Thursday, September 22, 2005

First Out the Exit Door

With the revelation in this WaPo story of Senate Majority Leader Bill Frist's uncanny unloading of personal stock in HCA just before the company issued a nasty earnings report, it might be worthwhile to revisit the last time Frist's stock market activity made news. From a WaPo piece in December 2004:
A campaign fund controlled by Senate Majority Leader Bill Frist (R-Tenn.) has lost almost $460,000 in stock market investments since 2000 and now does not have enough to cover a sizable bank loan, according to federal election records and the manager of the Frist account.

The heaviest losses, totaling more than $500,000, occurred in a stock index fund in 2001 and 2002, years when the securities markets suffered a major downturn. But the Frist campaign account lost an additional $32,050 in July and August, a setback that was only partially offset by a gain of $11,472 in September, according to Linus Castignani, treasurer of "Frist 2000," which was created to finance the senator's successful campaign for a second six-year term in 2000.

Meanwhile, records show, Frist has continued to use money from the 2000 campaign account to cover various expenses.

In August 2001, well after the campaign ended, Frist 2000 took out a variable interest rate loan of $360,000 from the Nashville office of U.S. Bank, at an initial rate of 4 percent.

There was a need for cash, Castignani explained, because bills for administrative and political expenses had to be paid from the account even though the money was tied up in the stock market. "Our investments had been made and were losing money, so if we had decided to sell the stock while it was down, the losses would have been permanent. Our hope is the market is improving and our losses will become less."
One of the pearls of wisdom the investment industry is fond of peddling to the public is that it never pays to panic. Wall Street veterans, however, have long known that it often pays to panic before everyone else does then ask questions later.

Did Frist's ongoing painful experience with losses in his campaign fund cause him to "panic first" when it came to his own wallet?

71 Comments:

Anonymous Anonymous said...

Interesting. Great find on the campaign fund problems, did not know that.

9/22/2005 3:17 AM  
Blogger Cloudland Blue Quartet said...

All very well but, at the end of the day, he'll get away with this. Why is that?

9/22/2005 4:11 AM  
Anonymous Anonymous said...

Congress is a gentlemans' club. As a group they appear to be the most successful and savvy investors in America. Gentlemen do not look too closely at what other gentlemen are doing. Not to forget the ladies, Hillary is well known for her trading skills.

9/22/2005 6:54 AM  
Anonymous Anonymous said...

And the WSJ villified Hillary for it.
Because its a GENTLEMAN"S club after all. No upstarts please and no friggin females....

9/22/2005 6:59 AM  
Blogger Bravo 2-1 said...

Would I be correct to surmise that you are sketching a motive?

9/22/2005 9:02 AM  
Anonymous Anonymous said...

What else does one expect from a GOP leader in Congress. If they were ethical they would not get the job and keep it. How much ethical and moral leadership and action have we seen out of congress since 2001? I somehow can't think of any!
But then I cannot think of any from Bush or Cheney either.
Ethics are only demanded from the democrats, republicans are ethical because they say so, even if you find them in a manure pile up to their necks.

9/22/2005 9:07 AM  
Anonymous Anonymous said...

From what I'm reading, it looks liek all the top executives bailed.
More to investigate here than a video diagnosing "doctor".

9/22/2005 10:42 AM  
Anonymous Anonymous said...

yea, if you read Josh Marshal's Talking Points Memo, you will see that most of the senior folks bailed late last spring.

It is possible that the trustee for Frist had some uncanny luck and timing, but who is going to believe that? Not me. Frist knew & told him to sell.

9/22/2005 11:05 AM  
Blogger Roy said...

You have to be extremely bias and or naive to believe that either the republicans or the democrats corner the market on shady deals. I agree with the person who said Congress is a Gentlemans Club. I am sure every one is familiar with Terry McAuliffe turning a $100K into 18 million in Global Crossing which went belly up soon after. It is not a democrat or Republican issue but an elitist issue. These people should be punished!

