Rep. Ron Paul is captivated by gold. Over the past two decades, he has written books about the virtues of gold-backed currency. He has made uncounted speeches about the precious metal. He even took a leadership post on the House subcommittee that oversees the nation's monetary policy, mints and gold medals.
But his focus on gold goes beyond the theoretical.
In recent years, Paul (R-Tex.) has poured hundreds of thousands of his own dollars into stocks of some of the world's largest gold-mining operations, according to a review of his financial disclosure forms by The Washington Post. In 2008, while advocating for the United States to reinstate a gold standard, he reported owning up to $1.5 million in shares of at least nine gold-production companies. In addition, he disclosed up to $200,000 in silver stocks. In all, those holdings represented close to half of his assets.
The intersection of Paul's investments, policy convictions and congressional duties is acceptable under the ethics rules that govern lawmaker investing, a code of behavior that stands in stark contrast to the stricter regulations that government and private executives typically must follow.
But the mix of his interests — when stock and other private-sector investing on Capitol Hill is near an all-time high — underscores an age-old concern: How to ensure that congressional leaders are acting in the interests of voters and not themselves?
'A reflection of my philosophy'
Paul said that for him, there is no conflict, because his advocacy of gold is consistent with his views on monetary policy, something that everyone knows he has been discussing for more than 30 years.
"It's the reason I ran for Congress," he said. "It's a reflection of my philosophy."
Paul said he has consciously never taken any legislative action that would directly benefit his gold investments. He said his only goal is to strengthen the U.S. currency. In fact, he said, if that occurred, his gold stocks would drop in value.
In both houses of Congress, a host of other committee chairmen and ranking members have reported that they have millions invested in business sectors that their panels oversee, according to a Post analysis of financial disclosure records through 2008, committee assignments and lawmaker investments by industry.
The disclosure reports covering 2009 will be made public in the coming days. But because lawmakers still use a pen-and-paper method of reporting, it will be months before the information is entered into a database by the Center for Responsive Politics and then made available for analysis by The Post.
While many lawmakers have no investments in sectors under their oversight, some congressional committees had notably high concentrations of such holdings, The Post's analysis shows.
Targeted legislation
The patterns are important because committee chairmen and ranking members have more power than their colleagues to raise questions, hold hearings and push through targeted legislation that in some cases governs the industries in which they have investments.
Rep. Jane Harman (D-Calif.), for instance, served as chairman of a subcommittee responsible for overseeing technology-oriented efforts to improve homeland security, intelligence, information sharing and risk assessment in 2008. At the time, she disclosed more than $1 million in holdings in companies involved in intelligence and homeland security contracting, including Lockheed Martin and BAE Systems.
Sen. Frank Lautenberg (D-N.J.), who chaired a subcommittee that oversees water quality, owned a stake valued at more than $1 million in Linn Energy, a company that has been cited by federal authorities for alleged water pollution. It is unclear whether specific issues concerning Linn ever came before the subcommittee.
Sen. Thomas R. Carper (D-Del.), whose subcommittee keeps watch on clean air and nuclear safety, reported up to $65,000 in holdings in Duke Energy, which uses nuclear plants to generate electricity. Duke is 46th on the list of top 100 "corporate air polluters in the United States," according to researchers at the University of Massachusetts. Duke spokesman Tom Williams said that the company provides power for 11 million people in five states and that some air pollution "kind of goes with what we do."
The membership of some committees had disproportionately large holdings in companies or industries they oversee, The Post analysis shows.
On the House Agriculture Committee, which holds sway over farm policies and subsidies, members had farming and agribusiness investments worth five times on average the amount held by other colleagues in the House. Many of the committee members' holdings were in family farms. Nothing prevents those members from also receiving farm subsidies, and in the past, some have.
Likewise, House Energy and Commerce Committee members, who routinely hold hearings about telecommunications and computer issues, had heavier than average investments in companies such as Oracle, Nokia, AT&T and Verizon.
House Homeland Security Committee members also had more communications and electronics holdings as a group than the House as a whole, and House Transportation and Infrastructure Committee members as a group owned almost six times more holdings in transportation firms.
In the Senate, the Banking, Housing and Urban Affairs Committee had on average almost twice the value of holdings in finance, insurance and real estate as that chamber as a whole. The Senate Environment and Public Works Committee members had almost three times the value of agribusiness holdings as their colleagues on other committees.
