House majority leader Eric Cantor’s weakening of a bill designed to counter graft is the latest episode in a history of apparent abuse of authority that lends credence to the hypotheses that Cantor is an impediment to cleaning up Congress.
A peculiar thing happened on October 1. House Majority Leader Eric Cantor (R-Virginia) debated a challenger. His bout in Richmond with Democrat Wayne Powell was the Republican Congressional leader’s first campaign debate in a decade.
Why the sudden change of tack? Cantor isn’t expected to lose the race, The Washington Post’s Virginia politics blogger Laura Vozzella reported, but he is taking this cycle’s campaign more seriously due to concerns that a relatively close shave could make him “look weak.”
Debate or not, presiding over a hated Congress could make that thin margin practically inevitable. Despite the relative lack of indictments and investigations, Americans tend to think that the current Congressional crop is remarkably rotten. Polls show that confidence in the legislative branch has been at record lows throughout this Congressional session, and a poll taken at the end of last year showed that almost half of likely voters believe that most members of Congress are corrupt. Its little wonder that Powell’s internal polling in July showed that the House majority leader’s advantage has been whittled down to a single digit.
Indeed, Powell has attacked Cantor as beholden to the sort of moneyed interests causing dysfunction in DC. At the debate, the Democrat, according to Vozzella, “suggested that big donations from the pharmaceutical industry had led Cantor to vote against measures that would have allowed the government to save huge sums by negotiating better prices for Medicare drugs.” He also pointed out – albeit inaccurately – Cantor’s ties to billionaire casino magnate Sheldon Adelson. And Powell’s campaign has created a web site called CantorsMillions.com, an aggregation of scandalous tales involving the House majority leader.
Perhaps none are as damning as the one recalling his work whittling down the STOCK Act, a key piece of ethics reform that was signed into law earlier this year.
That vignette – insufficiently detailed on CantorsMillions.com – is rife with circumstantial evidence that Cantor might have been legislating with an eye on his own net worth.
And even if it hasn’t been – or can’t be – proven that his actions violated federal law or House rules, Cantor’s take on ethics and the appearance of self-dealing here could undergird Americans’ belief that legislators are systematically abusing their power with impunity. It also makes a rather compelling case that the rot starts at the top.
The story began in 2006 with the drafting of the STOCK Act. Written by Rep. Louise Slaughter (D-New York) and then-Rep. Brian Baird (D-Washington), the bill sought to close a legal loophole that had allowed members of Congress to profit off of non-public legislative information (read: engage in insider trading). It was largely ignored until November 2011, when a 60 Minutes feature on legislative insider trading prodded Congress into damage control mode. Suddenly, everyone on the Hill was rushing to back and strengthen the STOCK Act. In late January 2012, the act first passed committee in the Senate, whereupon Senators tacked on amendments, recognizing the opportunity to claw back public trust. The broadened bill was approved by an overwhelming 96-3 margin in early February.
And then – after the bill was sent to the House – Cantor got to work. The majority leader stripped it of two key amendments: the Leahy-Cornyn amendment, which would have strengthened anti-corruption statutes, and the Grassley amendment, which would have regulated political intelligence operatives – insiders who sell legislative insider information worth an estimated $400 million.
The defenestration of the Grassley amendment, in particular, proved controversial. The provision would have forced political intelligence operatives to register as lobbyists must do, and, therefore, would have made it easier for investigators to catch private investors profiting off of Capitol Hill insider info – something the STOCK Act ordered law enforcement to do. But Cantor contended that the amendment might hinder the flow of information from Capitol Hill to the electorate, and favored mandating a Congressional study of political intelligence.
A number of lawmakers on both sides of the aisle were left fuming. Drafters of the 2011 bill, Reps. Slaughter and Tim Walz (D-Minnesota), were upset; as was Sen. Charles Grassley (R-Iowa). The senior Republican said the study proposal was designed to get Washington to forget about the reform and implied that he didn’t believe Cantor was actually concerned his amendment might stem legitimate flows of information.
