Day after day, page after page the blogospherians document stunning abuses of the law, outrageous corruption and, at times, treason while the media works feverishly to protect the liberal elite class in power. There is no seperation of press and state when the Dems reign. The preservation of power is first and foremost, so I commend 60 minutes for ezposing this crime, and yes it is a crime. Any member of Congress, be it R or D, should be arrested and jailed just like the regular folks.
I applaud Steve Kroft's 60 Minutes segment on Peter Schweizer's new book on how Obama donors cash in and a guide to those in Congress who mixed business with governing. Of course, Kroft tries to nail Republicans but the mother lode of corruption is under Pelosi - I think this is just the tip of the iceberg. There ought to be a huge special investigation of all members of Congress. Oh yeah. Kudos to supreme investigative journalist Peter Schweizer. I sat on a panel with him for YAF and he is brilliant. Get the book.
Last night, 60 Minutes aired its report on possible insider trading by Members of Congress. A principal focus of the report was House Minority Leader Nancy Pelosi and her participation in an IPO of Visa, one of the hottest IPOs in recent years. Reporter Steve Kroft questioned Leader Pelosi recently at a press conference about her investment and its possible impact on credit card legislation before the House during her term as Speaker.
I will have much more to say on this soon, as the legislative maneuvering around the recent credit card bill is a rich narrative and suggests there may be something to Kroft’s suspicions. For now, though, I have a more fundamental question: How did Nancy Pelosi get access to Visa’s IPO in the first place?
Participation in a stocks IPO, i.e. Initial Public Offering, is one of the more sought after trades on Wall Street. Often, an IPO investor is able to get into a stock at a relatively low price and realize an almost immediate gain once trading commences, especially if the IPO is “hot” or, rather oversubscribed, meaning more investors wanted shares than were available. Visa’s IPO was blockbuster-level “hot.” As reported by The New York Times:
Visa‘s blockbuster initial public offering is currently oversubscribed for its expected trading start on March 20, Scott Sweet of the research firm IPO Boutique told MarketWatch.
Mr. Sweet told the publication that the I.P.O. is drawing “extreme demand.”
It is very difficult for any individual investors to participate in an IPO, as most of the shares are reserved for major brokerage clients, institutional investors and pension funds. It is so difficult, in fact, the SEC has published an “FAQ” on why it is so difficult for individual investors to participate in IPOs:
Joy McCann writes:
So, it turns out there’s conduct that would get private businesspeople put in prison, but is perfectly legal for legislators. And Nancy Pelosi took this—quite literally—to the bank.
CBS has the story:
(From the CBS website.)
Big Government’s Wynton Hall gives us the best overview:
Should it be legal for lawmakers to buy stocks in companies directly affected by their legislative efforts?
In early 2008, Nancy Pelosi and her real estate developer husband, Paul, were given an opportunity to buy into a Visa IPO. It was a nearly impossible feat—one that average citizens almost certainly could never achieve. The vast majority of purchase opportunities went to institutional investors, large mutual funds, or pension funds.
Despite Pelosi’s consistent railing against credit card companies, on March 18, 2008, the Pelosis bought between $1 million and $5 million (politicians do not have to report the exact amounts, only ranges) worth of Visa stock at the IPO price of $44 per share. Two days later, the stock price rocketed to $65 per share, yielding a 50% profit. The Pelosis then bought Visa twice more. By their third purchase on June 4, 2008, Visa was worth $85 per share.
How did Nancy Pelosi snag one of the most coveted initial public offerings in history? The facts are still emerging. Yet according to Schweizer, corporations that wish to build congressional allies will sometimes hand-pick members of Congress to receive IPOs. Pelosi received her Visa IPO almost two weeks after a potentially damaging piece of legislation for Visa, the Credit Card Fair Fee Act, had been introduced in the House. If passed, the bill would have cut into Visa’s profits substantially by lowering so-called “interchange fees,” the 1% to 3% charge retailers pay Visa when customers use Visa cards for purchases. Interchange fees are a critical source of revenue for the four credit card companies–$48 billion in 2008, to be exact.
