CBS News’ 60 Minutes aired a report last night alleging that several members of Congress have traded stock using information they received during private briefings or meetings, enabling them to profit from inside information. By far the most damning story was about House Financial Services Chairman Spencer Bachus (R-AL), who in 2008, the day after receiving a private briefing from the nation’s chief economic officials on the extent of the financial crisis, proceeded to bet that the stock market would tank:
In mid September 2008 with the Dow Jones Industrial average still above ten thousand, Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke were holding closed door briefings with congressional leaders, and privately warning them that a global financial meltdown could occur within a few days. One of those attending was Alabama Representative Spencer Bachus, then the ranking Republican member on the House Financial Services Committee and now its chairman. [...]
While Congressman Bachus was publicly trying to keep the economy from cratering, he was privately betting that it would, buying option funds that would go up in value if the market went down. He would make a variety of trades and profited at a time when most Americans were losing their shirts.
Watch the report:
Bachus, who was the ranking member of the Financial Services committee at the time (since the Democrats held the house) made about 200 trades as the financial crisis peaked, netting about $28,000. “What we know is that those meetings were held one day and literally the next day Congressman Bachus would engage in buying stock options based on apocalyptic briefings he had the day before from the Fed chairman and Treasury Secretary,” said Peter Schweitzer, a fellow at the conservative Hoover Institution, whose work was the basis for CBS’ report. “I mean, talk about a stock tip.”
CBS also criticized House Speaker John Boehner (R-OH) for trading health stocks right before the public option was officially killed and noted that former Rep. Dennis Hastert (R) and former Sen. Judd Gregg (R) profited from steering federal earmarks towards projects in which they had a financial stake.
In an attempt to balance its piece, 60 Minutes then found a Democrat to attack — House Minority Leader Nancy Pelosi (D-CA), whose husband participated in a special stock offering from Visa while legislation affecting the credit card industry was pending in the House. Unlike 60 Minutes’ allegations against Republicans, there was no evidence provided that Pelosi used her congressional position to unethically enrich herself or that she sought to protect the credit card industry in any way.
Like House Majority Leader Eric Cantor (R-VA), Bachus was betting that the country would fail economically, giving him a financial upside in an outcome that would be worse for the rest of the country. Previously, Bachus said that Washington’s role is to “serve the banks,” but in this instance, he seemed to believe that Washington’s role is to serve his own bank account.