“Are they sincere or not?” he rhetorically asked Bloomberg TV correspondent Peter Cook, after Cantor’s staffers announced their boss’ justification for removing the provision.
“They’ve got time to sit down and work this out with me. We can find some language that will work out.”
They didn’t. Grassley’s blunt language -“Doesn’t that take a lot of chutzpah?” he said of Cantor in the Cook interview – didn’t influence Cantor; nor did the fact that a majority of Representatives co-sponsored political intelligence disclosure in Walz’ and Slaughter’s draft – a bill whose markup was killed by Cantor in late 2011 right before the holiday recess.
The amendments might have been restored had Congress not been beset by gridlock. But it wasn’t to be. After Cantor altered the bill, the traditionally leadership-subservient House Rules Committee put the House rules in suspension for the STOCK Act vote, rendering it up-or-down; the House held its nose and passed the bill (who would’ve voted against an insider trading bill in an election year?); the Senate refused to put it to a conference committee, and the president signed it into law in April, while simultaneously lamenting its deficiencies. The STOCK Act was hacked apart in the House, and the majority leader’s fingerprints were all over the proverbial axe.
Enter Mrs. Cantor
The controversy goes beyond the House majority leader having neglected his colleagues’ wishes to pass a law designed to catch white collar criminals. His wife, Diana, is a former Goldman Sachs vice president with deep ties to financial firms: She is a partner of a privately owned Wall Street investment firm called Alternative Investment Management, LLC; an independent director of The Edelman Financial Group, an investment advisory group; and chairman of the board of trustees for the Virginia Retirement System – the institution that manages the public sector employees’ pension fund in her and her husband’s home state. As if Mrs. Cantor’s industry ties weren’t suspect enough in the context of her husband’s stance on political intelligence reform, in July, CNN discovered that the House majority leader created a loophole that exempted legislators’ spouses and children from stock trade disclosure requirements – a rule that had existed in the version passed by the Senate.
When CNN confronted Cantor’s staffers about the exemption, they said it was inadvertently created, claimed they’d never heard of it, and swore that they’d fix it. It was subsequently closed.
But, as Powell’s chief of staff claimed in the earlier-alluded to Cantorsmillions.com post, the House majority leader’s response seems to represent a face-saving measure rather than a newfound zest for transparency.
It’s not just his consistent aversion to the STOCK Act that makes the mea culpa suspect; Mrs. Cantor has ties to lobbyists allegedly opposed to political intelligence regulation. She is a director of the Chamber of Commerce’s think tank, the National Chamber Foundation (NCF). The Chamber itself was opposed to political intelligence regulation, according to Public Citizen lobbyist Craig Holman. The Chamber claimed to have taken no position on the STOCK Act, even though disclosures show that its lobbyists repeatedly brought up the bill with members of Congress.
The opacity theme surrounding the Cantors and the Chamber-linked think tank doesn’t end there, either. The House majority leader never disclosed his wife’s NCF position in House financial disclosure statements. She isn’t compensated, but according to House Ethics Rules, a legislator may only omit a spousal position if he or she himself has no interest in it and “neither derives, nor expects to derive, any financial or economic benefit from the item.” (PDF – p. 253). The Cantors file taxes jointly, and the position offers her unique networking opportunities. In June, for example, the NCF hosted a “National Jobs Summit” in DC that featured private- and public-sector movers and shakers (including Wisconsin Governor Scott Walker). The position, therefore, appears to offer significant economic benefits to someone with deep financial sector ties and a lengthy list of corporate titles: Mrs. Cantor is also on the board of Domino’s Pizza, media conglomerate Media General and a consulting firm called Vistage International [http://www.vistage.com/about-us/vistage-board-of-directors.aspx] – a firm that also boasts convicted financial criminal Mike Milken on its board.
It’s not clear why Cantor would omit her NCF position on disclosure forms – it has been discussed in the media before – but the organization is no stranger to controversy. It is currently under investigation by New York Attorney General Eric Schneiderman (and possibly the IRS) for allegedly funneling money to the Chamber’s campaign war chest.
