US: Bombshell WSJ investigation reveals runaway corruption by federal bureaucrats

US: Bombshell WSJ investigation reveals runaway corruption by federal bureaucrats. By Rebecca Ballhaus et al.

Thousands of officials across the government’s executive branch reported owning or trading stocks that stood to rise or fall with decisions their agencies made, a Wall Street Journal investigation has found.

More than 2,600 officials at agencies from the Commerce Department to the Treasury Department, during both Republican and Democratic administrations, disclosed stock investments in companies while those same companies were lobbying their agencies for favorable policies.

That amounts to more than one in five senior federal employees across 50 federal agencies reviewed by the Journal.

  • A top official at the Environmental Protection Agency reported purchases of oil and gas stocks.
  • The Food and Drug Administration improperly let an official own dozens of food and drug stocks on its no-buy list.
  • A Defense Department official bought stock in a defense company five times before it won new business from the Pentagon.

The Journal obtained and analyzed more than 31,000 financial-disclosure forms for about 12,000 senior career employees, political staff and presidential appointees. The review spans 2016 through 2021 and includes data on about 850,000 financial assets and more than 315,000 trades reported in stocks, bonds and funds by the officials, their spouses or dependent children. …

More than five dozen officials at five agencies, including the Federal Trade Commission and the Justice Department, reported trading stock in companies shortly before their departments announced enforcement actions, such as charges and settlements, against those companies. …

About 70 federal officials reported using riskier financial techniques such as short selling and options trading, with some individual trades valued at between $5 million and $25 million. In all, the forms revealed more than 90,000 trades of stocks during the six-year period reviewed. …

Blatantly illegal:

U.S. law prohibits federal officials from working on any matters that could affect their personal finances. Additional regulations adopted in 1992 direct federal employees to avoid even an appearance of a conflict of interest. …

Under federal regulations, investments of $15,000 or less in individual stocks aren’t considered potential conflicts, nor are holdings of $50,000 or less in mutual funds that focus on a specific industry. The law doesn’t restrict investing in diversified funds. …

When financial holdings caused a conflict, the agencies sometimes simply waived the rules. In most instances identified by the Journal, ethics officials certified that the employees had complied with the rules, which have several exemptions that allow officials to hold stock that conflicts with their agency’s work.

Federal agency officials, many of them unknown to the public, wield “immense power and influence over things that impact the day-to-day lives of everyday Americans, such as public health and food safety, diplomatic relations and regulating trade,” said Don Fox, an ethics lawyer and former general counsel at the U.S. agency that oversees conflict-of-interest rules.

He said many of the examples in the Journal analysis “clearly violate the spirit behind the law, which is to maintain the public’s confidence in the integrity of the government.”

Lawmakers too:

Congress has long faced criticism for not prohibiting lawmakers from working on matters in which they have a financial interest. …

Journal reporting last year on federal judges, revealing that more than 130 jurists heard cases in which they had a financial interest, led to a law passed this May requiring judges to promptly post online any stock trades they make.

Example: Lihong McPhail:

The financial disclosure of Lihong McPhail, an economist at the CFTC, showed the most trading reported by any federal official in the Journal’s review. Her husband made more than 9,500 trades in 2020 — an average of about 38 each trading day, according to her disclosure form and the CFTC. …

In amending the Commodity Exchange Act, Congress also declared that any breach by a CFTC employee of an investment rule set by the commission could be punishable by up to a $500,000 fine and five years in prison. The CFTC’s role doesn’t include regulating stocks, but in 2002, the agency adopted a rule banning short selling by its employees and their families.

Nonetheless, a CFTC ethics official approved short selling by Ms. McPhail’s husband, Joseph McPhail, a CFTC spokesman said, fearing that the commission “could possibly be sued by the employee if we said no.” The spokesman said the ethics office believed the regulatory provision exceeded the commission’s statutory authority.

Joanne Nova:

There’s a reason everything seems to be going off the rails simultaneously. The more money we print, the more corruption we feed.

US base money, which gets amplified 20-fold by the private banking system

And if you think corruption is terrible now, just wait until bureaucrats and bankers get a Global Carbon Currency.