While many Americans believe they have little in common with their elected officials, the fact is, they do. They have mortgages, credit cards and automobile loans. They have bank accounts and many are doling out lunch money every morning like millions of other parents around the nation.
The big difference, of course, is most of these politicians are wealthier than their constituents. And they have to report to those constituents their what they’re worth in a financial sense. Before you think you have no interest in these bits of information, you should consider a few things.
The Stop Trading on Congressional Knowledge Act of 2012, or STOCK Act, was signed into law this past April. Its purpose is to prevent, and in fact, make it illegal, for Congressional leaders to make trades based on information gained in the course of their duties and that’s not made public. Not only are our elected officials bound by this law, but many of their staff members and other higher executive employees in a government capacity.
As soon as next month, some transactions that were typically reported on an annual basis must now be reported within 45 days. Further, mortgages must now be reported and later this fall, those reports will be indexed on several government websites. Within a year, this information must be made available for download from the internet. While some politicians feel this goes too far, the fact is, it really is about maintaining transparency for those who opted for a public sector position and those who ran campaigns to earn their positions have an even greater responsibility to those who they represent.
Conflicts of Interest
Remember the whopping $3 billion loss JPMorgan Chase announced in May? The controversy? And remember the arguments among lawmakers about whether or not regulation could have prevented the brouhaha? These elected officials were likely making their respective points not by what their constituents believed they should make, but rather, based on their personal stakes. That’s right – at least 38 Congressional members own shares in JPMorgan Chase. And the amounts they own might surprise you.
According to OpenSecrets.org, 15 Democrats and 23 Republicans own shares in the bank that total between $2 million and $4 million. One shareholder has stakes in the bank of at least $1 million. That elected official is New Jersey Democrat Senator Frank Lautenberg. He has a net worth that’s close to $116 million and has close to 200 various stock interests. Coming in behind Senator Lautenberg are Senators Mary Landrieu and Jeff Bingaman, both of whom are Democrats. Rounding out the top ten are Senators Tom Coburn (R), Sheldon Whitehouse (D), Claire McCaskill (D), Jon L. Kyl (R), Kay R. Hagan (D), Pat Roberts (R) and Sherrod Brown (D).
Because so many politicians are involved in special interests groups, it can become difficult to know who or where the ulterior motives lie. With the thousands of companies, hundreds of politicians and endless scandals and questionable ethics, it’s important to know where your tax dollars are being spent.
These are things that affect your family’s financial outlook, after all. And, too, many say it comes down to the old adage of “those with nothing to hide, hide nothing”. Often, special interest groups and companies – including banks and credit card companies – find themselves in a bit of hot water over business practices (the recent JPMorgan Chase $3 billion loss) or decisions that result in major disasters (BP Oil Spill in 2010). Not surprisingly, lawmakers and other politicians have personal stakes with these companies. Knowing those dynamics provides the opportunity to understand the reasons behind their decisions. Again, these are decisions that affect families and communities around the nation.
American millionaires account for around 1% of the population. Walk the halls of our government chambers and you’ll soon realize close to half of all Congressional members are millionaires. This suggests many simply can’t understand the difficulties many Americans face on a daily basis. Worries over making the mortgage payments or credit card payments are likely not shared with elected officials. Not only that, but lawmakers are getting richer every year, even as those who elected them into those positions continue to struggle to recover from the recession.
Regardless of how anyone feels about politics, it’s important to know a bit of the back story if for no other reason than to ensure each of us makes strong financial decisions for our families with as much information as possible. Remember, the decisions being made by our lawmakers are going to affect not only today’s generations, but future generations as well. Considering the recent jobs numbers, staggering student loan debt and concerns that credit card debt is climbing again, it truly does come down to making those smart decisions.