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Trusting Senator Frist

Other editors say

Nothing in congressional ethics rules says members can't trade stocks

The Wall Street Journal

When ethics is in the political air, it can be hard to sort the real sins from the invented. The way to understand the recent charges against Senate Majority Leader Bill Frist is as a case of no good deed going unpunished.

The SEC is investigating Mr. Frist for unloading his shares of hospital chain HCA prior to a July earnings warning. Democrats are suggesting that an HCA insider gave Frist a call to tip him off. Frist denies it, and to date there is zero evidence ' nada, zilch, nunca ' to support the allegation. And nothing in Frist's past or character suggests he's the kind of politician who'd try to scam the system to save a few bucks.

The real issue here is the modern demand that politicians abandon all acquaintance with the world of commerce when they take office, lest they have a conflict of interest. It looks to us as if Frist's good-faith attempt to comply with this demand is what has landed him in the headlines. A well-paid surgeon before he ran for the Senate in 1994, Frist also owned stock in HCA, a company his family helped to found. In an attempt to insulate himself from criticism, Senator Frist and his family put some &

36;10 million of HCA stock into what are known as blind trusts.

Blind trusts must be approved by the Senate Ethics Committee and are subject to a roster of rules. The idea is that some outside trustee manages the money, and the elected official is ignorant of his investments. In practice these trusts are never as blind as billed. While it is true that Frist would not have known what was in his trust on any one particular day, the trustees did send him general communications (on file with the Senate) about his holdings.

No surprise, then, that these trusts have hardly spared Frist criticism. In 2004, a liberal group filed an ethics complaint arguing that Frist's ties with HCA should bar him from voting on medical malpractice reform. The latest allegations were leveled by yet another partisan group, Citizens for Responsibility and Ethics in Washington. Its insider-trading complaint so far rings hollow.

— Frist has said he first requested legal advice about selling his HCA stock in April to avoid any hint of future conflicts, and received Ethics Committee approval. If he did indeed ask for advice in April, this would have been before even HCA would have foreseen earnings trouble. April would also have been a smart time to sell, with the company's stock up 40 percent for the year.

The irony is that Frist was never required either to establish a blind trust or to sell his shares. In both cases he did so to insulate himself from the appearance of any conflict. Instead, in doing both he has only made himself a bigger target for those who'd suggest he has something to hide. They want politicians to abjure all worldly goods, like Ralph Nader.

What these accusers miss is the entire point of the concept of disclosure. The Senate ethics manual declares that members should not be required to divest themselves of assets: Instead, public financial disclosure provides the mechanism for monitoring and deterring conflicts. The guide also questions the wisdom of having politicians fully strip themselves of worldly goods, given that it is likely to insulate a legislator from the personal and economic interests that his or her constituency, or society in general, has in governmental decisions and policy.

Good point. The disclosure rules exist to prevent blatant conflicts, but they were never intended to bar members from knowing what they owned or what was sold. Members of Congress ought to have some acquaintance with the world they represent, including private business.