This is really crazy. Yesterday, the Wall Street Journal had this front page story about how congressional staffers are allowed to use information about policies about to be implemented to invest in stocks and make money.
At least 72 aides on both sides of the aisle traded shares of companies that their bosses help oversee, according to a Wall Street Journal analysis of more than 3,000 disclosure forms covering trading activity by Capitol Hill staffers for 2008 and 2009.
The Journal analysis showed that an aide to a Republican member of the Senate Banking Committee bought Bank of America Corp. stock before results of last year’s government stress tests eased investor concerns about the health of the banking industry. A top aide to the House Speaker profited by trading shares of Freddie Mac and Fannie Mae in a brokerage account with her husband two days before the government authorized emergency funding for the companies.
Now, this is called insider trading in the private sector, and people are going to jail for it. Now, whether one thinks that insider trading is a crime that deserves punishment is not even the issue here. What is stunning is that while insider trading is illegal in the private sector, it is totally legal for government employees to do it, because insider-trading laws don’t apply to Congress. Basically, Congress passed a law making insider trading illegal for the private sector and exempted itself.
Some lawmakers find the double standard shocking, and a few years back, a few of them proposed a bill that would prevent members and employees of Congress from trading securities based on nonpublic information they obtain. That bill went nowhere. Here is the interesting part — according to the Journal:
When the bill was introduced nearly five years ago, just 14 other lawmakers endorsed it. The current version of the bill has fared worse: Only nine lawmakers support it. There is no companion legislation in the Senate.
The whole story is here. And here is a follow-up piece about trying to make it illegal for congressional staffers to trade on information they gather while watching their bosses regulate the heck out of us.
They would not end up in jail. They would receive multi million dollar bonuses.
Reply to this commentLinkReport AbuseI now know the career path for my children---congressional aide; steal with the government's blessing s/o---sheeze!
Reply to this commentLinkReport Abuse"What is stunning is that while insider trading is illegal in the private sector, it is totally legal for government employees to do it....Congress passed a law making insider trading illegal for the private sector and exempted itself."
Uh, what's stunning about this? It's exactly what you'd expect (from Republicans and Democrats both, I might add). It'd only be stunning if it WEREN'T happening (or if someone ultimately managed to overturn it).
Reply to this commentLinkReport Abuse"Insanity in individuals is rare; in groups, political parties, and governments it is the norm."
Reply to this commentLinkReport AbuseMy mouth is hanging open here......
Reply to this commentLinkReport AbuseAnd so we learn it isn't just the lust for power that twists eager new Congressional office holders into morally untethered careerists. Much of it is pure greed. How nice for America.
Reply to this commentLinkReport AbuseMaybe 5 - 8 years ago I saw a study purporting to show that members of congress were the only group of investors with a better "win" record than actual wall street professionals.
All these people make it into the government- sometimes on merit and sometimes on their own dime. But they all come out with lavish assets and think-tank jobs for life.
There have been all manner of attempts to curtail this corrupting power- from term limits to salary caps. But it is clear that Government and the Rent Seekers will always figure out a way to line their pockets.
The only way around it is to reduce the power and money in government so much that the abuses are small, and the incentives to abuse even smaller.
Reply to this commentLinkReport AbuseHow to restore confidence?
Reply to this commentLinkReport AbuseFire them.
They did nothing illegal?
I don't care.
Silence on the part of Republicans is guilt after the fact.
"'"Insanity in individuals is rare; in...governments it is the norm.'"
But this isn't insane at all. It's quite rational. Governmental officials want easy money--after all, who doesn't? They have the power to provide themselves with special privileges that allow them to get easy money, so they do. Presumably they performed a risk-benefit calculation and calculated that the benefit from passing a law (cash from insider knowledge) exceeded the risks (the outrage of citizens and their ouster from office). The vast majority of Congresscritters seem to have survived in spite of their unwillingness to support reform, so their calculation appears to be correct. They're not irrational at all.
They are, of course, moral imbeciles, but we knew that.
Reply to this commentLinkReport AbuseThis law must make an exemption specifically for Congress, because I KNOW that it is illegal for DoD civilians to use insider/bid information for financial gain.
It isn't ALL the government that is exempt.
Reply to this commentLinkReport AbuseI guess you don't remember the ImClone scandal, whylie, where CEO Sam Waksal and Martha Stewart were both nabbed on insider trading charges after he learned the FDA wasn't going to consider ImClone's application for a cancer drug and passed the word on to Martha, whereupon they both started dumping shares -- and got caught and went to jail. Only now I realize that any Senate or Congressional staffers who could have done the same sailed merrily along.
Reply to this commentLinkReport AbuseSo the goal is to hold them accountable now that we know about this. Each person needs to contact their representative and Senators and ask them how they stand on this issue. ACCOUNTABILITY!!!
Reply to this commentLinkReport AbuseALL ANIMALS ARE CREATED EQUAL EXCEPT SOME ANIMALS ARE MORE EQUAL THAN OTHERS.
Reply to this commentLinkReport AbuseNo Huey, not all government is exempt. Just the part that makes the rules.
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