Insider trading benefited both parties in Congress
David Weigel at Slate.com points out that the insider trading of politicians on Capitol Hill during the financial meltdown - detailed in a book by Peter Schweizer - was done by both parties.
Please don't get the impression that Rep. Spencer Baucus was the only member of Congress who attended closed-door sessions about the 2008 economic crisis, then called his broker. In another part of Peter Schweizer's book, he checks the schedules of other attendees at a September 16, 2008 meeting with Hank Paulson and Ben Bernanke. It's a pure mixture of Democrats and Republicans.
"September 17, 2008, was by far [Rep. Jim] Moran's most active trading day of the year," writes Schweitzer. "He dumped shares in Goldman Sachs, General Dynamics, Franklin Resources, Flowserve Corporation, Ecolabs, Edison International, Electronic Arts, DirecTV, Conoco, Procter & Gamble, AT&T, Apple, CVS, Cisco, Chubb, and a dozen more companies." Schweitzer actually counts ninety companies that Moran dumped, helping him avoid big losses.
Also at the meeting: Rep. Shelley Capito. "She and her husband dumped between $100,000 and $250,000 in Citigroup stock the day after the briefing," reports Schweitzer. And then there was Dick Durbin, then and now the assistant majority leader of the Senate. "He sold off $73,715 in stock funds" after the September 16 briefing. "Following the next terrifying closed-door briefing, on September 18, he dumped another $42,000 in stock."
Durban's aide emailed Weigel that the senator was dumping stock all through that September and had no insder trading knowledge.
Indeed, following the Lehman Brothers collapse, smart investors were in a very bearish mood. But the congressmen named above had direct knowledge from the Treasury Department and Federal Reserve how bad the crisis was and what the government was planning to do about it before that information became generally known.
That's the definition of insider trading and even though it appears no one did anything illegal, it's still a rancid example of congressmen taking advantage of their position - in this case to avoid catastrophic losses.
Remember - rules are for the little people...
Hat Tip: Ed Lasky