Thanks to CBS on some great reporting. Insider Trading is legal for Congressmen! As Steve Kroft reports, members of Congress and their aides have regular access to powerful political intelligence, and many have made well timed stock market trades even in the very industries they regulate. For them alone, the practice is perfectly legal.
I for one knew politicians were corrupt and making millions I was just not sure how they did it. I mean making $150K plus per year does not a millionaire make. They are not going to reach the 1% club on that salary. So the politicians all banded together and passed a law that made insider trading legal. For Them!
While Martha Stewart and Raj Rajaratnam go to Jail your congressman does not. Talk about a double standard. These people a certainly taking advantage of the 99%. There should only be one thing in your mind when you’re drafting legislation, ‘Is this good for the United States of America?’ That’s it. If you’re starting to say to yourself ‘how’s this going to affect my investments,’ you’re corrupt!
Let me give you a few examples: Alabama Representative Spencer Bachus, Republican member on the House Financial Services Committee and now its chairman. After meetings with Federal Reserve Chairman Ben Bernanke Congressman Bachus would engage in buying stock options based on economic briefings he had just the day before from the Fed chairman and the treasury secretary.
John Boehner, who led the opposition against the so-called public option, government funded insurance that would compete with private companies. Just days before the provision was finally killed off, Boehner bought health insurance stocks, all of which went up.
Illinois Congressman Dennis Hastert became speaker of the House in 1999, he was worth a few hundred thousand dollars. He left the job eight years later a multi-millionaire. Hastert got a $207 million federal earmark to build the Prairie Parkway through these cornfields near his home. What people didn’t know was that Hastert had also bought some land adjacent to where the highway is supposed to go. He sold that land and made over Two million dollars. He now works as a lobbyist!
If I’m a corporate executive and you’re a senator, and I give you IPO shares in stock and over the course of one day that stock nets you $100,000, that’s completely legal. Corporate executives, members of the executive branch and all federal judges are subject to strict conflict of interest rules. But not the people who write the laws.
Nancy Pelosi and her husband have participated in at least eight IPOs. Undisturbed by a potential conflict of interest the Pelosis purchased 5,000 shares of Visa at the initial price of $44 dollars. Two days later it was trading at $64.
The situation has gotten worse. In the past few years a whole new totally unregulated, $100 million dollar industry has grown up in Washington called political intelligence. It employs former congressmen and former staffers to scour the halls of the Capitol gathering valuable non-public information then selling it to hedge funds and traders on Wall Street who can trade on it.
What would be a criminal enterprise anyplace else in the country and turned it into a profitable business model.
You can read the full CBS article here.
