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Lawmakers' committee assignments and industry investments overlap

Rep. Ron Paul, on a panel that deals with monetary policy, has invested in gold-mining firms.
Rep. Ron Paul, on a panel that deals with monetary policy, has invested in gold-mining firms. (Bill Clark - Roll Call/getty Images)
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"Senator Carper's investments or holdings do not influence the way he makes policy decisions. He bases those decisions on what he thinks is right and fair for Delaware and our nation," Cunningham said. "Owning stock in a company such as Duke Energy, which produces energy from wind, nuclear, natural gas and coal, simply reflects his beliefs."

Lautenberg did not respond to questions about his holdings. A Lautenberg aide said the Linn Energy holdings were in a trust owned by his wife.

Under current rules, judges and executive branch employees cannot handle matters that overlap their holdings, but lawmakers can.

Judges cannot rule in cases involving companies in which they own stock, and executive branch officials must sell assets in industries they regulate or put them in blind trusts. By contrast, long-standing ethics rules for Congress generally leave it up lawmakers to decide whether their holdings pose a conflict and whether they should recuse themselves from a vote.

The appearance of potential conflicts creates unease among congressional observers. Steve Ellis, vice president of the nonpartisan Taxpayers for Common Sense, said there has been a long-standing suspicion, difficult to verify, about committee assignments: that lawmakers tend seek out certain committees to suit their own interests.

"It is part of the problem with the committee system. People try to get on the committees in which they have a vested interest," said Ellis, whose group closely tracks congressional activity. "Committees can have a huge impact on the sectors of the economy under their jurisdiction, and they're going to know more about what's going on in those sectors than the average lawmaker."

"By being on a committee with a particular jurisdiction, they're in a better position of influencing the performance of their investments," he said, "or at least appearing to have that ability."

A gold standard

Ron Paul is better known across the country as a conservative presidential candidate than for his work in Congress, where he has introduced much legislation to limit the size and power of the federal government. That includes proposed bills to eliminate the Federal Reserve and to turn the country back to a gold-backed currency.

A fan of Ayn Rand and other conservative economic icons, Paul, a physician, said he was spurred to run for office after the government's decision in the early 1970s to no longer back every dollar with an equivalent amount of gold, commonly known as the gold standard. That decision, Paul said, has been responsible for inflation and other economic ills.

In one of his papers on monetary policy, written in 1982 during an earlier recession, Paul derided that change. "More and more people are asking if a gold standard will end the financial crisis in which we find ourselves. The question is not so much if it will help or if we will resort to gold, but when."

He has maintained a consistent position during the years since, making the gold standard a key platform of his runs for the White House. This this month, he wrote a piece titled "Why Big Government Hates Gold."

Over the years, his investments in gold and related metal-mining have grown, according to his disclosure records. In 2004, he reported holdings in Goldcorp, Barrick Gold, Glamis Gold and Iamgold, worth $300,000 to $730,000. By 2007, he reported owning $768,000 to $1.7 million, with up to $1 million in Goldcorp alone.

The disclosure records for 2008 show that Paul reported $600,000 to $1.46 million in holdings in gold and metal-mining.

Paul serves as the top Republican on the Financial Services subcommittee on domestic monetary policy and technology. He said his personal holdings do not conflict with his policy advocacy because everyone has a right to look out for his own interests. He said his gold investments are logical and consistent with his views that the dollar will lose value because it's not backed up by anything.

"It's protection against the devaluation of the dollar," he said. "Everybody invests out of self-interest. That's not a story."

Paul played down the idea of creating additional rules to curb congressional investing, saying that lawmakers who wanted to could find a way around them. "The only way to deal with this is to put people in office with character," he said.

He said the real solution would be to cut government's influence over the private sector, making it harder for congressional decisions to have an impact on the markets.

"Government is so involved in everything we do in this economy," he said. "The only solution is getting the government out of things it should not be doing."

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