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Stanford, Madoff Scandals Show Need for Campaign Finance Reform

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In the wake of the $8,000,000,000 fraud allegations against Allen Stanford and the investigation as to whether Stanford was running a ponzi scheme similar to Bernard Madoff's, two glaring problems with the government are coming to light. The most obvious problem is the failure of the SEC to properly investigate the warnings about the practices of Stanford and Madoff that were raised by former employees and competitors years ago. The less obvious problem revolves around the political donations and contributions of the accused and their companies.

Madoff contributed to the campaigns to both republican and democratic candidates including Senator Merkley (D) of Oregon, Senator Lautenberg (D) of New Jersey, and Andrew Saul (R) before he withdrew from the race against Representative John Hall of New York's 19th Congressional District, the Democratic Senatorial Campaign Committee, and others. Stanford contributed to the presidential campaigns of both President Obama and Senator McCain, as well as Representatives Rangel (D) and Meeks (D) of New York, Representative Peter Olson (R) of Texas, Representative Bill Nelson (D) of Florida, Senator Orrin Hatch (R) of Utah, Senator John Cornyn (R) or Texas, and Senator Chris Dodd (D) of Connecticut, the National Republican Congressional Committee, among others, the totals from him, his firm, and employees hitting $2.4 million since 2000. Senator Dodd and others have decided to donate Stanford's contributions to charity, which is a good start, but it is not nearly enough.

From an ideological standpoint, Madoff and Stanford contributing to both parties is contradictory and counterproductive, especially Stanford contributing to the campaigns of both Obama and McCain. The most logical conclusion for throwing money in both directions is that Madoff and Stanford saw personal gain in doing so. It is possible that the donations were as innocent as helping somebody you know and/or like, but it is just as likely if not more so, that they were a deliberate attempt to gain favor from the various elected officials, a polite way of saying attempted bribery. Hearing that Senator Dodd was unsure if he had ever personally met Stanford helps rule out the former. This is further compounded when one takes into consideration the variety of the races that Madoff and Stanford contributed to. Billionaires often do own a multitude of residences, but the odds that these two reside in every single State and District for which they contributed is unlikely. Senators and Representatives are elected to represent their constituents, which begs the question, why should Madoff, Stanford, or anyone else be allowed to donate to campaigns for which they are not constituents?

It can be argued that since Senators and Representatives serve the U.S. and set American policy as a whole, they represent every American in every constituency. However, under that train of thought, it can be argued that since the U.S. is a world leader and helps set global policy, it is okay for non-U.S. citizens to contribute to American campaigns. While this could result in a highly comical situation where the King of Spain is interfering in a local school board race, it would more than likely be seen as foreign interference with American politics and as a threat to the nation's sovereignty. Another logical conclusion from this standpoint is that it would be okay to register to vote in multiple districts and theoretically the ambitious citizen could vote in every election. In following the serving America as a whole argument for contributing to other constituencies' campaigns, one is forced to question why there should be separate constituencies and districts at all, requiring a new look at states' rights and the Constitution.

The issues that the Madoff and Stanford scandals have raised and the explanations that can be used to justify their various campaign contributions, magnify glaring weaknesses in campaign finance and the government as a whole. Legislative term limits are part of the solution as they limit the influence that individual donations have over the long run while severing long established personal connections that can be used for lobbying purposes, while having numerous other benefits. Just as important is the need for a complete overhaul of campaign finance regulations. Mandatory sole use of public financing for all candidates is one of the best options, by ensuring an equal playing field for all candidates while stopping lobbyists and individuals from planting the seeds of favor within our elected officials. The push for only using public financing has met resistance at every step and there are viable arguments against it such as the expense to the government and the question of whether the government should subsidize political speech. The strongest first move to solve the problem of campaign finance is to change the current laws to prevent individuals, firms, and lobbyists from donating to the candidates in states and districts that they are not constituents of. Quite simply, if you cannot vote for that person due to your residency, you should not be allowed to donate money to his or her campaign.