Financial Bailout: Are congressional leaders invested in the crisis?


Members of Congress continue to debate the bailout package that may well affect the bottom line of every taxpayer in the country, as well as those of big banks, brokerages, and other financial firms. While they hear from numerous experts, including distressed Wall Street titans, on the dangers facing their firms, what sort of exposure do members themselves have if those firms fail?

In their most recent financial disclosure forms, the chairmen and ranking members of the key House and Senate committees considering the $700 billion bailout of the financial sector disclosed investments in firms with interests in the outcome of the legislation.

Sen. Christopher Dodd, chairman of the Senate Banking Committee and a key member of the Democratic team negotiating a bailout, disclosed investments are in large mutual funds ranging from Growth Fund for America, Capital Income Builder Fund and a few others managed by the Capital Group worth somewhere between $130,000 and 300,000. (Financial disclosure forms require members to value their assets within broad ranges, hence the high and low figures used throughout this post). In the bailout talks underway, mutual funds may be given the same kind of protection as checking and savings accounts. In addition, Dodd and his wife, Jackie, invested $30,002 to $100,000 with the Fortress Investment Group, a firm that manages private equity funds and hedge funds. Dodd also has assets with Smith Barney IRA, whose parent company is CitiGroup, which stands to gain from a bailout through the sale of as much as $79.4 billion of their troubled assets. Dodd’s most recent financial disclosure form is available here.

Ranking member Sen. Richard Shelby, R-Ala., is the owner and still chairman of the board of Tuscaloosa Title Insurance, valued at between $1,000,001 and $5 million. Title insurance firms may be facing a slowdown as the housing market cools and the credit crunch makes refinancing more difficult. Shelby disclosed real estate investments in Alabama, including an office building, worth between $501,002 and $1,015,000, while his wife, Lisa Shelby, owned a home in Alabama and a Townhouse in Washington, D.C., each of which are worth more then $1 million. Lisa Shelby also had money invested with Citigroup, Merrill Lynch and Indymac Bank worth between $215,003 and $550,000. All three concerns have been pounded in the financial crisis. Citigroup has written off billions in subprime loans, Merrill Lynch was recently acquired by Bank of America, and Indymac was taken over by the Federal Deposit Insurance Corp. in July. Shelby’s most recent financial disclosure form is available here.

Rep. Barney Frank, chair of the House Financial Services Committee, has invested most heavily in a series of Massachusetts state and municipal bonds that funded everything from industrial development and the Massachusetts Turnpike to schools and water projects. However, one of the House Finance Committee chair’s two largest investments, worth between $100,001 to $250,000, was in the Calvert Social Investment Fund. A news release on Calvert’s home page said the company “fully supports the essential public mission of Fannie Mae and Freddie Mac of promoting broader access to home ownership,” despite that mission having resulted in the near failure of both organizations, averted only by Treasury Department’s seizure of the firms. Calvert also released figures on its investments in firms including American International Group, Merrill Lynch and Bank of America.

Frank also disclosed a $15,001 to $50,000 investment in a Citibank Deposit Program. His most recent financial disclosure form is available here.

At the end of 2007, Linda Bacchus, the wife of Rep. Spencer Bachus, R-Ala., held between $212,009 and $696,000 in CitiGroup Capital Market mutual funds; Bachus himself traded shares in companies like Exxon Mobil, Apple, Sony and Research in Motion. Bachus’ biggest asset was a property on Rocky Ridge Road in Birmingham, Ala., worth between $100,001 and $250,000. A Google search shows a listing for a gift shop at that address. Bachus has a mortgage on the property with Compass Bank; he owes somewhere between $100,001 and $250,000 on the property. Compass Bank has an online search service to look through the bank’s foreclosed properties. Bachus’ most recent financial disclosure form can be found here.

Members disclose information through the end of the previous calendar year; thus, current disclosures list assets members held as of December 2007. Investments and transactions from 2008, including those held, bought or sold by members during the crisis, will not be released to the public until June 2009.

Note: We’ll be adding profiles of key parties to the negotiations, starting with Sen. Judd Gregg and Rep. Roy Blunt, shortly.