Eric Cantor and the ‘honest graft’ of Congress

Eric Cantor - Memorial Day concert - courtesy Eric Cantor
Eric Cantor - Memorial Day concert - courtesy Eric Cantor

WASHINGTON, September 3, 2014 – In a radio interview leading up to Virginia’s GOP primary last June, House Majority Leader Eric Cantor’s Tea Party challenger, economics professor Dave Brat, accused the 13-year incumbent of having too cozy a relationship with “crony capitalist friends.”

“I’m not against business,” said the free-market champion, “I’m against big business in bed with big government,” Brat insisted.

In a guest column written for the Richmond Times-Dispatch, Dave Brat wrote,

“In my view, the greatest moral failure — which disqualifies Cantor for high public office — was his abuse of the public trust concerning the Stock Act, a bipartisan bill that was going through after the financial crisis. It was intended to ban insider trading on congressional knowledge for congressmen and their families. CNN discovered that Cantor altered the language of the House version in order to allow family members and spouses to continue insider trading on congressional knowledge. In my view, this action was beneath the dignity of the office.”

Cantor suffered a stunning primary defeat, the first for a sitting House Majority Leader since the creation of the post.

On a brighter note, investment bank Moelis & Co. announced Tuesday that Eric Cantor, who resigned his seat in Congress, will join the firm as vice chairman and managing director.

“Eric’s judgment and tremendous experience will expand the capabilities our team brings to clients around the world as he has unique expertise in assessing complex situations and crafting innovative solutions,” said Moelis & Co. in a press release.

In other words, Cantor’s big-government connections make him uniquely qualified to provide a Washington insider’s “expertise” to Moelis & Co. clients.

In his book “Throw Them All Out,” Peter Schweizer, a research fellow at Stanford University’s Hoover Institution, said Washington’s

“Permanent Political Class, composed of politicians and their friends, engages in honest graft. Let’s call it crony capitalism. Here the ‘invisible hand’ is often attached to the long arm of Washington. And business is good.”

Back in 2012, Schweizer told Steve Kroft of CBS’s 60 Minutes, “The buying and selling of stock by corporate insiders who have access to non-public information that could affect the stock price can be a criminal offense… But, congressional lawmakers have no corporate responsibilities and have long been considered exempt from insider trading laws, even though they have daily access to non-public information and plenty of opportunities to trade on it.”

Craig Holman, a lobbyist with Public Citizen, told The Hill,

“Congressional stock holders have a greater return on investment than the average American. Either they are geniuses on the stock market or they know something that we don’t. I suspect the latter.”

House Democratic Minority Leader Nancy Pelosi saw her stock holdings increase in value by $4 million in 2013. In 2008, Pelosi got in on the ground floor of Visa’s initial public offering (IPO), investing $5,000. A few days later, her Visa holdings were worth $80,000. She never adequately explained why the Wall Street investment banks that underwrote Visa’s IPO, the largest in history, afforded Pelosi (then Speaker of the House) such a remarkable financial opportunity.

Back to Erick Cantor, Business Insider reports that a Moelis & Co. filing with the Securities and Exchange Commission says Eric Cantor’s annual base salary will stand at a tidy $400,000, with an added $1,000,000 in restricted stock units, which he will receive based upon performance or after a set period of time at the firm.

“Isn’t it nice to have brokers who tell you these things?” domestic diva Martha Stewart supposedly said after her Merrill Lynch broker, Peter Bacanovic, advised her to dump all 3,928 shares of her ImClone Systems stock ahead of the news the FDA would not approve its colon cancer drug.

She was convicted of obstructing justice pertaining to insider trading and served five months in prison.

It’s a cautionary tale for a man who is no longer a protected member of what Mark Twain called a “distinctly native American criminal class” – Congress.

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