Glenn Beck wasn't invited to testify at Thursday's congressional hearing focusing on his favorite gold company, Goldline International, but he was certainly there in spirit. The House Committee on Energy and Commerce was ostensibly meeting to consider legislation that would better regulate the sale of gold coins. But to hear the Republicans on the committee tell it, the hearing was nothing more than a witch hunt against a respectable company that had the nerve to advertise on conservative talk radio shows. Rep. Ed Whitfield (R-KY) quoted several news headlines about the hearing that started with something like "Glenn Beck's Favorite Gold Company..." Whitfield suggested that were it not for Beck, the Democrats in charge would never have taken up the gold issue to begin with, though charitably he added, "I hope that's not why we're here."
Rep. Anthony Weiner (D-NY), who has made gold scams one of his crusades and who pushed to introduce the legislation, was incensed: "This hearing is not about whether Glenn Beck keeps shilling for this company. That's Fox News' problem." Instead, he fumed, the hearing was designed to help protect consumers from unscrupulous coin dealers preying on their fears about the poor economy.
But the Republicans were prepared and had even come with props to counter claims that Goldline vastly overcharges people for its products. Whitfield had dispatched his staff to buy a roll of coins from the U.S. Mint for $35. He said the "melt value" of the gold in those coins was substantially less than what they paid for them—to the tune of a 2000 percent markup. "Even the US government is doing a tremendous job of marking up its product as well," Whitfield observed.
Rep. Steve Scalise (R-La.) found an unusual way to defend Goldline: He blamed Obama and liberal Democrats in Congress for not fixing the economy, thereby forcing aAmericans to seek out companies like Goldline. Rather than find ways to create jobs, Scalise ranted, "liberals' answer is to go beat up on the people selling gold." Committee chairman Rep. Henry Waxman (D-Calif.), who made a brief appearance at the hearing, chastised Scalise for trying to politicize the hearing by suggesting that people were getting ripped off "because liberals are running Congress."
The first witness of the day was a doctor from New York, Dr. Julius Bazan, who had been persuaded to put $140,000 of his retirement funds into Goldline coins worth only $83,000. He said a Goldline salesperson had promised him that gold would go up to $3,000 an ounce by the end of the year. (It never got above $1300 before he decided to bail on the investment.) Whitfield consoled him for his loss, saying, "I've lost a lot of money in investments. That's something we all deal with." The Republicans on the committee tried to get Bazan to admit that it was his own fault that he'd gotten taken. Whitfield said his staffers had checked the price of another gold coin at the US Mint similar to those Bazan had bought from Goldline and discovered the Mint marked up the coins by $300. If Whitfield expected Bazan to be cowed, he was wrong. The doctor shot back that the coins he bought from Goldline had been marked up by more than $2,000. "That's a big difference," he snapped.
A little chastised, Whitfield finished by telling Bazan, "I haven't had a constitutent write to me about this issue."
Goldline Executive VP Scott Carter eventually got a turn before the committee to defend his company's practices. He came with a pair of crisis managers from the PR firm Powell Tate. The Goldline radio host delivered his testimony like he was doing one of the company's infomercial-radio shows. It sounded like it should have ended with an 800-number pitch. They had clearly prepped him, but given who he works for, there was only so much they could do. And the witness was far from ideal. He spent most of his time on message, talking about how much Goldline loves disclosure and how it has high standards for providing customers all the information they need before they buy its overpriced coins. Of course, Goldline doesn't love the sort of disclosure that Weiner's proposed legislation would require. That Carter called "unworkable."
If he had stuck to the disclosure pamphlets, Carter might have triumphed. But he made the corporate witness' fatal error: He blamed the victim. When one of the Republicans gave him some softball questions about what might have caused Bazan's financial disaster, Carter posited that Bazan had failed to take Goldline's advice (clearly laid out in its disclosure forms) to hold on to the gold for three to five years. What he didn't say was that the price of gold would have had to triple just for Bazan to recoup his initial investment, much less turn a profit. Still, Carter continued on that thread, insisting that if Bazan had simply held on to the gold a little longer, he would have seen the 90 percent returns that other Goldline customers have gotten in the past five years.
Rep. Bobby Rush (D-IL), feeble and having difficulty talking after suffering from salivary gland cancer, proved that the former Black Panther hasn't lost his chops. He politely asked Carter to clarify whether he really meant that Bazan was to blame for his financial losses. Carter didn't budge and stuck with his position. "So you're telling me it's totally his fault for losing $60,000?" Rush asked incredulously. Carter's hits on the nice old doctor didn't help his standing. Nor did his response to a question about a trio of former "boiler room" operators who'd been sued by the SEC for ripping off old people and who now work at Goldline. Of the men, Carter said, "They are in good standing in the company." But perhaps he was doomed from the start after he told Weiner that he did indeed believe that it was possible the government would confiscate some Americans' gold in the future, as it did in 1933—a claim that's part of Goldline's standard sales pitch.
Naturally wanting to get the final word in a hearing he'd been spoiling for since May, Weiner used his time not to ask questions but to dress down Carter for being a threat to the average American consumer. He scoffed at the idea that somehow socking away money in the form of old 20-franc Swiss gold coins, one of Goldline's most popular offerings, would give Americans any protection against a collapsing economy. "If you're holding a bunch of Swiss francs when the economy collapses, good luck buying a loaf of bread with that," he railed. "This is not about whether consumers are stupid. It's about whether you should be doing this. Just because you put the ripoff in the disclosure form doesn't mean you should do it."