Thursday, May 3, 2012

Congressman Brad Sherman Could be a Savvy Financial Advisor

If Congressman Brad Sherman fails to gain another term in the U.S. House of Representatives he may want to consider another career as a full-time financial analyst.

In 2010, voters approved a ballot measure that took the power to draw congressional lines out of the hands of incumbents and gave that task to an independent redistricting commission. The commission was charged with drawing district lines that, among other things, did not take into account where incumbents resided. That means the commission's purpose was to draw lines that fairly represented communities of interest, rather than lines that gave incumbents a chance at winning.

As a result of the independent redistricting commission's work, districts are not as safe as they used to be. Perhaps the poster-child for this phenomenon is the much-discussed match-up between two Democratic Congressman: Brad Sherman and Howard Berman.

Sherman and Berman have both raised enormous sums for their re-election bids. They are both running for a seat in the San Fernando Valley. Disclosure reports reveal that Sherman has more than $4 million in his campaign war chest (including personal loans), and Berman has approximately $2.4 million in the bank.

Sherman, for his part, is showing his business acumen. Recent disclosure reports show that Sherman earned over $650,000 just based on investing his campaign contributions. Luckily for Sherman, the tax rates on campaign investments are lower than the tax rates on other investors. Interesting: were it not for high returns on investments, Berman would have outraised Sherman in the first quarter of 2012.

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