A Stitch in Haste

Senate Majority Leader Bill Frist is defending his well-timed sale of HCA stock on the grounds that it was meant to prevent future conflicts of interest should he run for president in 2008:

"The complaints and questions have persisted," Frist said yesterday. "Because of these continuing questions, and looking ahead at my final years in the Senate and what might come next, I have for some time wanted to eliminate even the possibility of an appearance of a conflict by totally divesting of any HCA stock in my family's trust."
...
"In April, I asked my staff to determine if Senate rules and relevant laws would allow me to direct the trustees to sell any remaining HCA stock. In May, my staff worked with outside counsel and with the Senate ethics committee staff to draft a written communication to the trustees. After obtaining pre-approval by mid-June from the Senate ethics committee, I issued a letter directing my trustees to sell any remaining HCA stock in my family's trust."

This is all well and good, and I still see no reason to jump to conclusions about whether Frist had material nonpublic information about HCA's earnings. But it fails to address the systemic deficiencies in the Senate's ethics rules that this incident has exposed:

--How can a "blind trust" allow for directed transactions, under any circumstances? How can "blind" not mean blind?

--Why is it a conflict for Frist to hold equities in a blind trust as president, or as a presidential candidate, but not "merely" as Senate majority leader? Why is it a "potential conflict" for Frist to own HCA stock in 2005, 2006 or 2007 but not in 2004 or 2003 or December 2002, when he was elected majority leader?

--If the goal of the sale was merely to remove potential conflicts, then why not structure a slow, steady sale of the stock over time, comparable to the 10b5-1 trading plans now available to corporate insiders so they can avoid timing conflicts?

--Why should members of Congress be allowed to trade corporate securities at all? Wouldn't the best way to avoid conflicts be to freeze all trading activity during their time in office, or limit them to conflict-free investments such as mutual funds and government bonds, as much of Wall Street does?

I say again: If Frist played by the rules, then the rules are a ass.

More thoughts at PoliBlog.