By Marc Joffe, The Fiscal
Times
February 2, 2016
http://www.thefiscaltimes.com/Columns/2016/02/02/Why-37-Year-Old-Clinton-Financial-Scandal-Still-Relevant
The Clinton era of the 1990s
is remembered as a prosperous time punctuated by a
series of scandals. Today, we tend to dismiss these scandals as irrelevant
because they mostly involved sex, were exaggerated by partisan Republicans and
were mostly related to actions taken by Bill Clinton, who will not be on the
2016 ballot. But sweeping away all this history deprives voters of the chance
to consider a largely forgotten financial scandal that directly involved
Hillary Clinton during 1978 and 1979.
Under the guidance of an
attorney representing Tyson Foods, Hillary Clinton made a $98,540 profit from a
$1,000 initial investment in less than one year trading commodity futures.
While $98,540 may not seem like much money relative to the Clinton family’s
wealth today, it exceeded Bill and Hillary’s combined annual income at the
time.
When this story was revealed
in the spring of 1994, Hillary Clinton’s press secretary suggested that the
enormous profit was the result of the First Lady’s own research — but the
Tyson-linked attorney, James Blair, admitted that he advised Clinton when to
buy and sell the futures. Further, there was no evidence that Clinton had
previously traded in commodity futures or knew much about the market.
Careful readers at the time
also learned that Clinton’s initial trading also had a serious irregularity.
Unlike stock investments, commodity futures are almost always purchased with
high levels of margin, meaning that the investor is using a substantial
proportion of money borrowed from the broker to control positions. Exchanges
and regulators typically require investors to keep a minimum amount of cash in
their futures accounts to avoid getting into a negative position if futures
prices move in the wrong direction. In Hillary Clinton’s case, her $1,000
initial investment was well below the $12,000 deposit required by the Chicago
Mercantile Exchange for the first trades she executed. So not only did Hillary
make an extraordinary profit for a novice investor, she did so without
following the rules applied to less well-connected traders.
By the time the so-called
“cattle futures” scandal fell out of the headlines, readers of The
New York Times and Washington
Post — mainstream outlets that both extensively reported the story
— were left with the impression that Hillary’s trading activity was
suspicious. But, since Hillary was not an elected official, the scandal was
eclipsed by bimbo eruptions and the Whitewater Affair, both involving the
president himself.
It also was not much of an
issue in 2008 — but that was before the federal government started bailing
out banks and other big corporations. In the aftermath of TARP and other widely
reported instances of crony capitalism, Clinton’s behavior back in 1978 and
1979 warrants further scrutiny.
The factor that makes the
cattle futures scandal relevant is that Hillary Clinton received her trading
advice from Tyson Food’s outside counsel. Tyson was a major agricultural
producer in Arkansas and had numerous issues that Attorney General and later
Governor Bill Clinton could affect.
One such issue involved
enforcement of environmental regulations affecting Tyson’s chicken-processing
plants. It can be costly for factory farmers to properly dispose of chicken
manure, but the failure to do so can cause serious damage. This was
demonstrated by an incident at the company’s Green Forest plant in northwest
Arkansas. As The New York Times reported in March 1994:
In 1977, the state pollution
control agency reissued the license for Tyson's Green Forest plant on the
condition that the company meet with city officials to work out a plan for
treating its wastes. But the state never enforced the order, and in May 1983,
the waste from the plant seeped
into the town's drinking water. Residents became ill, and 15 months later
Governor Clinton declared the town a disaster area.
So it is possible to link
Tyson’s support for the Clintons to water contamination, an ironic circumstance
given Hillary Clinton’s criticism
of Governor Rick Snyder’s handling of the Flint water crisis.
The Times also reported,
“During Mr. Clinton's tenure in Arkansas, Tyson benefited from a variety of
state actions, including $9
million in government loans, the placement of company executives on important
state boards and favorable decisions on environmental issues.”
Tyson appears to have obtained
these results for what looks like a bribe delivered though Hillary Clinton’s
commodities account. To quote
the company’s former chairman: politics is “a series of unsentimental
transactions between those who need votes and those who have money.”
This perspective should
provide cause for concern today, since Hillary Clinton made
$2.9 million in speaking fees from large financial institutions between
2013 and 2015. That total includes $675,000 from the much reviled Goldman
Sachs. One is left to wonder whether Goldman and the other financial industry
behemoths stand to gain any transactional benefits for their money.
While paid speech-making is
not illegal, bribery is. Tyson might have simply made a campaign contribution
to Bill Clinton back then, but that would have violated limits
then in effect. Instead, Bill and Hillary pushed — and seemingly broke
— ethical and legal limits to get the cash they needed.
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