Throw Them All Out
Page 18
18 http://www.spiegel.de/international/business/0,1518,592268,00.html.
19 George Soros, "The Game Changer," Financial Times, January 28, 2009.
20 http://www.emc.com/leadership/tech-view/stimulating-ah-ha-phenomenon.htm.
21 http://www.teradata.com/t/industry-expertise/government.
22 http://4g-wirelessevolution.tmcnet.com/broadband-stimulus/topics/broadband-stimulus/articles/63191-extreme-networks-pushes-broadband-networks-into-rural-america.htm.
23 http://www.radware.com/Solutions/Enterprise/Industries/Government_US.aspx.
24 "Emerging Trends in Education Publishing," Cognizant.
25 http://www.nytimes.com/gwire/2009/06/12/12greenwire-doe-revives-futuregen-reversing-bush-era-decis-47303.html.
26 http://www.chron.com/disp/story.mpl/business/energy/6911328.html.
27 http://pseg.com/info/media/thought_leader/carbon_strategy.jsp.
28 General Electric Annual Report, 2008.
8. SOME ARE MORE EQUAL THAN OTHERS
1 Quoted in Edward Roeder, "Slippery Slopes: How Politicians Can Draw the 'Get Out of Jail Free' Card in the Game of Politics," Campaigns and Elections, August 2006.
2 Tony Mauro, "Recusal Report," Legal Times, October 10, 2008.
3 Kathleen Clark, "Regulating the Conflict of Interest of Government Officials," in Michael Davis and Andrew Stark, eds., Conflict of Interest in the Professions (New York: Oxford University Press, 2001), p. 53.
4 http://www.nytimes.com/2009/05/16/business/16insider.html.
5 See, for example, http://www.azauditor.gov/Reports/Counties/Yuma/SIU/SIU03-1.pdf.
6 Leonard J. Brooks, "Conflict of Interest in the Accounting Profession," in Davis and Stark, eds., Conflict of Interest in the Professions, p. 93.
7 http://www.nytco.com/press/ethics.html#B3.
8 Eleanor Randolph, "Guards of Press Troubled by SEC Suit," Washington Post, May 21, 1984.
9 U.S. Senator Ron Wyden, http://wyden.senate.gov/newsroom/press/release, July 15, 2010.
10 John Dorschner, "Senator Tells University of Miami He's Troubled over Hiring," Miami Herald, June 10, 2010.
11 U.S. Constitution, article 1, section 5.
12 Jacob R. Straus, "House Committee on Ethics: A Brief History of Its Evolution and Jurisdiction," Congressional Research Service Publication 7-5700, http://www.crs.gov.
13 Catharine Richert, "Public Citizen Gets It Right about Insider Trading Rules," Politifact, St. Petersburg Times, August 6, 2009.
14 Senate Ethics Manual, 2003, pp. 160–75.
15 Jeffrey Birnbaum, "Ethics Panel Finds Conflict with Senator's Job as Physician," Washington Post, April 6, 2005.
16 Committee on Standards of Official Conduct, 110th Congress, 2nd Session, House Ethics Manual, 2008 ed., pp. 234–37.
17 Andrew George, "Public (Self)-Service: Illegal Trading on Confidential Congressional Information," Harvard Law and Policy Review, vol. 2, 2008, p. 162.
18 Stephen M. Bainbridge, "Insider Trading Inside the Beltway," UCLA School of Law, Law-Econ Research Paper No. 10-08, June 30, 2010, http://ssrn.com/abstract=1633123.
19 Daylian M. Cain, George Loewenstein, and Don A. Moore, "Coming Clean but Playing Dirtier: The Shortcomings of Disclosure as a Solution to Conflicts of Interest," in Don A. Moore et al., eds., Conflicts of Interest: Challenges and Solutions in Business, Law, Medicine, and Public Policy (New York: Cambridge University Press, 2005), and Daylian M. Cain, George Loewenstein, and Don Moore, "The Dirt on Coming Clean: Perverse Effects of Disclosing Conflicts of Interest," Journal of Legal Studies, January 2005.
20 Clark, "Regulating the Conflict of Interest of Government Officials."
21 Beth Burger, "Businessman Dennis Kim Charged with Extortion," Bradenton.com, February 13, 2009.
22 Fred McChesney, Money for Nothing: Politicians, Rent Extraction, and Political Extortion (Cambridge: Harvard University Press, 1997).
