Democratic Sen. Ben Nelson of Nebraska is surrounded by reporters on Capitol Hill after a test vote on the financial overhaul bill Wednesday.
Democratic Sen. Ben Nelson of Nebraska is surrounded by reporters on Capitol Hill after a test vote on the financial overhaul bill Wednesday. Charles Dharapak/AP
The Senate took its third vote of the week Wednesday on whether to consider the financial overhaul bill. Once again, the "nos" had it. And once again, Democratic Sen. Ben Nelson of Nebraska lined up with Republicans against the bill.
The proposed law would set new rules for derivatives contracts — which could affect Nelson's investments. And that has raised questions about how lawmakers who have personal investments vote on regulating the investment industry.
The derivatives rules would be applied retroactively. Critics say that's unconstitutional and bad for business. Among the critics is Nelson's richest constituent, investor Warren Buffett of Omaha. Buffett's company, Berkshire Hathaway, is Nelson's biggest single source of campaign funds.
And if that's not enough, Nelson and his wife have investments in Berkshire Hathaway. The latest disclosure from 2008 valued those investments at $1.5 million or more.
"To be absolutely clear, I did not vote 'no' because of Berkshire Hathaway," Nelson told reporters in a conference call Wednesday morning. "Nor did the fact that I and my wife, Diane, have owned Berkshire Hathaway stock for 30-plus years — that had nothing to do with my vote. It's never been an issue. And it isn't now."
In fact, lobbyists for the bill say they usually expect Nelson to vote "no" on procedural moves like the ones this week.
The derivatives issue isn't the only reason Nelson has given for opposing the bill. He's also said the bill would hurt small businesses that provide financing for customers. At the Capitol on Tuesday, Nelson specifically pointed to dentists and auto dealers.
But that's not the way Sen. Christopher Dodd (D-CT), who chairs the banking committee and is leading the floor debate, remembers it.
Dodd said Nelson approached him just before casting his "no" vote and said he wanted to talk about the derivatives issue.
"Dentists and auto dealers did not come up," Dodd said.
Conflicts Of Interest Abound
This mix of investing and legislating is increasingly common on Capitol Hill. According to the Center for Responsive Politics, 28 lawmakers listed Berkshire on their personal disclosure forms in 2008.
Nelson just happened to hold a bigger position than the others.
The Senate and House ethics rules say it's OK because the investment opportunity is open to anyone. But in other parts of official Washington, making decisions that affect your personal investments is a potential felony.
"Yes, there's a criminal statute that would apply to members of the executive branch who participate in any government matter that would have a direct and predictable impact on their investments," says Richard Painter, ethics counsel to President George W. Bush. "So ordinarily, the executive branch official would be told by the ethics lawyer that they have to sell their stock before participating in this kind of thing."
Painter says one problem is that Congress writes its own ethics rules. A bigger problem is campaign contributions, which set up lawmakers for possible conflicts of interest every time they leave the Capitol to raise money.
"We all know what goes on up there, whether it's campaign contributors or financial holdings of the members and their families," Painter says. "But that doesn't make it good."
Painter says he would have newly elected lawmakers put all their money into mutual funds. If that were the case, Nelson's nest egg might be somewhat smaller.
But he'd be having an easier week at his job.