On September 20, 2019, Theron Mohamed writes on Business Insider:
- 51 US senators and their spouses have up to $96 million invested in corporate stocks, according to an analysis by Sludge and the Guardian, raising conflict of interest concerns.
- Sen. Richard Shelby, Sen. Shelley Moore Capito, and Sen. Jacky Rosen own significant amounts of stock in companies they oversee.
- Together, 10 members of the Senate banking committee hold up to $8 million worth of stock in finance, securities, and real estate companies.
Fifty-one US senators and their spouses have up to $96 million invested in corporate stocks, raising conflict of interest concerns because many of them could pass laws that help those businesses and thus enrich themselves.
An analysis by Sludge and the Guardian — a deep dive you can check out here — looked at the senators’ disclosed stakes totaling $28 million to $96 million across finance, defense, health, communications and electronics, and energy and natural resources companies.
Members of Congress aren’t legally barred from owning stock in companies they oversee, but having a vested interest in their success could affect their impartiality and willingness to pass laws that hurt those businesses.
Legislators are under mounting pressure to crack down on predatory lending, abuse of user data, climate change, sweetheart military deals, prescription drug prices and the opioid crisis. Senators’ stakes in banks, tech giants, fossil-fuel companies, defense contractors, and healthcare giants could temper their desire to tackle those issues.
The median investment range was between $100,000 and $365,000, Sludge and the Guardian said. The most popular stocks included Apple, Microsoft, Google-owner Alphabet, Amazon, Berkshire Hathaway, and Wells Fargo. The biggest single investment was Sen. John Hoeven’s stake in Westbrand — a private holding company for banks — which is worth between $5 million and $25 million.
Several lawmakers hold shares in companies they oversee, the analysis found. Sen. Richard Shelby owns between $1 million and $5 million worth of stock in Tuscaloosa Title Company, a private real estate insurance firm, despite sitting on Senate housing and insurance subcommittees. Nine other members of the Senate banking committee hold financial stocks including Sen. Doug Jones, Sen. John Kennedy, and Sen. Robert Menendez.
The trend extends beyond banking. Sen. Shelley Moore Capito owns substantial stakes in Microsoft, Intel, AT&T, and Verizon, despite sitting on technology and consumer protection subcommittees. Sen. Jacky Rosen, who also sits on those subcommittees, owns up to $480,000 worth of Amazon, AT&T, and Adobe stock.
Gary Reber Comments:
What is important to understand here is why would anyone seek to own viable corporate stocks? The reason is ownership of wealth-creating, income-producing capital assets is the source of wealth.
At present it requires people to have saved in order to acquire capital asset ownership stakes. This, as well applies to people privileged to insider information that benefits them when buying and selling stock, as the article discusses. As a result, the rich get richer, because they keep accumulating capital assets to pledge as security to acquire even more capital assets.
As a result, our society is becoming economically divided with the tiny few capital asset owners vs non-owners of the non-human means of production –– “productive capital assets that provide the bulk of the input to produce goods, products and services in an economy.
Virtually no one, including those seeking the office of the presidency of the United States, talks about the necessity of creating new productive capital asset owners simultaneously with the growth of the economy, and thus provide a new source of earnings, a second income not tied to a job. This can be accomplished using capital credit is credit used to purchase productive assets that pay for themselves out of their own future earnings and then yield income for consumption.
Instead, everyone focuses on job creation in the face of job-destroying shifts in the technologies of production, such as in temporary employment in infrastructure construction or dependency on a guaranteed job. Why? Because they only see a job as a means for people to earn an income. Yet, clearly, common sense should tell these narrow thinkers, that the wealthy few are wealthy because they own wealth-creating, income-producing capital assets, and the rest (the masses) of the citizenry are essentially job serfs or dependent on taxpayer welfare support.
The obvious solution is to create financial mechanism which will provide equal opportunity for EVERY child, woman, and man to acquire productive capital assets, as they are being formed, with the earnings of the investments. The rich understand how to accomplish this using capital credit but never share how they do it with those dependent on them for jobs.
The only impediment to ordinary Americans, working or not, who are propertyless in the capital asset context, from becoming an owner of newly formed, self-liquidating productive capital assets is putting up collateral as insurance or a guarantee against a capital credit loan for an investment that does not perform as expected.
As every rich person knows, capital acquisition takes place on the logic of self-financing and asset-backed credit for productive uses. People invest in capital ownership on the basis that the investment will pay for itself. The basis for the extension of capital credit and commitment of loan guarantees is the fact that nobody who knows what he or she is doing buys a physical capital asset or an interest in one (existing or to be formed) unless he or she is first assured, on the basis of the best advice one can get, that the asset in operation will pay for itself within a reasonable period of time –– five to seven or, in a worst case scenario, 10 years (given the current depressive state of the economy). And after it pays for itself within a reasonable capital cost recovery period, it is expected to go on producing income indefinitely with proper maintenance and with restoration in the technical sense through research and development.
Still, there is at least a theoretical chance, and sometimes a very real chance, that the investment might not pay for itself, or it might not pay for itself in the projected time period. So, there is a business risk. This is why the lender has no reason to loan to anyone unless it has two sources of repayment. In addition to determining that the investment is viable and that the person or business corporation is creditworthy and reliably expected to make loan repayments, there needs to be security against default. Thus, for the lender to make the loan, loan security must be provided. This is always in the form of some type of equity accrued through past savings.
But, there is another path to solve the security issue, that is, the risk can be absorbed by capital credit insurance or commercial risk insurance and re-insurance. Thus, in order to achieve national economic democracy, we need a way to handle risk management in finance by broadly insuring the risks. Such capital credit insurance would substitute for the security demanded by lenders to cover the risk of non-payment, thus enabling the poor and others with no or few assets (the 99 percent) to overcome the collateralization barrier that excludes the non-halves from access to wealth-creating, income-generating productive capital.
And because financing does not require borrowing from past savers (the rich), the capital credit loans can be interest-free, as well as insured.
It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic wellbeing.
The solution is embodied in the proposed Capital Homestead Act. To read how capital homesteading works, see this section in my article Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” at http://www.foreconomicjustice.org/?p=11.
