"Secrecy, arrogance, and the abuse of power have shattered the bonds of trust between the people and their elected leaders. Repairing that trust requires sweeping change…"
-- Republican House leader John Boehner, expected to be named Speaker of the House
I couldn't agree more, Mr. Soon-to-be-Speaker. And you've certainly laid out an impressive job of work for the upcoming 112th Congress. From what I hear, you're going to put an end to stimulus spending, but grow the economy. Balance the budget, but cut taxes. Curb entitlement spending, but preserve Social Security for our seniors. And of course, end the pernicious practice of legislative "earmarks."
Admirable goals all, and I wish you well in achieving them. But before tackling all of these hard issues, on behalf of investors everywhere, I'd like to ask that you take care of one tiny matter that's been bothering us lately. I'd like you to stop Congress from stealing from your constituents. Stop trading stocks on insider information, garnered from passing laws that affect the companies behind those stocks.
A particularly pernicious practice
Oh, not you, personally. I'm sure you would never stoop so low. (Right?) But if you've been paying attention to the papers lately, it seems that a lot of your colleagues have fewer compunctions. Some of them and their loved ones have been:
- Diluting the value of the U.S. dollar by printing money to bail out AIG
(NYSE: AIG) , Bank of America(NYSE: BAC) , Citigroup(NYSE: C) , and the rest of the alphabetical too-big-to-fail club, while simultaneously shorting the dollar by investing in the ProShares UltraShort 20+ Year Treasury ETF. - Buying puts on Hovnanian
(NYSE: HOV) -- essentially shorting housing -- at the same time they were talking up the strength of the U.S. housing market. - And generally profiting while the market plummeted, buying shares of the ProShares UltraShort QQQ ETF
(NYSE: QID) , which pays out 2% gains for every 1% the Nasdaq declines.
They're also setting a bad example for their employees. Just last month, the Wall Street Journal reported that Congressional staffers have been following in their employers' footsteps, placing bets on stimulus legislation that would subsidize the alternative energy market, by buying shares of Sunpower
Can you blame them? From what I hear, your colleagues over in the U.S. Senate have gotten so good at this stuff that, at last report, they were earning average annual profits from the stock market that exceeded the S&P 500's returns by 12% a year!
Good news and bad news
Now, if you want to get up to speed on this issue, I happen to know a couple of folks who can help. While Senators know a good racket when they see it, and are showing no inclination to remove their hands from the Congressional cookie jar, it turns out the House of Representatives contains at least two Congressmen with a bit more conscience.
You may not be aware of this (since you haven't co-signed their bill), but Representatives Brian Baird and Louise Slaughter have proposed a bill that would end insider trading on Capitol Hill. Their proposed "Stop Trading on Congressional Knowledge Act" is not as strong as the disclosure requirements we have in effect here at The Motley Fool. But they're a good first step towards increasing accountability in Congress, and reminding our elected representatives that we sent them to Washington to work for us, not profit at our expense.
So far, nine Congressmen have signed on in support of the STOCK bill. But if I recall correctly from Schoolhouse Rock, that still leaves the bill a bit short of a majority. A few words of support from you might go a long way toward getting this bill the support it deserves.
Act now. This offer expires soon!
You'd better act quick. Rep. Baird will not be returning to Congress next year, since he chose not to stand for re-election in 2010. On a brighter note, I'm sure you'll join me in congratulating Rep. Slaughter on her re-election. Unfortunately, while her victory assures us that Ms. Slaughter will not be a "lame duck" legislator, she's no spring chicken, either. At age 81, she won't be around Congress forever to help you reach your worthy goal of ending "secrecy, arrogance, and the abuse of power" on Capitol Hill.
Then again, in a few weeks' time, you'll have 60-plus new legislators coming in to help you make that goal a reality. Please, please put them to good use.
Yours Foolishly,
Rich Smith (TMFDitty)
