Lawmakers Invested in Bailed-Out Firms

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/content/article/2009/06/10/AR2009061002565.html?wpisrc=newsletter

Good that these bigwigs lose money, because so many Americans have lost their pensions, savings AND JOBS.
Anyone who is in public office, especially those charged with financial matters need to put their investment accounts into blind trusts run by an entity other than one run by a spouse or a company that has any ties to the elected official.

It really seems like a conflict of interest when the bigwigs loose money, and then have a major vote of whether or not the firms get bailed out.

I am not allowed to do certain types of stock trading because I work for a Retirement/Investment Company. I think Politicians should have limits too, as to who they can invest in and or, they should not be allowed to have any say on issues with companies that they have investments in.


I am surprised that B. F. isn't right there in with them too. Good for him. He still sounds like daffy duck when he talks though!

Love it when these guys are questioned about their money, while they go nuts spending ours on so many things that benefit few taxpayers.