9/22/2005 6:53 PM  
Blogger Nathan said...

I could not agree with Roy Bettencourt more. This is not a Repub or Dem issue, but a terrible issue within our country. It is easy to see with the politicians in our midst, but also with folks like Ken Lay and other extremely wealthy folks. It has led me to do almost no investing at all due to my limited connections and exposure to inside knowledge.

9/22/2005 7:42 PM  
Blogger muckdog said...

This isn't a specific party's issue. I think elected officials should be required to place their assets in a blind trust.

9/22/2005 11:46 PM  
Anonymous Anonymous said...

We should trust former Enron advisor, Paul Krugman.

9/23/2005 6:12 AM  
Anonymous Anonymous said...

We should trust the number one recipient of Enron's political contributions---George W. Bush.
Well, we can trust that he will always chart the shortest course towards national oblivion.

9/23/2005 10:03 AM  
Anonymous Anonymous said...

this thing looks like it is heating up FAST.

9/23/2005 11:23 AM  
Anonymous Anonymous said...

So what you're really saying is that prudent investors shouldn't adopt "last-in-Frist-out" accounting?

9/23/2005 6:27 PM  
Anonymous Anonymous said...

'blind-trust'

They are in a blind-trust - wink, wink.

"Frist on his blind trusts in 2003: Right now, I don’t know if I own HCA [stock] because it’s a qualified blind trust. [National Journal, 1/4/03]"

Now: "This week, Frist admited that he knew he owned HCA. In fact, he directed his trustees to sell the shares. Office of Senator Bill Frist press statement, 9/22/05"

"Frist’s Conduct in 1999 Completely Contradicts His 2005 Excuse"

"Insider Trading Runs In the Frist Family"

Don't forget HCA was involved in the largest health care fraud investigation in history. They paid over 1.7 billion.

Frist is too much like Delay. They have the attitude of "I am the government". They forget who they work for - the people.
So much for the laws applying equally to all, and it's a fair playing field.

I don't care if you are Republican, Democrat, or a whatever, character counts, and so do the laws. What frustrates me to no end, is how rabid Republicans went after Democrats, but now they turn their heads. Look, basically for the last 20 years, and certainly the last 10 years, the Republicans have been running the show. All I wish is, everyone would measure our politicians by the same stick, regardless of party... then we would be getting on the right track again. Until both parties start holding their representatives accountable, nothing is going to improve. imho, I think we have the most corrupt administration and congress ever, and that is saying a lot.

Frist's insider trading habits certainly don't install confidence in our free market system.

9/23/2005 6:58 PM  
Anonymous Anonymous said...

The financial community is dead silent because the prospect of a trillion or so dollars coming their way to be "invested" in whatever craptacular stock they're pushing this week has them drooling uncontrollably.

9/23/2005 11:09 PM  
Anonymous Anonymous said...

They have a Frist timeline here - click on Frist Stock timeline.

9/26/2005 12:05 PM  
Anonymous Anonymous said...

The blogger at War and Piece asks:

"So mobbed up, it's not even funny. Is this what the conservative movement has come to? Get this on the two mobsters arrested today in the gangland-style killing of Abramoff-Kidan business partner Gus Boulis. From the Miami Herald back in August:"

Abramoff was running a Rove/Delay Republican slush fund! Frist will slide because these "Republicans" have crossed the ethics line and are corrupt to the core.

9/27/2005 3:16 PM  
Anonymous Anonymous said...

If Frist is to be questioned, why not Rove or Bush - Rove sold his Enron holdings shortly after "Kenny Boy" Lay visited the White House. When questioned, the answer was that he was "divesting" himself. The time to divest would have been in December, before assuming power, not in June after private conversations revealed that the Enron bubble was about to burst. Of course, there was no investigation.

There was no serious investigation of the same type of financial insider dealing when George W. Bush sold his "gift stock" from Harken Energy, just before it tanked.

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