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No "Change" on Pay-to-Play Corruption

By Howie Rich

A little over 100 days ago, California Sen. Diane Feinstein called the inauguration of Barack Obama “a turning point for real and necessary change” in America.

But the more things were supposed to change, the more they have stayed in the same in Washington D.C., where the culture of corruption is more pervasive now than it ever was.

Today, Senator Feinstein finds herself at the heart of a massive conflict of interest scandal involving billions of taxpayer dollars.

What did she do?

And more importantly, what should be done to keep her from doing it again?

Let's start with the facts.

On the first day the new Congress convened – shortly before her “change” speech – Senator Feinstein introduced legislation that would route $25 billion to the Federal Deposit Insurance Corp (FDIC).

That's suspicious for several reasons, chief among them that FDIC is supposed to operate from bank-paid insurance payments, not taxpayer funds. Also Senator Feinstein isn't even a member of the committee with FDIC oversight.

Why, then, would she sponsor a bill awarding $25 billion to this agency?

Easy. The FDIC had just awarded a massive contract to sell foreclosed properties to CB Richard Ellis, a company run by Senator Feinstein's husband, Richard Blum.

On top of that, right around the time the contract was awarded, Blum's investment firm and its affiliates purchased 10 million new shares of CB Richard Ellis – which are now trading considerably higher than when they were purchased.

CB Richard Ellis also is receiving government-negotiated commissions that dramatically exceed industry norms for the sale of foreclosed property.

None of these facts is in dispute.

Neither Senator Feinstein, her husband, nor the FDIC are challenging any of them. They're simply saying there was “no connection” between her legislative advocacy and the awarding of the contract.

“No connection.”

Think for a moment about that - how many times have you heard the words “no connection” coming from politicians who were flagrantly reaching into your pockets to put money into the pockets of their friends or family members?

But sadly, we're not talking about securing a new job for a niece or nephew at the local recreation center – this is $25 billion of your money.

Not surprisingly, this isn't the first time Senator Feinstein has leveraged her position of power on behalf of her husband.

From 2001-05, for example, Senator Feinstein chaired the committee that awarded billions of dollars in defense contracts to two companies – URS and Perini – that were controlled by Blum.

In fact, an elaborate notification system was established between the Senator's office and her husband's firm in order to avoid the conflict of interest being exposed.

How do politicians continue to get away with such flagrant abuses of the public trust?

First of all, we have incredibly lax ethic laws at all levels of government in America – and in most cases politicians either regulate their own behavior or they directly appoint the regulators.

In other words – we have plenty of hen houses, and plenty of foxes guarding those hen houses.

In Colorado, voters recently took it upon themselves to insist on a higher standard from their leaders.

Last year, a majority of Colorado voters passed Amendment 54 – which placed sweeping new restrictions on the “pay-to-play” culture that so many politicians blithely propagate for their own personal enrichment.

Colorado's law is something more states should put on their books, but it's becoming clear in the light of scandals like Senator Feinstein's that tougher measures will be needed in our nation's capital.

Sadly, no one is pushing for those stringent ethics laws, and President Obama is obviously content to look the other way.

After all, there's “no connection,” right?

Wrong. Until we stand up and insist on sweeping anti "pay-to-play" laws, politicians will continue to pad their family empires on our dime.

The author is Chairman of Americans for Limited Government.


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