CQ TODAY ONLINE NEWS
– CAMPAIGN FINANCE
April 10, 2009 – 12:05 a.m.
Campaign of Energy Leader Lost $700,000 in Markets
By Jonathan Allen and Alex Knott, CQ Staff
Texas Rep. Joe L. Barton ’s campaign reported losing $703,500 in the financial markets last year.
A large chunk of those stock market losses — $196,900 — were in shares of four companies that have a stake in the bills handled by the House Energy and Commerce Committee, where Barton is the top Republican.
Barton is one of a handful of House members whose campaign accounts are heavily invested in stock and bond markets, and, like many other investors, his campaign savings took a pounding when the stock market crashed.
His campaign’s paper losses — which have not been locked in because the assets have not been sold — include $85,800 in General Electric stock, $68,400 in General Motors Corp. stock, $13,500 in Home Depot stock and $29,200 in stock in Lennar Corp., a home-builder that specializes in constructing houses that harness solar power.
Barton campaign spokesman Craig Murphy said the congressman has invested campaign funds for two decades and has no plans to divest.
“As it stands, the better off America is, the better off our campaign will be,” he said. “We are comfortable being together with America in that boat.”
It is legal for lawmakers to invest campaign money, and House conflict-of-interest rules do not apply to campaign holdings.
But the confluence of Barton’s legislative jurisdiction and campaign assets raises questions about the propriety of the arrangement.
“If he has stock in a company, whether it’s in his campaign account or whether it’s in his personal account, the things he does that may benefit that company are going to be inherently suspect,” said Andrew Herman, a partner at the Brand Law Group, who has successfully argued campaign finance law before the Supreme Court. “The members of Congress who pride themselves on rectitude probably don’t own any stock and certainly don’t own anything that would be under areas of their purview.”
Murphy noted that General Motors is a major employer in Barton’s 6th Congressional District and said “support for GM in this way seems appropriate even though it has lost money” in recent months.
The four companies in which Barton holds stock all have interests before the Energy and Commerce Committee, where Barton was chairman before the Democratic takeover of the House in 2007.
Those interests range from identity theft — an issue that Home Depot has lobbied on — to major overhauls of the nation’s energy policy.
Most of the rest of the financial hits Barton’s campaign took last year came from mixed investment funds. One, Fidelity’s Select Energy Service fund, is primarily invested in energy companies, with 22 of its top 25 holdings in that sector as of the end of February, according to the Morningstar financial analysis firm.
For the two-year campaign cycle from 2007 through 2008, Barton lost $504,200, not including gains from interest.
But Barton’s holding firm on the campaign investments. “He’s not pulling the money out, and he expects the stock market bounce back,” Murphy said.
The Bigger Picture
A CQ MoneyLine study found seven political committees that reported losing $10,000 or more of their donors’ money through investments in 2008.
Those net losses added up to a combined $1.9 million, and ranged from $17,500 for the campaign of Alabama Rep. Spencer Bachus , the top Republican on the Financial Services Committee, to Barton at $703,500 for the year.
The study covered only House campaigns because Senate campaigns are not required to file electronic reports.
“We reaped the benefits like others and we’ll have to handle the losses,” said Tom Kiley, the campaign treasurer for Rep. Bill Delahunt , D-Mass., who saw his account dwindle by $256,800 in September and October and $421,800 overall last year.
Murphy, the spokesman for Barton’s campaign, noted that Barton has made more money than he has lost over two decades of investing campaign funds in the market.
The Dallas Morning News reported in 1999 that he had “added nearly $30,000 to his campaign account ... without hosting a fund-raising event or mailing a single letter to prospective donors.”
“Back then it was, Wow, look how much money Barton is making in the stock market,” Murphy said.
Rep. Gary G. Miller , R-Calif., reported losing more than $50,000 when IndyMac bank collapsed because his account exceeded the $100,000 limit for federal insurance by that much.
Miller is unlikely to dump his unpaid treasurer: His wife, Cathleen Miller, handles the books.
Rep. Pete Stark , D-Calif., who owned banks before he was elected to Congress in 1972, reported posting investment gains of $124,000 for the two-year cycle. His campaign even made money — $57,100 – in October of last year, which was the worst month for campaign committee investments.
After his against-the-grain October rally, Stark’s campaign investments didn’t do as well and finished 2008 with less than $2,000 in gains.
Bachus saw his campaign’s assets jump more than $51,200 in 2007 before losses in 2008 gave him a net gain of $33,700 for the two-year election cycle.
Donors Yawn
Donors contacted by CQ did not seem to mind that their political contributions disappeared in the stock market.
Richard G. Gurnon, president of the Massachusetts Maritime Academy and a $250 donor to Delahunt, said “it would have been imprudent” to put a large amount of campaign money “in a mattress” or a bank account with a low yield.
Gurnon said he would give again because Delahunt has worked hard for his constituents — and indeed, the congressman on April 2 put in a request for a $250,000 earmark for that school.
Scott Fisher, the senior pastor at Metroplex Chapel in the Dallas-Fort Worth suburbs, said he is sympathetic to Barton’s lost lucre.
“Who wouldn’t be?” Fisher said. “It doesn’t bother me. Joe’s a good friend.”
None of the campaigns that reported investment gains or losses in the last political cycle were in any danger of losing at the ballot box. .
Democratic Rep. David Wu lost $123,700 in investment value in 2008 — after smaller gains in 2007 — but he won with 71.9 percent of the vote in Oregon’s 1st District. A spokeswoman declined to say whether Wu would sell his investments but noted that his campaign’s finances are in the black if investments are tabulated going back several election cycles.
Several campaigns or political action committees that lost money in 2008 are controlled by former members of Congress.
Those include former Rep. Joseph P. Kennedy II, a Massachusetts Democrat whose committee dropped $450,800; former Republican Rep. H. James Saxton of New Jersey, who lost $120,700, and former Mississippi Rep. Charles W. “Chip” Pickering Jr., a Republican, who lost $85,800.
Kiley, who handles Delahunt’s campaign finances, said the lost investment value wouldn’t endanger the veteran congressman.
“Of course it is a loss of money that is available, but Bill is a very good fund-raiser and we have the ability to handle any campaign that comes our way,” he said.
Comments
Why isn't the bigger discussion here why the man supposed to be responsible for regulating energy companies for the best interest of the public has hundreds of thousands of dollars in campaign donations, mostly from corporate pacs anyway, invested in those companies. Does no one else see this as a huge and scandalous conflict of interest?
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