23 R. Beck, C. Hoskins, and J. M. Connolly, "Rent Extraction Through Political Extortion: An Empirical Examination," Journal of Legal Studies, January 1992.
9. WHY THIS MATTERS
1 George Washington Plunkitt, Plunkitt of Tammany Hall (Boston: Bedford Books, 1993), p. 34.
2 http://money.cnn.com/2003/03/20/pf/saving/war_military_pay/table.html.
3 Scott Higham, Kimberly Kindy, and Dan Keating, "Senate Panel Ban Seen as Double Standard," Washington Post, December 19, 2010.
4 Plunkitt, Plunkitt of Tammany Hall, p. 42.
5 http://www.rollcall.com/issues/56_119/financial-disclosure- congress-205462-1.html.
6 National Conference of State Legislatures, "To Vote or Not to Vote: State Provisions on Conflicts of Interest and Voting," November 2009.
7 http://fppc.ca.gov/index.php?id=37.
8 http://www.washingtonpost.com/wp-dyn/content/article/2006/05/22/AR2006052201080.html.
9 "Judge Rules FBI Raid on Rep. Jefferson's Office Was Legal," Associated Press, Foxnews.com, July 10, 2006.
10 Joel'S. Kahn and Francesco Formosa, "The Problem of 'Crony Capitalism': Modernity and the Encounter with the Perverse," Thesis Eleven, vol. 69, May 2002.
11 Andrew Redleaf and Richard Vigilante, Panic: The Betrayal of Capitalism by Wall Street and Washington (Minneapolis: Richard Vigilante Books, 2010).
12 Richard H. Lester et al., "Former Government Officials as Outside Directors: The Role of Human and Social Capital," Academy of Management Journal, vol. 51, no. 5, 2008.
13 Myles Mace, Directors: Myth and Reality (Boston: Harvard Business School Press, 1986), p. 86.
14 Lester et al., "Former Government Officials as Outside Directors."
15 Market Call, CNNfn, December 12, 2002.
16 Eitan Goldman, Jorg Rocholl, and Jongil So, "Do Politically Connected Boards Affect Firm Value?" Review of Financial Studies, vol. 22, no. 6, pp. 2331–60.
17 http://www.futureofcapitalism.com/2011/02/introducing-the-crony-capitalist-index.
18 Marisa Katz, "Family Ties," National Journal, March 31, 2007.
19 http://coburn.senate.gov/public/index.cfm?a=Files.Serve&File_id=f036d73d-7a10-4a57-a9ee-de3987049c31.
20 Carl Hulse, "In Capitol, Last Names Link Some Leaders to Lobbyists," New York Times, August 4, 2002.
10. WHAT NEEDS TO BE DONE
1 Tim Golden and David Kocieniewski, "Businessman Says Torricelli Arranged Stock Deal," New York Times, April 12, 2001, and Robert Ingrassia, "Old Pal Helped Torricelli; Probes Followed," New York Daily News, March 20, 2001.
2 Megan J. Ballard, "The Shortsightedness of Blind Trusts," Kansas Law Review, vol. 56, 2007.
3 Senator Charles Grassley and Jennifer Shaw Schmidt, "Practicing What We Preach: A Legislative History of Congressional Accountability," Harvard Journal on Legislation, vol. 35, 1988.
4 Henry G. Manne, Insider Trading and the Stock Market (New York: Free Press, 1966), p. 171.
5 Donna Nagy, "Insider Trading, Congressional Officials, and Duties of Entrustment," Boston University Law Review, vol. 91, 2011, p. 1105.
6 Bud Jerke, "Cashing In on Capitol Hill: Insider Trading and the Use of Political Intelligence for Profit," University of Pennsylvania Law Review, vol. 158, no. 5.
7 Jerke, "Cashing In on Capitol Hill."
8 United States v. Mississippi Valley Generating Co., 364 U.S. 520, 549 (1960).
9 David G. Savage, "Supreme Court Upholds Conflict-of-Interest Laws," Los Angeles Times, June 14, 2011.
10 State of Florida Case No. SC 09-1910, Nineteenth Statewide Grand Jury, First Interim Report, "A Study in Public Corruption in Florida and Recommended Solutions," December 17, 2010, p. 43.
ACKNOWLEDGMENTS
The adventure that became this book started a couple of years ago when I first became enthralled with a simple but puzzling question: how is it that politicians enter office with relatively modest means and leave rich? Although I am responsible for the content of this book, I am thankful to the many colleagues and friends who offered guidance, assistance, and help along the way.
