They will not say so in public, but U.S. Sen. Kelly Loeffler's stock portfolio is making many Republicans, here and in Washington, more than a little nervous.
Among those holding their tongues is Senate Majority Leader Mitch McConnell, R-Ky, who pronounced himself heavily invested in Loeffler’s election — before the coronavirus landed and the market crashed.
Over the weekend, asked if McConnell still had her back, a spokesman pointed to praise of Loeffler previously offered up by the Senate majority leader. On Dec. 3, 2019.
Loeffler understands the situation. "There have been some headlines – some very inaccurate, really, I would just say hurtful headlines about my portfolio activity," the junior senator said Monday in a conference call with the Savannah Area Chamber. Which was recorded and posted on YouTube by American Bridge, a Democratic group.
“I do not transact in my own portfolio. Those are handled by third-parties – have been for well over a decade,” Loeffler said. But one voice pressed the senator – asking if she had considered putting her assets in a blind trust or investing in mutual funds that would reflect the stock market as a whole. And your 401(k), too.
"I am definitely looking at that," Loeffler said. (We reached out to the Loeffler campaign about the recording and did not hear back.)
But if you really want to know how worried Senate Republicans are about her election chances in November, there’s no need to pester Loeffler or her colleagues individually. Just hop into the ‘Way Back Machine and set the dial for November 2011.
America was just climbing out of the Great Recession. A presidential election year was about to begin. And insider trading by members of Congress and their staffs was entirely legal.
That month, a "60 Minutes" segment trained its eye on a Hoover Institute research fellow named Peter Schweizer and some students who had examined the age-old question of how members of Congress always seemed to leave Washington richer than they went in – on a $174,000-a-year salary.
The CBS piece looked at U.S. Rep. Spencer Bachus, R-Ala., the ranking member of the House Financial Services Committee, who had attended an apocalyptic briefing on the economy in mid-September 2008. One day later, he invested heavily in stock options.
“While Congressman Bachus was trying to keep the economy from cratering, he was privately betting that it would,” the narrator intoned. “He would make a variety of trades and make a profit when most Americans were losing their shirts.”
Which sounds very familiar today.
In 2009, as debate began over what would become the Affordable Care Act, then-House Minority Leader John Boehner, R-Ohio, invested in health care stocks. The purchase caught up to him after he’d become House speaker.
”I have not made any decisions on day-to-day trading activities in my account – and haven’t for years,” Boehner said. He told “60 Minutes” that his investments were in the hands of an adviser with whom he spoke perhaps once a year.
Again, that sounds familiar.
The next year, Congress passed the Stop Trading on Congressional Knowledge (STOCK) Act, which prohibited insider trading by members of the U.S. House, Senate and their staffs.
The vote was 417-2 in the House and 96-3 in the Senate. That’s how worried both Democrats and Republicans were about the optics. The current situation may be just as angst-filled for Republicans.
Under the auspices of the STOCK Act, the U.S. Justice Department is looking at transactions made by U.S. Sen. Richard Burr, R-N.C., who privately warned a group of constituents in February of the dire economic implications of the coronavirus pandemic, and dumped up to $1.7 million in stocks – even while assuring the public that all was well.
Loeffler’s financial disclosures show that millions of dollars in stocks were sold on her behalf after she attended a closed-door Jan. 24 Senate briefing on the coronavirus.
The largest transactions involve $18.7 million in sales of Intercontinental Exchange stock in three separate deals dated Feb. 26 and March 11. Loeffler is a former executive with ICE, and her husband, Jeff Sprecher, is the CEO of the company, which owns the New York Stock Exchange among other financial marketplaces.
As stated above, Loeffler said the transactions were conducted at arms’ length. And the senator says she has not been contacted by federal law enforcement. But publicly, Loeffler was also talking up the soundness of the American economy at the time of the transactions.
From the Republican side, there are two things to worry about here. First, even though she is believed to be the richest member of the Senate, Loeffler’s financial portrait remains unfinished. Upon joining the chambers, members are required to state their holdings and liabilities.
Loeffler sought and received a 90-day extension. The deadline for filing that information is May 5, which will bring another round of media inspections.
Then there is the fact that the transactions by Burr and Loeffler have put a spotlight on every other senator as well – including U.S. Sen. David Perdue, R-Ga. Who, like Loeffler, will be on the November ballot.
On Monday, my Journal-Constitution colleague Tia Mitchell reported that Perdue’s financial portfolio saw a heavy trading during the month of March, as Congress passed three different spending bills to address the economic devastation caused by COVID-19. (Unlike Loeffler, Perdue was not at that private Jan. 24 Senate briefing on the coronavirus.)
Republicans have spent the last two years preparing for a national campaign focused on rampant “socialism” – their rebuttal to the Medicare-for-all debate among Democrats. But if the economy isn’t headed in the right direction by November, Democratic charges of crony capitalism, with Burr and Loeffler as poster children, could be just as effective.
Twenty candidates are running against Loeffler, including U.S. Rep. Doug Collins, R-Gainesville. Which means her all-comers contest is all but certain to result in a Jan. 5 runoff. But Perdue will have a Libertarian in his race, as well as a Democrat. And Georgia Republicans have begun musing about a worst-case scenario in which both contests move to 2021 runoffs, with control of the U.S. Senate at stake.
A few paragraphs ago, I mentioned Peter Schweizer, who inspired that "60 Minutes" segment eight years ago. He is now an investigative journalist and president of the Government Accountability Institute.
His is not a liberal organization. The board chairman is Rebekah Mercer, the conservative philanthropist whose family is heavily invested in Breitbart.com, the alt-right news site. Schweizer provided conservatives with some of the early ammunition on Hunter Biden’s activities in Ukraine.
Schweizer now lives in Tallahassee, Fla., but still keeps tabs on congressional stock transactions. The STOCK Act hasn’t changed the situation that much, he said.
“It does make it clear that if you use material, nonpublic information as an elected official or staffer, and you trade on it, it is absolutely, unequivocally a crime. That was not the case before,” Schweizer said in a phone interview.
The U.S. Justice Department will prosecute the most egregious cases – as was made clear by the recent guilty plea to insider trading by U.S. Rep. Chris Collins, R-N.Y. He tipped his son with a phone call from the White House lawn.
“I still think the threshold is going to be much higher than with somebody in the private sector. The easiest way to deal with this – it’s not perfect by any means – is to just require everyone to put their assets in a blind trust,” Schweizer said. “Because otherwise, we’re basically left with taking the word of politicians. And politicians have a tendency to lie.”
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