ATLANTA - 12/19/2011
Earlier in the month, author and political commentator Peter Schweizer visited the Heritage Foundation in Washington, D.C. to discuss his new book "Throw Them All Out", a critique of crony capitalism on capitol hill.
"This [crony capitalism] is the most profound issue that we face in America in the 21st century," Schweizer told the small gathering.
As an example of some of the ethical issues present in American business politics, Mr. Schweizer used the IPO. Initial Public Offerings, or IPO's, are little more than legal bribery when offered to members of Congress while in session, according to Schweizer.
Think of it this way...If I was to approach a Congressperson with an undisclosed amount of money and ask for a particular political favor, the ethical ambiguity becomes quite clear.
On the other hand, if I was to tell a Congressperson that "Hey, my company's going public on such and such date, you can buy the stock at a discounted rate now and then sell it at profit on that date. All you have to do is write this (or vote against this) bit of legislation...," the waters become somewhat murkier.
This is in essence insider trading, but all perfectly legal in terms of US Congressional business transactions.
House Speaker Nancy Pelosi is suspected to have engaged in this type of "legal graft". Pelosi was given access to 5,000 shares of VISA's IPO, valued initially at $44/share. When VISA went public, the shares jumped to $66/share. Pelosi netted $100,000 in one day.
In exchange for this, Schweizer speculates that Pelosi blocked Credit Card Reform legislation for the next 2 years.
Benjamin Burton Jr. 12/19/2011
Watch Video of the discussion here: