Timothy Noah: What the Heck Is the ‘Political Intelligence’ Industry?
When I read this morning that a provision in the House ethics bill had been dropped that would have required members of the political intelligence industry to register with the federal government, I had one question. What’s the political intelligence industry?
The bill in question, a version of which cleared the Senate last week 96-3 with the political intelligence requirement—sponsored by Sen. Chuck Grassley (R., Iowa)—intact, would outlaw insider trading by members of Congress. Grassley wasn’t pleased. “It’s astonishing and extremely disappointing,” Grassley said,
that the House would fulfill Wall Street’s wishes by killing this provision. The Senate clearly voted to try to shed light on an industry that’s behind the scenes. If the Senate language is too broad, as opponents say, why not propose a solution instead of scrapping the provision altogether? I hope to see a vehicle for meaningful transparency through a House-Senate conference or other means. If Congress delays action, the political intelligence industry will stay in the shadows, just the way Wall Street likes it.
I agree, and I don’t even know what the damn thing is!
It turns out that the political intelligence industry is something that sprang up as a way to convey inside information to hedge funds and mutual funds. Although it’s illegal to trade on the basis of inside information about public companies, it’s perfectly legal, in most instances, to trade on the basis of inside information about stuff the government does. So these hedge funds and mutual funds (and, to a lesser extent, other Wall Street investors) hire “expert network” companies like Gerson Lehrman, Coleman Research Group, Inc., and Public Insight LP to tell them the latest on what Washington will or won’t do, and when. The expert network firms operate worldwide collecting all kinds of information for investors, but lately they’ve been ramping up their activities in Washington. An Oct. 4 story in the Wall Street Journal reported that the political intelligence industry employs about 2,000 people in D.C. and generates about $100 million in annual revenue, according to Integrity Research Associates LLC, which “evaluates investment-research firms.” The political intelligence industry is sufficiently mature to have spawned another industry to to keep track of it!