Why should our elected officials have the green light to make money through insider trading when they are on the inside track anyway? But CBS News reports that they have the right, and they do it regularly.
The story aired on CBS's "60 Minutes" program Sunday night, but Politico reports that it originated in a book by Peter Schweizer, a research fellow at the
conservative-libertarian think tank, Hoover Institution, which is due to be released this week.
Schweizer says some lawmakers are coming up with the “ridiculous excuse” that they don’t make enough money. Speaking on CBS Monday morning, Schweizer was asked whether Congressional members try to deny or justify the allegations of insider trading and he said it was a combination of both.
House Speaker John Boehner and House Minority Leader Nancy Pelosi are mentioned in Schweizer's book as allegedly buying and selling stocks in companies at the same time that laws involving those firms were being discussed in Congress.
Turns out the questioned investments are totally legal, if unethical, because federal insider-trading laws do not apply to members of Congress. Schweizer says,
"The people who make the rules are the political class in Washington. And they've conveniently written them in such a way that they don't apply to themselves."
CBS reports that Boehner was among a group of lawmakers who allegedly traded healthcare stocks during 2009's healthcare debate. Boehner, as House minority leader at the time, led the opposition against the so-called public health-insurance option that called for a government-run health insurance agency to compete against private carriers. Days before the measure was killed in Congress, Boehner bought health-insurance stocks, all of which allegedly went up in price.
Boehner said during a news conference that he had
"Not made any decisions on day-to-day trading activities in my account -- and haven't for years. I don't -- I do not do it, haven't done it and wouldn't do it."
A Boehner spokesman says the healthcare trades were made by the lawmaker's financial adviser, who Boehner consults with about once a year.
Meanwhile, House Minority Leader Nancy Pelosi and her husband participated in at least eight initial public offerings, which is the first sale of stock by a private company to the public. These included buying 5,000 shares of credit-card company Visa Inc. in 2008 at an initial $44 share price, for a total of $220,000. It did well. The stock jumped to $64 a share, or $320,000, two days later.
At the very same time, The House, was discussing major legislation affecting the credit-card industry.
At a news conference, Pelosi denied that she would act upon an investment based on information she had as House speaker. She said the CBS story was based on a "false premise."
On Sunday, a Pelosi spokesman described Schweizer as a
"Discredited conservative author who has made a career of out attacking Democrats."
The spokesman also told CBS that corporate executives, members of the U.S. executive branch and all federal judges are subject to strict conflict of interest rules, but not the people who write the laws. He added,
"If you are a member of Congress and you sit on the Defense committee, you are free to trade defense stock as much as you want to. If you're on the Senate banking committee you can trade bank stock as much as you want, and that regularly goes on in all these committees."
But the big question, is why?