Tim Murphy examines the growing market for political intelligence:
As Wall Street has pursued ever more complex ways to make a buck, the political intelligence industry has boomed, bringing in $402 million in 2009, according to Integrity Research Associates, which tracks the PI sector. That’s still small potatoes compared to the $3.3 billion lobbying industry, but it has caught the eye of critics who worry that it amounts to selling special access to the public’s business.
The political intelligence industry began to take shape in the early 1980s.
As federal regulatory power expanded, big business wanted to know what happened in obscure subcommittee hearings—and didn’t want to wait for the next day’s papers to read about it. In 1984, investment banker Ivan Boesky hired lobbyists to attend committee hearings about a big oil merger and report back to him. It paid off: Boesky made a cool $65 million just by finding out first and buying low. “Investors started to realize that there was money to be made by knowing what was going on in Washington and knowing it as quickly as possible,” says Michael Mayhew, the founder of Integrity Research Associates.
As Wall Street put an ever-greater premium on speed, investing in supercomputers to place orders milliseconds before the competition, the industry took off. The biggest known score came in 2005, when Congress was weighing approval of a $140 billion trust fund for asbestos liability claims. … A few days before then-Senate Majority Leader Bill Frist (R-Tenn.) announced a vote on the plan, hedge funds snapped up stock in companies that would be shielded from lawsuits if the fund were set up. The Securities and Exchange Commission suspected that advance notice of the vote had leaked from the senator’s office to lobbyists who then tipped off their political-intelligence clients. That the asbestos fund ultimately never came to be was beside the point; the hedge funds had already made their money.
The Dish 