Do two representatives make a trend? Today, Rep. Kirsten Gillibrand (D-NY) posted her personal financial disclosure form on her member Web site. (See it here.) This makes her the second known member of Congress to post their financial disclosure form to their Web site. Last month, Bill blogged about Rep. Darrell Issa (R-CA) being the first known member to post these documents to their site. As I've explained before, citizens can only get personal financial disclosure forms, the documents that tell you how much your congressman is worth and what assets they own, directly from Congress by travelling to Washington, DC and picking up the hard copies from the Legislative Resource Center (located in the basement of Cannon Office Building). Gillibrand and Issa are doing a much needed service by being personally responsible for the public disclosure of these vital documents.

The Sunlight Foundation supports a provision in the pending bill, the Honest Leadership and Open Government of 2007, that requires the Clerk of the House to put all member's personal financial disclosure forms online. Instead of waiting for the House and Senate to go through a conference committee and the Clerk to figure out how to set up a system to get the documents online your member of Congress could spend 10 minutes to upload their own personal financial disclosure form to their Web site. Hopefully two does make a trend and more congressmen will follow suit. What's your congressman waiting for?

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Last night, the House Democrats revealed the much anticipated companion lobbying and ethics bill to the Senate's S.1 (we'll have a more detailed look later). Included in the bill is a provision to put personal financial disclosures and travel reports online for the first time. As you may know, we've been lobbying for this and consider this to be a great victory for transparency in the House of Representatives. We commend the House for continuing to towards a more open and accessible online presence. Thanks to everyone who called or sent a letter to Speaker Pelosi and members of the Judiciary Committee. We've heard that your calls and letters helped push the leadership to include this provision. In the face of newspaper articles doubting the seriousness of the reform effort in the House this provision should indicate that the House is willing to make their own institution more transparent and open to the public at large. Now, for the provision itself. (Clause (a)(2) requires personal financial disclosures be put online.)

SEC. 402. POSTING OF TRAVEL AND FINANCIAL DISCLOSURE REPORTS ON PUBLIC WEBSITE OF CLERK OF THE HOUSE OF REPRESENTATIVES.

(a) Requiring Posting on Internet- The Clerk of the House of Representatives shall post on the public Internet site of the Office of the Clerk each of the following:

(1) The advance authorizations, certifications, and disclosures filed with respect to transportation, lodging, and related expenses for travel under clause 5(b) of rule XXV of the Rules of the House of Representatives by Members (including Delegates and Resident Commissioners to the Congress), officers, and employees of the House.
(2) The reports filed under section 103(h)(1) of the Ethics in Government Act of 1978 by Members of the House of Representatives (including Delegates and Resident Commissioners to the Congress).

(b) Applicability and Timing-

(1) APPLICABILITY- Subject to paragraph (2), subsection (a) shall apply with respect to information received by the Clerk of the House of Representatives on or after the date of the enactment of this Act.
(2) TIMING- The Clerk of the House of Representatives shall–

(A) not later than August 1, 2008, post the information required by subsection (a) that the Clerk receives by June 1, 2008; and
(B) not later than the end of each 45-day period occurring after information is required to be posted under subparagraph (A), post the information required by subsection (a) that the Clerk has received since the last posting under this subsection.

(c) Retention- The Clerk shall maintain the information posted on the public Internet site of the Office of the Clerk under this section for a period of at least 6 years after receiving the information.

 

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The House Judiciary Committee is currently deciding what will or will not be included in the House’s ethics reform bill. While the Committee is talking about requiring greater transparency from lobbyists they aren’t taking simple steps to make the House more transparent. Last week, Ellen proposed that the Judiciary Committee take one simple step to make the House more transparent by putting personal financial disclosure forms online. (This is also a recommendation in The Open House Project report.) You can help make this happen by following this link and contacting Speaker Pelosi and the members of the Judiciary Committee and asking them to include a provision putting personal financial disclosures online in the ethics bill. If you want to know why you should care about the online disclosure of personal financial disclosure forms you can read Ellen’s post and continue reading this post. (See also the Congresspedia entry on personal financial disclosure.)