If the Credit Card Fair Fee Act had been passed into effect, it would have amended antitrust laws to require credit card companies to enter negotiations with merchants over interchange fees, and it would have given the Justice Department and the Federal Trade Commission the power to arbitrate if the two sides failed to come to an agreement. For that reason, Visa and the other credit card companies strongly opposed the bill.
The Credit Card Fair Fee Act was exactly the kind of bill one would think then-Speaker Pelosi would have backed. “She had been outspoken about antitrust problems posed by insurance, oil, and pharmaceutical companies,” Schweizer notes, “and she was vocal about the need for controlling interest rates individual banks charged to use their credit cards.”
Initially, the Credit Card Fair Fee Act cleared the Judiciary Committee on a 19-16 vote, and the National Association of Convenience Stores began lobbying for a vote on the floor of the House. “It is imperative to tell your Representatives to request a vote on the House Floor from Nancy Pelosi,” the association urged its members. Still, with at least ten percent of the Pelosi family’s entire stock portfolio invested in a single stock, Nancy Pelosi clearly had a vested interest in ensuring that Visa’s profits were protected. And that is exactly what she accomplished. Despite broad public support for the bill—77% in one study—Pelosi saw to it that the bill never made it to the House floor.
Shortly thereafter, a second bill limiting collusion by the credit card companies on interchange fees was proposed. The Credit Card Interchange Fee Act of 2008, while not as strong as the first bill, would have required greater transparency from credit card companies in informing customers how much they were paying in interchange fees. Yet again, reports Schweizer, “this second bill suffered the same fate as the first, never making it to the House floor.”
By 2009, both bills had garnered even broader bipartisan support and were reintroduced. Under Speaker Pelosi, however, neither bill lived to see a vote on the House floor.
Pelosi eventually supported something called the Credit Card Reform Act. Curiously, the all-important interchange fees went untouched by that legislation. Instead, the bill stated that the interchange fee issue should simply be “studied.” The bill’s other measures would not affect Visa but rather its client banks. In short, the Credit Card Reform Act ensured that Visa and the other credit card companies dodged a potentially costly bullet.
None of that, however, prevented Pelosi from grandstanding. She publicly declared that the Credit Card Reform Act sent a “strong and clear message to credit card companies” that they would be held to account for their “anti-consumer practices.”
My emphasis. Read the whole thing; also see Bloomberg‘s take. Meanwhile, AllahP has a roundup on the Pelosi-VISA affair, along with the closely related Obama-Greentech scandal, which is also getting new attention because of Peter Schweizer’s new book; that volume covers these two prime examples of crony capitalism—twisted together as they are like strands of evil DNA. Schweizer himself has a story in the Newsbeast that focuses a bit more on the Greentech side of things.
The bottom line? Both the White House and the former Speaker have been caught with their hands deep in the cookie jar. Pelosi, especially, has an unspinnable scandal on her hands. There is no good way to play this to a Democratic constituency, particularly since banks are the primary designated scapegoats for our current economic ills.
They will try, but neither scandal will go away, and Pelosi’s reputation is unlikely to recover. Ever.
UPDATE: Typical of the Stalinist tactics of the left's smear machine to destroy voices of truth and freedom, Soro's puppet orgs are going after the journalist who broke the story of Congressional insider trading.
The left exists to destroy.
Pelosi Smear Reportedly Based On Book By Breitbart Editor
by Media Matters for America
Schweizer has worked on behalf of President Bush, Glenn Beck, and Sarah Palin, and drew criticism for a previous false attack on Pelosi. Pelosi Asked About Potential "Conflict Of Interest" On Credit Card Reform. During a November 3 press conference, ...
heh. Pelosi is H.I.S.T.O.R.Y