> Let me say thanks to my good friend Stephen K. Bannon, who not only engaged intellectually with this project, but also challenged me to push further in explaining the deeper and broader problems of crony capitalism. Marc Thiessen, a good friend and partner in Oval Office Writers, offered helpful advice and moral support. Thanks is also due to Eric Singer of the Congressional Effect Fund in New York, who helped me refine my views and research concerning the interplay between congressional actions and American finance. Wynton Hall, as always, provided solid advice and sound input. I also greatly benefited from friends and colleagues who offered thoughts and comments, including Andrew Breitbart, Larry Solov, Brian Baugus, Amy Ridenour, and Ron Robinson.
Bernadette and Owen Smith have been great friends and supporters going back more than a decade. I'm very thankful for their encouragement of this project, and I'm glad we are back in regular contact. I'm honored to be the William J. Casey Fellow at the Hoover Institution, and very grateful for it.
At the Hoover Institution, I appreciate the support and friendship of John Raisian, and of my colleagues, whom I see all too rarely. Bruce Nichols, my publisher, took a chance on this project, and I'm grateful that he saw the vision even more clearly than I did at the beginning. He not only kept me on schedule and corrected my errors, he offered tremendous advice on how to make the manuscript better. Bruce, it's an honor to work with you. My agents, Glen Hartley and Lynn Chu, are simply the best in the business. Period.
A project like this is, by its nature, a team effort. I was blessed to have the assistance of the following individuals who helped me enormously: Rhonda Adair for her editorial and intellectual input in shaping and completing the project; Tori Brooks for her research assistance; Seamus Bruner for his research work; Josh Eller for his research, input, and advice; David Healy Jr. for his research work and fact-checking; Tim Ward for his research work and fact-checking; Rick White, who provided expert advice and wisdom and consulted on this project in almost every aspect—conception, research, and writing; and Casey Wood, who provided research assistance and fact-checking support.
A special thanks goes to my assistant, Sally Jo Roorda, who put up with a horribly disorganized and messy office, a crowded schedule, and a neurotic boss, but still held everything together and did so with a smile.
Mom, you are the best. Maria, to whom this book is dedicated, your "little brother" appreciates you much more than he lets on. That needs to change.
My family—including my wife, Rochelle, and our children, Jack and Hannah (a.k.a. Sweet Pea)—has put up with a distracted man wandering around the house looking for books or documents for far too long. Thanks for being so patient ... yet again.
INDEX
Abbott Labs: Congress members trade in stock, [>], [>]
Abound Solar: receives federal grants, [>]
Ackerman, Gary: buys IPOs, [>]–[>]
Act Networks: Congress members buy IPO, [>]
Advanced Technology Vehicles Manufacturing Program, [>]–[>]
AIG: government bails out, [>]–[>]
Albright, Madeleine, [>]
Alito, Samuel, [>]
Allegheny Energy: receives federal grants, [>]
Soros invests in, [>]
Alliance for Climate Protection, [>]
AltaRock: receives federal grants, [>]
alternative energy: under Bush, [>]
Department of Energy and, [>]–[>], [>], [>]
Doerr and, [>]–[>]
Gore and, [>], [>]
Obama and, [>]
Soros invests in, [>]–[>]
Ameren: Soros invests in, [>]–[>]
American Electric Power: Soros invests in, [>]
American Express: and PPIP, [>]
American Recovery and Reinvestment Act, [>]
and crony capitalism, [>]–[>], [>]–[>]
insider information and, [>]
Amgen: congressmen trade in stock, [>]–[>], [>]
Amirys Biotechnologies: congressmen trade in stock, [>]
receives federal loans & grants, [>], [>]
Angeleno Group, [>]
Apollo Group: stock price declines, [>]
Apple: congressmen trade options in, [>]
Audacity of Hope, The (Obama), [>]
