Politicians are bullish with funds from donors

By Katherine Pfleger, Associated Press, 10/14/99

ASHINGTON - Members of Congress seeking to add to campaign war chests are investing on Wall Street to cash in on the economic boom, according to a review of funding reports.

Most legislators have made modest returns on conservative investments, but a handful reported six-figure profits. One apparently lost the gamble: Tom Campbell, a California Republican, reported losses of $56,379 in 1997 and 1998.

Campbell ''would rather not talk about it,'' said a spokesman, Suhail Khan. His investments are in the black this year, according to the campaign reports.

While lawmakers must disclose investments annually to let voters consider possible conflicts of interest, they are not required to detail where funds are invested.

House and Senate members must report to the Federal Election Commission any gains or losses from investments that range from Treasury notes to high-tech stocks.

Before he pulled most of his money this year, Representative Peter Deutsch, a Florida Democrat, said his campaign had money in such companies as Microsoft, Coca-Cola, General Electric and Cisco Systems.

He made $184,531 last year.

''It would be sort of a disservice to your contributors not to figure out what is the maximum way to use the contributions,'' Deutsch said. ''It allows you spend more time working for your constituents.''

Deutsch called one of his campaign's money managers, Meyer Berman, as a witness last year at a congressional hearing on trading rules.

Deutsch's campaign lost $80,126 invested with Berman last year, but more than made up for it with other investments. Berman was responsible for most of Deutsch's $25,732 gain for the first half of 1999, when his campaign treasury had $1.7 million.

To avoid the appearance of a conflict, the congressman has no control over how his money managers invest campaign funds, a Deutsch aide said.

In the last decade, candidates have become more bullish about investing contributions in stocks, said a University of Virginia political scientist, Larry Sabato.

''Little lights have gone off in various campaign treasurers' heads as they watched the stock market go up, up, up,'' Sabato said.

Under election law, donors can give candidates $1,000 for each election. If candidates lose that money in the stock market, they cannot ask the same donors for more.

Many candidates stick to safe investments.

The campaign of Senator Kay Bailey Hutchison, a Texas Republican, made $88,751 in the first half of this year, primarily from $5.5 million worth of Treasury bills and notes, said her campaign treasurer, Ken Anderson.

Representative Bill McCollum, Republican of Florida and a Senate candidate, has taken small risks. Most of his $1.4 million is in a bond fund. But a campaign spokesman, John Sowinski, said McCollum has less than 5 percent of his investments in two individual stocks, which he also invests in personally: Cephalon, a biopharmaceutical company, and Diamond Multimedia Systems, which makes portable digital music players.

The campaign earned $25,259 from investments and nominal bank interest in the first half of the year, FEC reports show.

The question was, ''How do you manage a $500,000 fund that you don't need for a while?'' McCollum said. ''The point wasn't to score a home run or anything.''

Gary Ruskin, director of the Congressional Accountability Project, a nonpartisan group, said lawmakers should disclose campaign investments because they could affect their decision-making.