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Millionaire Politicians: Trading Influence for Cash

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Millionaire Politicians: Trading Influence for Cash
The poverty rate in the United States has risen by about 33% since the year 2000, while the income gap between the top 1 percent earners and the rest has widened by 17 percent for the same period. How have those socioeconomic changes affected America politicians?

As it turns out, for the first time in history, more than 50 percent of U.S. Congress members are millionaires.

Furthermore, the median net worth in 2012 for all 535 members of Congress in office was a little over $1 million. The value of all their combined assets, minus liabilities, was about $4 billion, and many of them are in the nation top 1 percent richest people.

The top 25 wealthiest senators and representatives each have an estimated net worth of more than $35 million, with the richest - Darrell Issa (R-Calif) - topping the list with nearly half a billion dollars.

U.S. lawmakers earn a base annual salary of $174,000, not counting benefits, and many of them invest in Wall Street.

In 2012, the 10 most popular stock investments for members of Congress included the technological giant General Electric (1st), the bank Wells Fargo (2nd), Bank of America (6th), and JPMorgan Chase (7th).

Do politicians use their privileged position to engage in insider trading? As University of Chicago Professor Luigi Zingales points out, "Not only can members of Congress legally trade on confidential information; they do, despite the potential cost to their reputations."

A 2004 study published in the Journal of Financial and Quantitative Analysis revealed that U.S. senators trading in stocks beat the market by 12 percent a year. "Since even the best hedge-fund managers find it hard to achieve comparable results, we must conclude that these senators either are better than hedge-fund managers, or that they benefit from privileged information," writes Zingales. U.S. congressmen and their staffers also collect privileged information and sell it to hedge-fund managers for millions of dollars.

Peter Schweizer, the President of the Government Accountability Institute, wrote in his 2011 book Throw Them All Out: "Insider trading is illegal on Wall Street, yet it is routine among members of Congress. Normal individuals cannot get in on IPOs at the asking price, but politicians do so routinely. The Obama administration has been able to funnel hundreds of millions of dollars to its supporters, ensuring yet more campaign donations. An entire class of investors now makes all of its profits based on influence and access in Washington."


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Video Added on : 08 Sep 2014 02:26 am
Video Posted Under : Politics & Politicians Videos

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