Yesterday, Charlie Gasparino of CNBC suggested that James Chanos of Kynikos made campaign donations to Governor Eliot Spitzer (NY-D) to avoid a problem or gain some other favor (click here to watch the actual video). I know it’s easy to assume that every donation is meant to influence or that every politician is influenced, but that is absurd. Clearly, our campaign finance laws are abused and we have way too much corporate power in politics. But let’s stick to the assumption that most people are good and that contributions are not illegal. The same Constitution that gives our press the right to make salacious insinuations, also provides for the right to petition the government. That means the right to lobby and by inclusion, contribute to political campaigns. If you don’t like it, try changing the Constitution or another attempt at general campaign finance laws, but keep the smear out of it. If there is an admission or a guilty verdict, then smear away.

So now the facts, Jim Chanos is a short selling specialist in the investing / hedge fund industry. Eliot Spitzer is now the governor of NY and no longer is charged with pursuing legal action, largely against abuses in the investment world. Chanos has a long history of donating to politicians and with the exception of his cousin’s campaign for Nevada Attorney General and the Defend America PAC, all the donations I found were to Democratic campaign causes. He has donated to previous Democrats running for Governor in NY (Cuomo 2002) and for Phil Angiledes, the failed 2006 Democrat gubernatorial candidate in California. Spitzer happened to be a Democrat running for governor - go figure he got money from Chanos. But then again, Spitzer campaigns have received Jim’s support since his second attempt to become Attorney General in 1998 - long before Eliot’s first targeting of Wall Street.

One of the great things about the mess called “campaign finance” is the transparency of legal donations and lobbying efforts. If you consider the political scandals like ABSCAM or more recently, Abramoff, the real abusers aren’t disclosing their activities in online databases. So for people like Chanos that document the trail of funds, I tend to assume they do not have evil intent - call me naive. You can do your own homework online by searching a few databases like this one for state elections or this one for federal elections. He has donated to general committees that make the decision about which candidates get how much money and he has donated to a bunch of candidates that have not won. In fact, I think his ability to pick winners in short selling stocks is much better than picking winners for elected office. How much influence do you get from candidates that lose? Regardless, not all contributions are bribes and not all politicians can be bought. Chanos and his wife also contribute a lot of money and time to other causes. Click here to learn the amazing details of one such contribution. If you want to help them out with a donation, I promise that you will not be accused of trying to influence any political behavior. I don’t know Jim personally and I am not saying he is a saint, but let’s stick to boring details and not make exciting unfounded accusations.

I have repeatedly said how unnecessary I find potential hedge fund legislation and regulation, but it is inevitable - so we must ensure the process is equitable and thorough. I have made no campaign contributions to Spitzer or anyone else for that matter, but yet, I agree with Chanos. If I make a contribution in the future, will that suddenly prove a desire to corrupt a politician? Obviously not. However, this subject requires a lot of thought, hearings and analysis. The SEC and Congress are empowered to take those actions and yet, we all have an obligation to provide them with as much meaningful information as possible so they can make whatever decision they feel is right. That includes both sides of the debate and yes, you can bet that people who oppose my view and Chanos’ view are making contributions to one politician or another (maybe even Spitzer.) But their legal contributions should not be stopped or criticized. Amid all the oversight by regulators and lawmakers, hedge funds must pick up their responsibility in the debate. And as a leader in the industry, Chanos must be involved. Besides, he has a history of testifying in front of Congress - like when he volunteered info about his significant role in exposing the Enron fraud and how to help prevent something similar happening in the future.