The first reason to put personal financial disclosure online is the sheer level of difficulty in obtaining them. In the absence of private sites like Open Secrets you have to hop on a plane and fly to Washington to view your Member’s personal financial disclosure. Once in Washington you’d have to go to Capitol Hill, specifically the basement in the Cannon Office Building to find the Legislative Resource Center. There you would be required to give your name, address, and occupation to obtain a copy of this disclosure form and then you’d have to pay to copy it yourself. If that’s not reason enough for why you’d want these documents online you can continue reading.

In the wake of the Watergate scandal, Koreagate, and a myriad of smaller scandals Congress passed the Ethics in Government Act. This Act required Members (along with executive branch officials and others) to file annual personal financial disclosures. The purpose of the financial disclosure provision is to make public the personal finances of lawmakers and executive branch officials so as to dissuade these targeted government officials from engaging in personal behavior that may constitute a conflict of interest and providing public documentation so that if they are violating some rule, protocol, or law or are maintaining unseemly relationships the news media can inform their constituents.

This is what we’d call a targeted transparency measure; a targeted item (Members’ personal finances) is made transparent to promote a goal (less conflicts of interest; less corruption) with an enforcement mechanism (public flogging in the news media that could lead to investigations). The purpose of targeted transparency is usually to create a greater amount of choice by providing essential information to a consumer. In this case the consumer is the constituent or voter and the choice is whether they want this person, the Member of Congress, to continue to represent them or not. But in the current conception there is a middle man — the news media.

By putting personal financial disclosure forms online voters can go to the Clerk of the House or the Senate website and discover whether their Member’s financial information is anything to fuss about. There’s no need to wait to find out what your newspaper’s Washington Bureau (if they even have one) has to say about your congressman’s finances. This also would prevent those often silly articles about an item in a Member’s personal financial disclosure that may or may not be controversial but the reporter is going to report about the controversy over whether it is controversial (see this recent Associated Press article or this Washington Post article).

Instead of relying on “check-box” journalism about Members of Congress you can check for yourself to see if your congressman is selling land to some unidentified Limited Liability Corporation, or if your congressman sold their stock just before the price dropped, or if they are affiliated with or own stock in controversial organizations. Or if they just happen to own stock and a summer house. Or, like some Members, have a lot of debt.

Putting personal financial disclosure forms online is just a piece of the puzzle in creating a system of user-centered (in this case constituents and voters) information so that constituents and voters can make better choices and share information to create those better choices. Better choices should lead to political representation more attuned to the needs of constituents.

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The Sunlight Foundation and nearly a dozen other groups today sent a letter to House Speaker Nancy Pelosi to urge her to add to the upcoming lobbying reform legislation a provision that would require members to electronically file their personal financial disclosure forms.  These reports provide detailed information on each members' personal financial assets, and are critical to the public's understanding of whether their representative's private interests might conflict with his or her public duties as a lawmaker. Congress, which has required electronic filing of reports by lobbyists, campaign committees and 527 organizations, has failed to make personal financial disclosure reports available on the Internet-even in PDF format. Instead, the reports and the information contained in them are buried in the basement office of the House Clerk.

The House Ethics Manual states that "…public disclosure of assets, financial interests, and investments has been required as the preferred method of regulating possible conflicts of interest of Members of the House and certain congressional staff. Public disclosure is intended to provide the information necessary to allow Members' constituencies to judge their official conduct in light of possible financial conflicts with private holdings."

But because these reports are currently disclosed within the boundaries of the Capitol Hill, constituents from Maine to California, from Alaska to Florida, must either head to Washington themselves to get the necessary information or rely on the efforts of privately funded groups like the Center for Responsive Politics to make the information truly public. 

In the Internet age, members of Congress should abide by and honor the purpose of filing a financial disclosure, and make the information available to all their constituents-in a searchable, sortable, publicly accessible database.

At the very least, personal financial disclosure statements should be scanned and images of them made readily available on taxpayer funded congressional Web sites for the American people to see. (Indeed, they're scanned into image files and stored on computers in the House.) By enacting this common sense reform, Congress would demonstrate not only its commitment to setting a high ethical standard but also an understanding that transparency is the only way to reach and maintain it.

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Last week, Ken Silverstein, in reporting a story on Rep. Tom Feeney, R-Fla., and his sweetheart condo deal, began the piece this way:

A few years back, university researchers found that during the 1990 stock market boom U.S. senators beat the market by 12 percentage points a year on average. By comparison, corporate insiders beat the market by 5 percent, and typical households underperformed by 1.4 percent, the Christian Science Monitor said of the research. Financial experts . . . say the senators’ collective achievement is a statistical stunner, too big to be a mere coincidence.

