Stock inquiry could hurt Frist politically
WASHINGTON – Two federal inquiries into Senate Majority Leader Bill Frist’s stock sales have handed Democrats a chance to broaden their long-stated claim that Republicans push ethical boundaries and focus on laws that help the rich, political analysts say.
Until now, such accusations have centered on the House and White House. House Majority Leader Tom DeLay, R-Tex., has been chastised three times by the chamber’s ethics committee, and a Texas grand jury recently indicted a political action committee he had organized.
Now, with the revelation that federal prosecutors and the Securities and Exchange Commission are looking into Frist’s sale of hospital stocks shortly before their value fell, Democrats are expanding their ethics accusations into the Senate’s GOP leadership ranks.
Activists in both parties agree it is much too early to say whether Frist engaged in insider trading, a charge that could cripple his 2008 presidential hopes. But the mere launch of inquiries by the SEC and the Justice Department allows Democrats to claim that both House and Senate majority leaders operate under ethical clouds.
“It is a drip, drip, drip,” said former House majority leader Tony Coelho, who knows the corrosive power of ethics charges. The California Democrat, who resigned in 1989 following accusations about a loan deal, said, “With DeLay and now Frist, it’s a buildup of arrogance of power. … With (President) Bush’s numbers down, this could be a very negative thing for the Republicans.”
Democratic consultant Jenny Backus said many Americans already think “things are rotten” in the capital’s Republican-dominated political circles. “To have the Senate majority leader under an ethics cloud is going to drive this point home for the voters,” she said.
In carefully worded statements, Frist’s office has said the senator instructed managers of his “qualified blind trust” in June to sell his family’s shares in HCA Inc., the nation’s largest hospital chain, founded by Frist’s father and brother. A month later, the stock’s price dropped 9 percent after the company predicted weakening earnings. It is illegal to trade stocks based on inside information. Frist, a wealthy surgeon, “had no information about the company or its performance that was not available to the public when he directed the trustees to sell the HCA stock,” his office said.
The senator’s spokesmen say he sold the HCA stock in order to avoid possible conflicts of interest as Congress deals with health care legislation. For years, however, Frist had rejected arguments that his stock holdings could cause a possible conflict.
Some nonpartisan analysts said the Frist case could fizzle, in legal and political terms, if anything short of insider trading is proved. For one thing, they say, the story has broken at a time when hurricanes are dominating the national news. Moreover, they say, questions of blind trusts and stock transactions may prove too arcane to captivate the average voter.
“I’m not yet convinced that the cloud over Frist is all that dark and all that big,” said Stuart Rothenberg of the nonpartisan Rothenberg Political Report. “The Democrats are going to have to make the case about party corruption. What’s more, this is a stock deal. Partisan people will say this proves a lot. Other people will say, `Stocks and trusts, I don’t know this stuff.’ ”
Backus disagrees. Average Americans, she said, understand the notion of powerful and privileged people getting sweetheart deals.
Charlie Cook of the independent Cook Political Report said the Frist news comes at a time of sagging approval ratings and other problems for the Republican Party.
“The biggest toll,” Cook said, “is for Frist’s presidential aspirations. They were already on the ropes. He’s not gotten good reviews as the Republican leader in the Senate. … The guy is pretty damaged merchandise in terms of presidential aspirations.”