Most members of Congress are more than a little wealthy. That is not a bad thing since Congress should have the best and brightest, and many get into public service after having been successful in some other field. Moreover, there does not appear to be any particular ideological correlation. For example, according to opensecrets.org, the two richest members of the House are Darrell Issa and Jane Harman; it is hard to get further apart than that.
Lyndon Johnson appears to be the first President who put all his assets in a blind trust prior to taking office. Every president since has done so. Generally, this is regarded as beneficial to the credibility of the Presidency and the country.
A recent financial disclosure form by House Republican Leader Eric Cantor raises the question of whether a blind trust should also apply to Congress. Congressman Cantor has ‘up to $15,000’ in ProShares Trust Ultrashort 20+ Year Treasury ETF. This is likely a great stock pick if there is no agreement reached on the debt limit, and the government defaults on its interest payments. Interestingly, the only reason we know about Cantor’s bet against reaching a solution is that he made his play early. Financial disclosure forms are made once a year on May 15th, and released to the public thirty days later. Just about everybody on both sides of the aisle could also be shorting the country’s credit score, and we would not know of it for almost a year.
I am not suggesting that Cantor would push the country over the edge into default for a quick buck. Compared to his minimum $2.17 million net worth, it is small potatoes. But, as one of the half dozen people closest to the negotiations, he will be one of the first to know if an agreement has been reached. Such an agreement would be the perfect moment to sell order his holding. If this was a publicly traded company, it would be a textbook case of insider trading. But it is not a publicly traded company involving the inside trade. Instead, it is the country as a whole.
We live in a far more complex financial landscape than previous decades. It is now possible to find a way to make a financial bet for or against just about any action in Congress. If you can’t think of any other way, then just go to intrade.com and bet on it directly! Moreover, Congress is increasingly becoming a high-stakes arbiter picking winners and losers in business. An excellent example was the conflict between banks and retail chains over debit card swipe fees. Every one of these issues brings huge quantities of lobbyist money into Washington.
The possibility that the legislators are making side-bets on the outcome of their actions makes it seem that the country’s interests are far down on their concern list. Put it another way, it just plain looks bad. By comparison, blind trusts are an established and respected technique for eliminating this kind of second guessing about the motives of those we trust to be acting in our interests.