It’s not the first time I’ve come across the results of that study, and when I do I can’t help wondering exactly how this phenomenon works. Professor Bainbridge quotes a bit from a Wall Street Journal article that reported on the same study (and available, sadly, only with a subscription):

The researchers say senators’ uncanny ability to know when to buy or sell their shares seems to stem from having access to information that other investors wouldn’t have. “I don’t think you need much of an imagination to realize that they’re in the know,” says Alan Ziobrowski, a business professor at Georgia State University in Atlanta and one of the four authors of the study.

Senators, for example, are likely to know which tax legislation is apt to pass and which companies might benefit. Or a senator who sits on a certain committee might find out that a particular company soon will be awarded a government contract or that a certain drug might get regulatory approval, says Prof. Ziobrowski.

I suppose it comes down to how precisely one is “in the know.” It’s hard for me to imagination, for example, that a lawmaker could look at a change in depreciation rules and then pick the winners from among the 2,600-some publicly traded companies listed by the New York Stock Exchange. But a change in a rule narrowly tailored to benefit a particular company, on the other hand, wouldn’t require quite as much analysis.

Does the phenomenon extend beyond stock deals? Recently, The Chicago Tribune traced the growth of House Speaker Dennis Hastert’s fortune from the his first term in Congress (when they estimated his net worth to be a maximum of $290,000) to his most recent filing, from which they calculated the speaker’s worth at just over $6 million. It may be an apples and oranges comparison (although I think such things are sometimes helpful), but if Hastert had invested his initial $290,000 net worth in the S&P 500, he would have ended 2005 with a bit more than $1.46 million in the bank. In any case, The Tribune’s history makes fascinating reading, and is the sort of thing I would like to see done for other members of Congress.

Take Rep. Nancy Pelosi, for example, the Democratic Leader. She entered Congress, after winning a June 1987 special election, as a wealthy woman: in 1988, the Associated Press noted that she was one of a then-small group of House millionaires (the article lists a dozen). She and her husband had a net worth then of at least $3.6 million. (Financial disclosure forms require members to value their assets within ranges–$1-to-$1,000, $1,001-$15,000, and so on; the AP regrettably didn’t provide the maximum figure.) I did some back of the envelope calculations, and found that the Pelosi’s current minimum net worth is $22.2 million–which is a significantly better return than had they invested in the S&P 500 (which over the same time period would have increased a $3.6 million nest egg to one worth $18.2 million). Like Hastert, a good chunk of the Pelosi’s investments are in land–whether it’s vineyards, office properties or condos. I think it would be worth looking into those kinds of histories.

And speaking of looking, I just wanted to note that one of our congressional volunteers had found that same line item on Rep. Feeney’s form, the one that Ken did such a masterful job exposing, as a troubling item. What else is in those forms?

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My colleague, Larry Makinson, moaned and groaned a couple days ago that the personal financial disclosure records for members of Congress were not available in electronic form. Well, Sunlight noticed that too and that’s why one of the first grants we made was to the Center for Responsive Politics to create a searchable online database out of those paper records.

CRP has collected, scanned and posted PDF images of Personal Financial Disclosure reports for members of Congress since 1995. In case you don’t know these reports show which members are the wealthiest, which own certain stocks, which members maintain (or have recently paid off) large debts, etc. In short, there’s some really important information in those forms that might tell us how lawmakers vote, the earmarks they propose, and why. With paper records, analyzing this data is so…last century. Meaningful and timely analysis is practically impossible. (This is no accident…)

The new database that CRP will produce will mean that members of the press and citizens will finally be able to search and compare the assets and liabilities of members of Congress without conducting the painstaking and time-consuming research now required. Imagine that after a vote is taken in which pharmaceutical companies make out like bandits, that you could learn — with one keystroke — that 75 percent of the lawmakers who voted for the legislation own stock in pharmaceutical companies! (That’s just a hypothetical, of course. Just a wild guess….)

The data will be made up of relational tables that capture the individuals filing and their payments, income, assets, gifts, reimbursements, liabilities, positions held, and agreements. CRP is going to start with the latest filings –  that cover the last year — and then they will work backwards. The initial database will be up and operating publicly by September 1. The latest filings for lawmakers will be available on June 15.

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