Scott Brown Held Bank Of America Stock While Advocating For Big Banks
WASHINGTON -- Sen. Scott Brown (R-Mass.) positioned himself as a clean-government advocate this week, co-sponsoring the STOCK Act, which is designed to halt insider trading-like activity by members of Congress.
But Brown's financial disclosure records show that he has been a large investor in Bank of America, GE and Exxon-Mobil throughout his time in the Senate -- even as he secured lucrative legislative protections for the nation’s biggest banks, trading houses and oil companies.
What's more, under Brown's new good-government legislation, this type of activity would still be permitted.
According to personal financial disclosure records from 2009 and 2010, Senator Brown has owned up to $50,000 of stock in Bank of America, which received $45 billion of federal money from the Troubled Asset Relief Program, the government bailout program. He also owns up to $100,000 in General Electric stock, which issued over $70 billion in debt guaranteed by the American government during the financial crisis while its massive banking wing shuddered on its subprime mortgage bets.
But during the final phase of last year's debate over Wall Street reform legislation, Brown demanded critical breaks for big banks as the price of his support, which was critical for the bills passage.
Those breaks included the elimination of a costly tax on too-big-to-fail banks and a special exemption in risky securities trading for the nation's largest banks.
As part of the Wall Street reform package, Democrats proposed barring banks that accept deposits from consumers from gambling in risky securities markets for their own accounts, a plan often referred to as the Volcker Rule. Such transactions are hugely profitable for banks, but involve massive risk for consumers, who provide the capital for the speculation but derive no benefits when they succeed.
But Brown refused to back the entire Wall Street overhaul unless big banks were allowed to devote up to 3 percent of their total capital to sub-companies entirely devoted to securities trading. That legislative carve-out posed tremendous financial benefits to big financial companies, including Bank of America and GE, while permitting them to take big risks that taxpayers could eventually be forced to absorb.
When banks fail, the government often guarantees the debt that bank has taken out with other banks -- a guarantee which can cost taxpayers money. But the nation's biggest banks have long been exempt from the program to resolve failing banks, forcing government officials to choose between bailing out the bank or letting it fail, which can be very destructive to broader financial markets.
The 2010 Wall Street reform legislation established a new regime to deal with failing mega-banks, and had included language to charge banks an annual fee designed to cover any of the expenses associated with cleaning up the mess and easing losses for the collapsing bank's creditors. Brown also helped strip that provision from the bill, saving billions of dollars a year for big banks, including GE and Bank of America.
Brown, who owns up to $50,000 of Exxon Mobil stock according to financial filings, also voted against ending federal subsidies for oil companies earlier in 2011.
But this type of activity would not actually be curbed by Brown's STOCK Act, because the legislation only deals with active trading -- members of Congress who buy and sell stocks based on nonpublic political information pertaining to specific companies.
Since Brown has been a longtime shareholder in all three companies, any legislative efforts that boosted the value of those stocks would not run afoul of the new rules included in his bill. A spokesman for Brown agreed that the bill would not curb members of Congress from voting on provisions that affect companies they have a stake in.