When asked about their investments, committee chairmen and ranking members said their assets generally were managed by professional brokers or were owned by their spouses. They said they took care not to let their personal wealth influence their legislative activity.
In a statement, Harman echoed the sentiments of other lawmakers, saying: "I take seriously my legal and ethical obligations to avoid conflicts of interest. My family and I have portfolio managers who make all investment decisions — both buy and sell — without consulting us. All investments are fully disclosed."
Harman, one of the richest members of Congress, is married to a founder of the Harman Kardon electronics fortune, her disclosures show. She noted that she recently recused herself from a vote concerning Toyota because her family had a substantial stake in the company.
A spokeswoman for Carper said his holdings in Duke Energy were owned by the senator and his wife. Spokeswoman Emily Cunningham noted that because the financial disclosure statements allow lawmakers to report in ranges, the actual holdings could have been worth from $16,000 to $65,000. But she said that "exact amounts are not available."
"Senator Carper's investments or holdings do not influence the way he makes policy decisions. He bases those decisions on what he thinks is right and fair for Delaware and our nation," Cunningham said. "Owning stock in a company such as Duke Energy, which produces energy from wind, nuclear, natural gas and coal, simply reflects his beliefs."
Lautenberg did not respond to questions about his holdings. A Lautenberg aide said the Linn Energy holdings were in a trust owned by his wife.
Under current rules, judges and executive branch employees cannot handle matters that overlap their holdings, but lawmakers can.
Judges cannot rule in cases involving companies in which they own stock, and executive branch officials must sell assets in industries they regulate or put them in blind trusts. By contrast, long-standing ethics rules for Congress generally leave it up lawmakers to decide whether their holdings pose a conflict and whether they should recuse themselves from a vote.
'Vested interest'
The appearance of potential conflicts creates unease among congressional observers. Steve Ellis, vice president of the nonpartisan Taxpayers for Common Sense, said there has been a long-standing suspicion, difficult to verify, about committee assignments: that lawmakers tend seek out certain committees to suit their own interests.
"It is part of the problem with the committee system. People try to get on the committees in which they have a vested interest," said Ellis, whose group closely tracks congressional activity. "Committees can have a huge impact on the sectors of the economy under their jurisdiction, and they're going to know more about what's going on in those sectors than the average lawmaker."
"By being on a committee with a particular jurisdiction, they're in a better position of influencing the performance of their investments," he said, "or at least appearing to have that ability."
Ron Paul is better known across the country as a conservative presidential candidate than for his work in Congress, where he has introduced much legislation to limit the size and power of the federal government. That includes proposed bills to eliminate the Federal Reserve and to turn the country back to a gold-backed currency.
A fan of Ayn Rand and other conservative economic icons, Paul, a physician, said he was spurred to run for office after the government's decision in the early 1970s to no longer back every dollar with an equivalent amount of gold, commonly known as the gold standard. That decision, Paul said, has been responsible for inflation and other economic ills.
In one of his papers on monetary policy, written in 1982 during an earlier recession, Paul derided that change. "More and more people are asking if a gold standard will end the financial crisis in which we find ourselves. The question is not so much if it will help or if we will resort to gold, but when."
He has maintained a consistent position during the years since, making the gold standard a key platform of his runs for the White House. This this month, he wrote a piece titled "Why Big Government Hates Gold."
Over the years, his investments in gold and related metal-mining have grown, according to his disclosure records. In 2004, he reported holdings in Goldcorp, Barrick Gold, Glamis Gold and Iamgold, worth $300,000 to $730,000. By 2007, he reported owning $768,000 to $1.7 million, with up to $1 million in Goldcorp alone.
The disclosure records for 2008 show that Paul reported $600,000 to $1.46 million in holdings in gold and metal-mining.
Paul serves as the top Republican on the Financial Services subcommittee on domestic monetary policy and technology. He said his personal holdings do not conflict with his policy advocacy because everyone has a right to look out for his own interests. He said his gold investments are logical and consistent with his views that the dollar will lose value because it's not backed up by anything.
"It's protection against the devaluation of the dollar," he said. "Everybody invests out of self-interest. That's not a story."
Paul played down the idea of creating additional rules to curb congressional investing, saying that lawmakers who wanted to could find a way around them. "The only way to deal with this is to put people in office with character," he said.
He said the real solution would be to cut government's influence over the private sector, making it harder for congressional decisions to have an impact on the markets.
"Government is so involved in everything we do in this economy," he said. "The only solution is getting the government out of things it should not be doing."