WASHINGTON — Some N.C. members of Congress have more than a typical stake in the health of the financial services industry.
Most notable are Rep. Robin Hayes, a Concord Republican, and Sen. Elizabeth Dole, R-N.C., who have substantial personal investments in American International Group, the insurance giant that was rescued by a federal loan.
Hayes had between $2.8 million and $11.5 million of his personal fortune invested in AIG, according to his 2007 personal financial disclosure forms. That was more than any other member of Congress, the Center for Responsive Politics said.
Dole had between $1.1 million and $5.3 million invested in the company's stock. Lawmakers are required to report each asset in ranges, such as $500,000 to $1 million, rather than specific amounts.
Lawmakers may be asked in coming days to vote on a major bailout of the industry, with price tags as high as $700 billion for the White House's initial proposal.
“At the same time members of Congress are sorting out what the cost of this is to taxpayers, there's also a cost and a potential benefit to some of them personally,” said Massie Ritsch, a spokesman for the Center Responsive Politics, a nonprofit watchdog group that examines money in politics.
“It has the appearance where there could be a conflict of interest and it's awkward,” said Bob Phillips, executive director of Common Cause North Carolina. “And it does unfortunately add to the public's leeriness about whether the elected officials are making a decision in the public's best interest.”
Ritsch noted that for wealthy members of Congress, these investments are a small segment of their portfolio. The group isn't suggesting the ownership presents a conflict of interest, but he said consumers ought to be aware.
“This information is provided so the public can make sure their elected officials aren't making official decisions based on their own finances,” said Ritsch, who volunteered that he owns AIG stock as well. “These companies have done very well until recently and so members of Congress who had investments in them did largely benefit from Congress' largely hands-off approach to the financial industry.”
Amanda Little, a spokeswoman for Hayes, noted that the government has already intervened with AIG without a vote of Congress.
“With regard to any potential ‘bailout' legislation, the basic premise everyone is talking about would give Washington authority to purchase bad mortgage-related assets from U.S. financial institutions,” Little said. “To my knowledge, the types of assets have not been specified, nor have the institutions that may be eligible. So, I am not sure how any particular stock or corporation could be evaluated.
“Needless to say, Congressman Hayes' personal finances do not impact his decision on this or any other issue.”
Dole spokesman Wes Climer said she stands by every vote she's taken in the Senate.
“It isn't a news flash that Senator Dole is invested in American companies,” Climer said. “As any financial planner will tell you: Diversify, diversify, diversify. And that includes investing in the financial sector.”
Dole, who is on the Senate Banking Committee, has defended the Federal Reserve Bank's intervention with AIG, saying it was necessary to prevent what would have been one of the largest corporate failures in American history.
Other investments by Carolina lawmakers, according to the Center for Responsive Politics:
$250,000 to $600,000 in Merrill Lynch by Dole.
$7,000 to $21,000 in Lehman by Rep. Howard Coble, a Republican from Greensboro.
$2,000 to $30,000 in Merrill Lynch by Rep. Brad Miller, a Raleigh Democrat.
Several lawmakers have investments in Charlotte-based Bank of America:
$865,000 to $1.8 million by Hayes.
$17,000 to $80,000 by Dole.
$15,000 to $50,000 by three House members, Charlotte Democrat Mel Watt, Banner Elk Republican Virginia Fox, and Chapel Hill Democrat David Price.
Dole's political challenger, state Sen. Kay Hagan, a Democrat from Guilford, has numerous family investments, including between $116,000 to $265,000 in BofA, $18,000 to $95,000 in Goldman Sachs, $17,000 to $80,000 in Lehman, and $2,000 to $31,000 in Merrill Lynch. (Only sitting members of Congress will vote on bailout legislation.)
Lawmakers also get campaign contributions from financial companies.
Commercial bank employees and political committees have given Dole $91,000 in the 2008 campaign cycle. Mortgage bankers and brokers have given $26,000 to Dole, and $32,000 to Rep. Patrick McHenry, a Cherryville Republican, the center said.
“The stocks that a member of Congress holds won't get them re-elected,” Ritsch said. “It's campaign contributions that help them keep their seats in Congress and therefore are more important to their political fate.”
Who gives what
Here's a sample of the campaign donations collected by Carolina lawmakers from employees and political committees of financial companies between 1989 and 2008, according to the Center for Responsive Politics:
- Goldman Sachs: $30,000 to Sen. Richard Burr, R-N.C.; $24,000 to Sen. Elizabeth Dole, R-N.C.; $13,000 to Sen. Jim DeMint, R-S.C.; $10,000 to Rep. John Spratt, D-S.C.; $7,000 to Rep. Mel Watt, D-N.C.; $5,000 to Rep. Patrick McHenry, R-N.C.; and $1,000 to Rep. Robin Hayes, R-N.C.