Nick Baumann

Nick Baumann

Senior Editor

Nick is based in our DC bureau, where he covers national politics and civil liberties issues. Nick has also written for The Economist, The Atlantic, the Washington Monthly, and Commonweal. Email tips and insights to nbaumann [at] motherjones [dot] com. You can also follow him on Facebook.

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Watchdog Group Files Ethics Complaint Against McConnell Over Judd Tape Revelations

| Thu Apr. 11, 2013 12:10 PM EDT
Sen. Mitch McConnell (R-Ky.).

Citizens for Responsibility and Ethics in Washington (CREW), a nonprofit government watchdog, has asked the Senate ethics committee and the Federal Bureau of Investigation to probe whether aides to Senate Minority Leader Mitch McConnell improperly conducted political opposition research on federal government time.

A tape of a February McConnell campaign meeting that Mother Jones released Tuesday includes a section in which a McConnell aide states that McConnell's "LAs"—congressional parlance for legislative assistants—helped gather background information on Ashley Judd, who was at the time considered a potential opponent in McConnell's 2014 reelection race. The tape also refers to a "Josh" who worked on the research, which CREW's complaint speculates might be Josh Holmes, McConnell's congressional chief of staff.

Senate ethics rules forbid legislative assistants and other Senate employees from participating in political activities on government time. "In general, however, the ethics rules do not bar staffers from engaging in campaign activity provided they do it on their own time and do not involve government resources or property," Tara Malloy, a government ethics expert at the Campaign Legal Center, told Mother Jones on Tuesday. You can read the relevant section of the ethics rules here. Bottom line: If McConnell's aides did the research in their free time, they're in the clear. But if they used government resources or worked on political matters on government time, they could be in trouble.

The Weekly Standard's Daniel Halper has suggested that the McConnell aide on the tape explicitly says that the LAs who worked on the opposition research did so "in their free time." Jesse Benton, McConnell's campaign manager, made the same argument in an interview with WHAS-11, a Louisville television station. But "it doesn't really matter" whether the McConnell aide on the tape claimed that the political work was done in the LAs free time, explains Melanie Sloan, CREW's executive director. "The question isn't what somebody said, it's what they did," she says. "We need to know if it was on office time and with office resources. Those are the relevant questions here."

Benton has acknowledged that McConnell's Senate staffers do campaign work, but says they only do it in their off hours. "We do have several legislative staff that do contribute their free time, which is perfectly fine, perfectly legal, and cleared ahead of time by the ethics committee," he told WHAS-11.

The FBI is currently investigating how the tape of the McConnell meeting was made. But Sloan says the bureau should expand its probe. "McConnell should welcome a review of the tape," she says. "If McConnell thought it was so important for the FBI to investigate, the FBI should investigate everything about the incident. I think that's hard to argue against. The tape certainly gives you probable cause to believe something improper occurred. It clearly merits investigation."

Did Mitch McConnell Use Senate Employees for Oppo Research on Ashley Judd?

| Tue Apr. 9, 2013 5:11 PM EDT

A secret recording of Sen. Mitch McConnell (R-Ky.) and aides discussing in February how they might attack actor/activist Ashley Judd, then a potential 2014 challenger to McConnell, attracted widespread attention after Mother Jones published it Tuesday morning. Much of the news coverage focused on the McConnell team's comments about Judd's religious views and her mental-health history. But the tape might raise ethics questions for McConnell and his staff.

Senate ethics rules prohibit Senate employees from participating in political activities while on government time. But the tape indicates that several of McConnell's legislative aides, whose salaries are paid by the taxpayer, were involved with producing the oppo research on Judd that was discussed at the February 2 meeting.

Here's the relevant section of the transcript:

Presenter: So I'll just preface my comments that this reflects the work of a lot of folks: Josh, Jesse, Phil Maxson, a lot of LAs, thank them three times*, so this is a compilation of work, all the way through. The first person we'll focus on, Ashley Judd—basically I refer to her as sort of the oppo research situation where there's a haystack of needles, just because truly, there's such a wealth of material. [Laughter.]

Ah, you know Jesse slogged through her autobiography. She has innumerable video interviews, tweets, blog posts, articles, magazine articles.

The presenter was explaining that the opposition research on Judd was compiled by several people. "LAs" is congressional parlance for legislative assistants; one of the legislative assistants, Phil Maxson, gets his own shout-out. The question is whether Maxson and the other McConnell LAs were digging up material on Judd while on government time. If they were engaged in this research while on annual leave or vacation—or working outside Senate hours—they wouldn't be violating Senate rules. But if this was done on Senate time, McConnell could have a problem.

[UPDATE: The Weekly Standard's Daniel Halper suggests that the aide in the transcription isn't saying "thank them three times," he's saying "in their free time." That's plausible, and if it's true, McConnell and his aides are in the clear. You can listen for yourself here. UPDATE 2: On even closer listen, "in their" isn't plausible, but "free time" is. You should decide for yourself.]

