by John Light
There are many ways corporations and financial interests can exercise influence in Washington. Some donate money to political campaigns while others hire lobbyists to be their megaphones to legislator ears. But information flows the other way, too. And since the financial crisis, details about the laws and regulations being hashed out behind closed doors is more valuable than ever.
A story from the Washington Post this week looks at the growing popularity of “political intelligence” firms that sell analysis of federal actions, and the likely policy ramifications of those actions, to interested parties. Oftentimes, the clients are investors in a company that will be affected by a policy decision or a proposed regulation. Some firms even coordinate meetings and conference calls with congressional staff members in which they share what they know about relevant legislation.
The Post illustrates this with an example: Capitol Street, a political intelligence firm specializing in health policy, recently set up a private conference call between a member of Sen. Orrin Hatch’s staff (R-Utah) and investors in Humana, a major healthcare company. The staffer told the investors that the odds were improving that Congress would make a decision related to Medicare that would help insurance companies. That same morning, the level of speculative trading on Humana’s stock was nearly 10 times more than it had been on any day in the previous two weeks. Lawmakers and federal regulators have noted that this sort of politically informed investing can look suspicious, and investigators recently issued subpoenas in connection with a different spike in trading after a D.C.-based investment-research firm correctly predicted a change in policy.
Via Michael Charney