Stanford's donations still stain lawmakers' hands
December 8, 2011
By Loren Steffy
In the battle over insurance coverage for investors who lost money in the collapse of Stanford Financial's
U.S. brokerage, it's difficult to know who's on investors' side.
Recently, 27 lawmakers sent a letter to the Securities Investor Protection Corp., which is funded by the brokerage industry and overseen by the government, demanding that SIPC cover investors for their losses. SIPC granted similar coverage to clients of Bernard Madoff and the recently bankrupted commodities trader MF Global.
The 23 Republicans and four Democrats threatened to convene hearings in Washington next week if SIPC didn't act. That, apparently, is easier than living up to their own shortcomings.
Seven of the lawmakers who signed the letter received campaign contributions from Stanford. Only two - Rep. Michael McCaul, R-Austin, and Rep. Rep. Charles Boustany, R-La. - returned the money. Five others - Republicans Pete Sessions of Dallas, Lamar Smith of San Antonio and Vern Buchanan and Ileana Ros-Lehtinen of Florida, as well as Democrat Steve Cohen of Tennessee - owe Stanford's estate money, according to the court-appointed receiver in the company's bankruptcy.
The firm's namesake, R. Allen Stanford, liked to spread cash around Washington. The receiver has been trying to recover political donations for almost two years. About $1.8 million remains outstanding, and only about $142,000, has been returned.
Even more disturbing, five committees of the two political parties - the Democratic Senatorial Campaign Committee, the Democratic Congressional Campaign Committee, the National Republican Congressional Committee, the Republican National Committee and the National Republican Senatorial Committee - have refused to return a combined $1.6 million. Check please the complete list of Political contributions here.
In other words, while lawmakers are quick to call on the brokerage industry to insure the losses of Stanford's investors, they are far less willing to demand the same of themselves or their political parties.
Many of the elected officials who received campaign contributions from Stanford - including both Texas senators and Sessions - donated them to charity. That, however, doesn't let the politicians off the hook.
If Stanford was a fraud as the government contends, then the money is stolen. Donating stolen money doesn't eliminate the potential theft. Even if no theft is proved, the receiver is operating under a court order to recover money on behalf of investors, and donating it doesn't absolve lawmakers of the court's order.
Meanwhile, the Securities and Exchange Commission, which is charged with overseeing SIPC, ordered the fund to pay investors in June. So far, it hasn't. As recently as last week, SIPC's chairman sent a letter to one member of Congress saying SIPC disagrees with the SEC's decision.
Sen. David Vitter, R-La., had been trying to arrange some sort of settlement between the SEC and SIPC. Those efforts apparently fell through.
"The SEC needs to take definite action before the end of the year, and I'm afraid that's going to mean suing SIPC," he told SEC Chairman Mary Schapiro.
The SEC, of course, is making up for past mistakes. Having bungled earlier investigations into Stanford, it then took more than two years to reach a decision on SIPC coverage.
It may be getting tough now, but suing SIPC means investors, who have been strung along for almost three years, must wait even longer to find out if their losses are covered. Sadly, in this case, that's progress.
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|Comment wrote on December 8, 2011 at 19:31|
American Lawmakers Hypocrisy
These so-called lawmakers should make sure their hands are clean before coming to the table. It would appear that in this situation they all forget to wash.
They should be putting their own house in order before making demands on SIPC and making sure that they - and every other US politician who benefited from Stanford's generosity (with the money he stole from his victims) - pay back the stolen funds.
Could it be that these US politicians think that if they can get SIPC paid out (mostly to the American victims) the whole situation will die down and the pressure will be off them to do the right thing? Because let's face it not one of these "lawmakers" gives a fig about the International Victims whose stolen money they so readily took and now refuse to return, and not one of these politicians have mentioned that apart from the 4,000 US victims, there are another 20,000+ International victims who they do not fight for.
Then again, the International Victims can't be counted on to vote for them, so why should these political hypocrites bother about spending the International Victims stolen money while they sit on their fat backsides in Washington??