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Guide to congressional cosmetics

President Obama praised the STOCK Act when he signed it into law in April as a good first step to rid Congress of financial conflicts that undermine public confidence.

But it’s really no more than a fast makeup job to cover up the continuing blemishes on our democracy and give the president and members of Congress some talking points for the campaign trail.
The STOCK Act is supposed to prohibit legislators from profiting from the nonpublic information they get on the job. The STOCK Act also prohibits members of Congress from participating in initial public offerings unavailable to the public, and provides some additional public disclosure of congressional stock trading.
But we already know that members of Congress do better than civilians when they invest in the stock market. According to a 2011 study, investment portfolios of members of the House beat the market by about 6 percent annually, mimicking the performance of the stock portfolios of their Senate colleagues.
As an example, the Washington Post reported, four congressmen sitting on a committee investigating deceptive billing practices by video game makers sold their stock in the country’s biggest video game maker, GameStop, one of the companies under investigation.
One of the most egregious examples is Sen. Tom Coburn, the Republican Oklahoma senator who has made a name for himself preaching government austerity and self-righteously criticizing both parties for not having the courage to make the cuts needed to reduce the debt.
But austerity and sacrifice were apparently not on Sen. Coburn’s mind when he bought $25,000 in bonds in a genetic technology company at the same time he released a hold on legislation that the company supported. A hold is an informal Senate practice by which a senator can stall a piece of legislation. Coburn, meanwhile, cast one of the few votes against the STOCK Act, dismissing it as nothing more than a stunt.
One clue to just how innocuous the STOCK Act is: it was opposed by only two votes in the House and three in the Senate. This confirms my theory that whenever you see much ballyhooed-bipartisanship at work, you can be sure that members of Congress are either doing the bidding of the 1 percent, or covering their own butts.
The bottom line is that while members of Congress pass laws that prohibit other government officials from presiding over companies and industries in which they have a financial interest, Congress effectively exempts itself from such broad restrictions.
Writing on Yahoo Finance, Ron DeLegge outlines the STOCK Act’s major flaws and omissions: it still allows the sleazy, little-known practice of members selling “political intelligence” to lobbyists as well as continuing to allow members of Congress to own stock in industries over which they can exert influence.
The STOCK Act reminds us, when it comes to Congress, we shouldn’t be distracted by lame cover-ups or blather about bipartisanship, we should follow the money.
And we shouldn’t forget: it’s not their money.
It’s our money.

Funny Money

I had to laugh when I saw Treasury Secretary Geithner and Fed Chair Bernanke announce, with great fanfare, a new high-tech $100 bill. It’s supposed to ward off counterfeiters.

How big is the currency fraud the two G-men are after? Of the roughly $625 billion in “Franklins” in circulation, less than 1/100 of one percent is reported counterfeit, according to the Treasury Department.

That means that Geithner and Bernanke are trying to protect the taxpayers against the loss of $62.5 million from phony hundred dollar bills. That might seem to be a big hit on the American people – we need every dollar we can get these days - except that’s nothing when you compare it to, say, the $750 billion in taxpayer money that went to rescue Wall Street from speculation and outright thievery.

It’s less than nothing when compared to the estimated $600 trillion dollars in “derivatives” – packages of investments – that are sitting in investment portfolios throughout the global economy. That sum is about ten times the value of the entire output of goods and services by every country on earth. The geniuses on Wall Street were giddy trading derivatives with each other, getting a cut of every transaction, until suddenly the players realized they had no idea what the derivatives were worth. Indeed, many derivatives have no intrinsic economic value, but rather are simply bets on how other packages of investments will perform on Wall Street. Derivatives were at the core of the Wall Street collapse that threw our economy into a deep dive.

Our two crime-fighting government officials missed the real crime against the taxpayers – like everyone else who was supposed to be looking after the public’s interest. They sat idly by while hundreds of wealthy and politically-connected individuals made billions of dollars trading worthless securities until greed and the laws of gravity caught up with them.

Geithner and Bernanke remain at the scene of the crime. Which, of course, is still going on, day and night, and will continue until Congress puts an end to it, if our elected representatives can overcome the power of the Dark Side – derivatives lobby.

Meanwhile, we are meant to be thrilled and comforted by the spectacle of a greenback that is tough to duplicate. It’s like a cheap magic trick designed to distract us from what’s really going on.

You can see a $100 bill, after all. And it's easy to imagine some lowlife printing it up in a shed in his backyard. But no Americans ever saw a Wall Street trader concoct a derivative or try to foist one off on a clerk at the local grocery store. The derivatives that brought America to its knees exist only as electronic apparitions on a bank of monitors in front of some speculator at a Goldman Sachs or similar operation. Those are the people who were really “making” money.

Meanwhile, the new U.S. $100 bill introduced by Geithner and Bernanke has a big blue stripe down the middle, and all sorts of busy and confusing images designed to thwart criminals. It looks like something that has been run over several times by a truck. Just like our economy.