Avanex: congressmen buy IPO, [>]
Avant Immunotherapeutics: congressmen trade in stock, [>]
Avenue A: congressmen buy IPO, [>]
Bachus, Spencer: role in legislative decision-making, [>], [>]–[>], [>], [>]
trades stocks & options in economic crisis of 2008, [>]–[>]
uses insider information, [>], [>]–[>]
Bain Capital, [>]
Bainbridge, Stephen: on conflict of interest, [>]
Baird, Bryan: on kickbacks, [>]
Ballard, Megan: on blind trusts, [>]–[>]
Bank of America: congressmen trade in, [>]
banking industry: and PPIP, [>]–[>]
receives TARP funds, [>]–[>]
Barton, Joe: supports credit card fee reform, [>]–[>]
Basin Electric Power Cooperative: receives federal grant, [>]
Batcheller, Paul, [>]–[>]
Baucus, Max: and health care reform, [>]
Beech Ridge Energy Wind Farm, [>]–[>]
Berkshire Hathway, [>]–[>], [>]
congressmen trade in stock, [>], [>]–[>]
invests in Goldman Sachs, [>]–[>], [>]
lobbying by, [>]–[>]
and TARP, [>]
Bernanke, Ben: and economic crisis of 2008, [>], [>], [>], [>]
Big Short, The (Lewis), [>]
Bingaman, Jeff: buys IPOs, [>]
invests in Goldman Sachs, [>]
BioFuel Energy: Soros invests in, [>]
biotechnology industry: congressmen trade in stock, [>]–[>]
Gayle on, [>]
and Patient Protection and Affordable Care Act, [>]–[>]
and Project Bioshield, [>]–[>]
Blackboard, [>]
Blackstone Group: lobbying by, [>]
blind trusts: Ballard on, [>]–[>]
Congress and use of, [>], [>]–[>], [>]
Johnson's use of, [>]
"blue law" movement, [>]
Boehner, John: invests in Goldman Sachs, [>]
trades in health care industry stocks, [>]
Boeing Corporation: and Export-Import Bank, [>]–[>]
Boxer, Barbara: buys IPOs, [>]
Bradley, Jeb: trades in pharmaceutical industry stocks, [>]
Bridge Health International: congressmen trade in stock, [>]–[>]
Brightsource: receives federal loan guarantees, [>], [>]
Brin, Sergei: as Obama supporter, [>]
Bristol-Myers Squibb: congressmen trade in stock, [>]
British Petroleum: as Obama supporter, [>]
receives federal grant, [>]
Brokaw, Tom, [>]
Brown, Kirk, [>]
Brown, Mark Malloch: and political intelligence, [>]–[>]
Brown, Scott, [>]
Browner, Carol: and climate change, [>]–[>]
Buchanan, Vern: invests in Goldman Sachs, [>]
trades in health care industry stocks, [>]
Buffett, Warren, [>]
benefits from TARP, [>], [>]
buys Burlington Northern, [>]–[>]
and crony capitalism, [>]–[>]
in economic crisis of 2008, [>]–[>]
invests in General Electric, [>], [>], [>]
invests in Goldman Sachs, [>]–[>], [>]–[>], [>]–[>]
Lampe on, [>]
Paulson and, [>]–[>]
popular image of, [>]–[>], [>]
proposes Public-Private Investment Program (PPIP), [>]–[>], [>]
Rattner on, [>]
Stoll on, [>]
Summers on, [>]
supports Obama, [>]–[>], [>], [>]
supports TARP, [>]–[>], [>]
Winkler on, [>]–[>]
Burlington Northern Santa Fe Railway (BNSF): Buffett b
uys, [>]–[>]
Soros invests in, [>]
Bush, George W., [>], [>]
alternative energy under, [>]
and Emergency Economic Stabilization Act, [>]
signs Medicare Prescription Drug Act, [>], [>]
signs Project Bioshield legislation, [>]–[>]
signs TARP legislation, [>]
California: Fair Political Practices Commission, [>]–[>]
Proposition [>], [>]
Calvert, Ken: personal use of earmarks, [>]
and real estate investment, [>]–[>]
campaign contributions. See political connections
Canning, David: as Obama supporter, [>]
Cannon, Chris: supports credit card fee reform, [>]
Capito, Shelley: trades in financial stocks, [>]
Cardin, Ben: and ethanol tax credit, [>]
Cardinal Health: congressmen trade in stock, [>], [>], [>]
Career Education: stock price declines, [>]
CareFusion: congressmen trade in stock, [>], [>]
Carper, Tom: trades in health care industry stocks, [>]–[>]
Cato Institute: on Export-Import Bank, [>]
Center for American Progress: Soros supports, [>]
Center for Responsive Politics, [>], [>]
Chu, Steve: as Secretary of Energy, [>], [>], [>]
Cigna: congressmen trade in stock, [>]
Cisco Systems: Soros invests in, [>]
CitiAlternatives, [>]
Citigroup: congressmen trade in, [>], [>]
Citizens for Responsibility and Ethics in Washington, [>