Cantor’s staff did not respond to multiple requests for comment.
A Troubling Narrative
Perhaps Cantor’s weakening of a bill designed to counter graft – taking account of possible self-interested reasons for doing so – isn’t one of the most ironic pieces of self-dealing in modern history. Perhaps this coincidence of spousal business interests and political intelligence policy is all just a PR-unfriendly coincidence.
Whether or not that’s true, Cantor has a history of appearing to abuse his authority, with his financial interests coming under scrutiny.
Amid the debt ceiling crisis last year, it emerged that the House majority leader – who drew criticism for his willingness to flirt with the idea of default – owned between $1,000 and $15,000 in a financial instrument that aggressively shorts long-term US Treasuries. When Cantor rumbled that an agreement might not be possible, the asset’s value increased. His staff had said that the instrument was purchased for portfolio diversification. But a week before April 15, 2010, when Cantor announced support for the hyper-partisan anti-tax Grover Norquist-backed “Contract With America,” a significant chunk of his portfolio was liquidated. As if to signal skepticism of the stock market, over a three-day span starting on April 6, 2010, Cantor sold 61 different securities in a range of industries worth between $624,039 and $1,685,000.
And back in 2009, while the then-House Minority Whip opposed legislation that would have made it easier for underwater homeowners to negotiate lower mortgage rates, Cantor owned a large stake in the foreclosure process. According to Republic Report, he owned up to $100,000 in Cantor & Cantor, a family-owned debt collection law firm, and up to $500,000 in TrustMor, a mortgage firm owned by his brother. At the same time, Mrs. Cantor was the managing director of New York Private Bank & Trust, an institution among the top three banks “with the greatest percentage of family loans in the foreclosure process” – one that also benefited from the Cantor-backed Troubled Asset Relief Program.
The House majority leader has also pushed policies that his wife’s firms have lobbied for. The only issue Domino’s Pizza has lobbied for in the past decade is the repeal of an Affordable Care Act provision forcing chain restaurants to list calorie counts on menus. Meanwhile, the House majority leader has played a role in overseeing 33 repeals of the entire bill in the House, despite the fact such legislation has little chance of passing the Democrat-controlled Senate or the White House (Cantor himself has proposed two such bills). Cantor has also been a staunch opponent of net neutrality, a regulation preserving Internet openness that Diana’s Media General has likely lobbied against. Lobbying disclosure forms don’t say exactly what Media General’s position is on the issue, but The Richmond Times-Dispatch, which was owned by the company at the time, denounced Net Neutrality as a government”power grab,” saying the rules “should be stricken.” (If Net Neutrality was repealed, corporations could pay for preferential bandwidth on a tiered Internet).
This confluence of Cantor’s personal and political interests might be more of a smoldering gun than a smoking one. But rule-breaker or not, the narrative does lend credence to the hypotheses that Cantor weakened the STOCK Act for personal gain, and that he is an impediment to cleaning up Congress.
What’s unquestionable is that Cantor’s wealth has grown in proportion to his influence and access to information. According to personal financial disclosures, his average net wealth fluctuated slightly on an annual basis while he was still a rank-and-file Congressman. In 2004, his average net worth was $3.6 million. In 2007 that figure increased to $4.6 million. The next year, just before he became House Minority Whip, he was worth $4.3 million. But since becoming House Minority Whip in 2009, Cantor has steadily accumulated wealth. Last year, the House Majority Leader’s net wealth grew to about $6.8 million – an increase of 58.1 percent over three years characterized by significant global financial tumult.
It’s no surprise, then, that Cantor’s opponent would make an issue out of his “millions,” given Congress’ unpopularity, and the tales of Cantor’s questionable legislative motives – particularly with respect to the STOCK Act. Cantor might not end up punished in any sort of official capacity – to reiterate, there is no proof of legal or Congressional wrongdoing here – but the electorate might castigate him. A House majority leader with a suspect attitude toward corruption is certainly a compelling oppositional campaign narrative, particularly in an election year that could see a widely-derided Congress replenished.