Posts tagged insider trafing
You cannot read the description of the personal stock trading allegedly conducted by Rep. Spencer Bachus and other members of Congress during the financial crisis and conclude anything other than the following:
Our government is completely corrupt.
Yes, this behavior may be technically legal, because of an absurd loophole that makes insider-trading rules not apply to Congress.
Yes, this behavior may be widespread on Capitol Hill.
But there is no universe in which a reasonable person would consider this behavior ethical or okay. And for the 300+ million Americans who aren’t members of Congress, it would be just plain illegal
Many members of Congress seem guilty here, including John Kerry, Dick Durbin, and Jim Moran. But Spencer Bachus takes the cake.
According to a new book called Throw Them All Out by Peter Schweizer, as relayed by Dave Weigel at Slate, Rep. Bachus made more than 40 trades in his personal account in the summer and fall of 2008, in the early months of the financial crisis.
The fact that Bachus personally traded on private information he received as a result of his job is bad enough. The fact that he was the ranking member of the House Financial Services Committee at the time is simply outrageous.
In one case, the day after getting a private briefing on the collapsing economy and financial system from Ben Bernanke and Hank Paulson, Rep. Bachus effectively shorted the market (by buying options that would rise if the market tanked.)
A few days later, after the market tanked, Bachus sold his position and nearly doubled his money.
If a corporate executive or Wall Street trader did this–cashed in personally after getting private, non-public information from his work–Rep. Bachus and every other member of Congress would be screaming from the rooftops about how the financial system is deeply corrupt and how the executive should be charged with insider trading.
And they would be right.
Rep. Bachus should return whatever money he made by betting on the direction of the markets (or anything else) in the fall of 2008. He should apologize for his behavior and jaw-dropping lack of judgement. He should urge his fellow members of Congress to immediately enact legislation that defends the fairness of the markets by holding Congress to the same insider trading laws as everyone else. He should then resign in disgrace.