Is Congress Getting Rich Off Insider Trading?
Since the 2008 economic meltdown, the average American household has lost up to 20 percent of its net worth.
During the same period, members of Congress increased their net worth by 25 percent.
The reason for the unlikely financial windfall? According to policy expert Peter Schweizer, it's all from canny stock market bets made by elected officials using information gleaned from confidential committee meetings.
What kind of information, you ask? The non-public, for-your-eyes-only kind. The kind that can get you 11 years in prison.
In his new book, Throw Them All Out, Schweizer, an outspoken conservative, takes aim at both sides of the aisle, noting the questionable investment practices of John Kerry, Nancy Pelosi, John Boehner and dozens of others who routinely made timely, advantageous adjustments to their stock portfolios just before a boom or bust.
". . . The political elite gets to play by a different set of rules than the rest of us. . . Washington is a company town, and politics is a business," said Schweizer to the Daily Beast.
"People wonder why we don’t get more change in Washington, and the reason is that the permanent political class is very comfortable."
Perhaps most troubling are the actions of Republican Rep. Spencer Bachus of Alabama. In 2008, the ranking member of the House Financial Services Committee took two confidential meetings with Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke to discuss the impending global economic crisis. Days later, he began betting that the market would fall, and when it did, doubled his investment.
It may appear deplorable that the same public servants guiding our economic recovery are financially invested in seeing it fall apart, but as Zachary Karabell of the Daily Beast points out, the real scandal isn't that it's happening—it's that it's legal:
No one employed by a public company or by Wall Street could ever trade on such information without risking increasingly harsh legal action. Yet no law bars Congress from making money from information that no else has, at least not until someone leaks it or an official announcement is made. Given how advantageous such insider information is and the fact that no law bars its use, it’s a wonder there aren’t more congressional trading millionaires.
So what can be done? I'd love to see the Occupy movement make this one of their cause celebres and bring some likeminded and notable members of the 1 percent into the fold (hello, Martha Stewart). But the bottom line is that members of Congress, like traders on Wall Street, need to be regulated. Back in 2006, a proposed bill banning insider trading died a quiet death on the floor. Now is the time to bring it back.
Want to let Congress know how you feel about their conflict of interest? Check out this petition at change.org.