Here's how Tara Malloy, an expert on ethics rules at the Campaign Legal Center, described the issue in an email:

Any assessment under the Ethics rules would require some more facts—most particularly whether any official resources were used in connection to the conversation or oppo research, and/or whether the conversation or other activities took place on government property. In general, however, the ethics rules do not bar staffers from engaging in campaign activity provided they do it on their own time and do not involve government resources or property.

Here is the relevant excerpt from the Senate Ethics Manual:

As discussed more fully below, Senate Rule 41 prohibits Senate staff, with the exception of specified "political fund designees," from handling federal campaign funds. Subject to that restriction, however, and as long as they do not neglect their official duties, Senate employees are free to engage in campaign activities on their own time, as volunteers or for pay, provided they do not do so in congressional offices or otherwise use official resources.  An employee's "own time" includes time beyond regular working hours, any accrued annual leave, or non-government hours of a part-time employee. Staff may not be required to do political work as a condition of Senate employment. Just as Senate employees are free to campaign for their employing Members on their own time, they may also use their free time or, with the permission of their employing Members, reduce their Senate hours (with a commensurate reduction in pay) to campaign for presidential candidates, other federal candidates, or state or local aspirants. With respect to the question of leave time to perform campaign activities, it is the Committee's understanding that the Senate does not recognize a "leave of absence."

We asked Jesse Benton, McConnell's campaign manager; Allison Moore, a spokeswoman for his Senate office; and Phil Maxson, the LA named on the tape, to explain whether the oppo work was done on Senate time, but they did not respond.

Guy Cecil, the executive director of the Democratic Senatorial Campaign Committee, which is working to defeat McConnell, sent out a series of tweets on Tuesday noting this issue:

The Trouble With the SEC's "Cars"

| Mon Feb. 4, 2013 11:23 AM EST

On Monday, we posted my story on high-speed trading from the January/February print issue of Mother Jones. (Read it!) Here's the nut:

As technology has ushered in a brave new world on Wall Street, the nation's watchdogs remain behind the curve, unable to effectively monitor, much less regulate, today's markets. As in 2008, when regulators only seemed to realize after the fact the threat posed by the toxic stew of securitization, the financial whiz kids are again one step—or leap—ahead...

...[Knight Capital's big loss on August 1] wasn't the worst-case scenario. Not even close. A lot of high-frequency trading is done by small proprietary trading firms, subject to less oversight than brand name financial institutions. But big banks have also tried to get in on the act. Imagine a runaway algorithm at a too-big-to-fail company like Bank of America, which manages trillions, not billions, in assets. Or, says Bill Black, a former federal regulator who helped investigate the S&L crisis of the '80s and '90s, imagine trading algorithms causing "a series of cascade failures"—like the domino effect that followed Lehman's collapse. "If enough of these bad things occur at the same time," he says, "financial institutions can begin to fail, even very large ones." It's not a question of whether this will happen, Black warns. "It is a question of when."

Years of mistakes and bad decisions led to the 2008 collapse. But when the next crisis happens, it may not develop over months, weeks, or even days. It could take seconds.

One quote I couldn't fit in the final story illuminates the point that the nation's watchdogs are behind the curve. When I asked Gregg Berman, the Securities and Exchange Commission expert who headed the agency's inquiry into the flash crash, how he'd describe the SEC's role, he responded with an extended metaphor:

Berman compares the agency's role in the marketplace to how traffic laws are created and enforced. A town can pass rules setting speed limits that take into account traffic flow and safety, and patrol officers can use radar guns to measure the speed of individual cars, issuing tickets when violations occur. But the officer is not actually in the car and cannot step on the brake pedal as soon as the driver begins to violate the speed limit. Similarly, the SEC is not generally an active market participant "steering the car" in real time. Instead, it acts through policies that do act in real time. For example, the single-stock circuit breakers, put in place after the flash crash, are designed to automatically hit the brakes and halt trading under disorderly market conditions, akin to programing the car to hit the brakes automatically when a potential collision is detected.

That the SEC isn't "in the car," steering in real time, is obvious to anyone who works in finance—as Berman notes, the agency is limited to accident-avoidance technologies that are programmed in advance. It's obvious why this is: Giving the SEC the ability to monitor and shut down trading in real time would be enormously expensive and would likely slow down trading considerably. (Imagine if someone sitting in the passenger seat while you drive, with their own wheel and set of brakes. You probably wouldn't like it.)

To the uninitiated, though, this point might seem pretty scary. The SEC is relying on automatic measures—designed in response to the last disaster—to slam on the brakes if a potential collision is detected. But the "cars" (trading firms) are hurtling down highways faster than ever before, and many of them are being "driven" by robots—sophisticated trading algorithms that buy and sell securities automatically, without human intervention.

One crash, and the demise of one trading firm, isn't such a big deal. But what about a chain-reaction crash? What about a multi-car pileup?

Here's the bottom line: If the SEC's automatic measures fail, it won't be able to react in time to avert a crisis. It will only be able to come in after the fact and try to clean up the mess. We accept this sort of thing when it comes to cars. But even the largest of car crashes can't wreak the kind of economic havoc that a series of cascade failures in the market could.

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