cronies or family,” shared Congressman Brian Baird, Washington DC.

Baird offered a bill years ago that would ban insider trading on Capitol Hill. But the act received the support of only nine out of 435 members in the House of Representatives, and none in the Senate.

“In this case you’ve got the possibility of making great amounts of money. In ways that aren’t illegal and ways that are hard to detect,” Baird told RT.

He added that annual disclosure reports are not enough.

“To my knowledge there is no human being employed by the Congress of the US who has looked at our financial reports with an eye towards possible conflict of interests.”

At present, there is no initiative to change the rules.

What is deemed cheating for the rest of America, is perfectly legal for the country’s lawmakers. Why would they want to change it? As it is now, a public servant’s stock market activities are hard to track, there are no investigators on the Hill doing that and some believe those senators and staffers who have recently been caught in the spotlight are just the tip of the iceberg.

This can’t be legal, argued filmmaker Francis Megahy. “Insider trading is of itself illegal.”

If there is ever an investigation and the SEC and the police find that information was obtained about the future direction of companies and their stocks and shares, that absolutely would be a crime,” he added.

Megahy argued that the issue is bigger than a mere conflict of interest; it’s a crime. “Everybody is very very careful about that on Wall Street. You can go to prison for that, and you do.”

A previous bill to ban insider trading on Capitol Hill failed, receiving only nine out of hundreds of votes. This is unlikely to change, argued Megahy. They would likely only take the issue seriously is a major case goes public.

However, the people don’t really know what is going on. They are not informed by the media. These stories aren’t covered heavily by the US media.

The more these things are talked about the better chance we the public have that something will eb done about it,” said Megahy.