Peter Schweizer, my editor at Big Peace, and a fellow at Stanford’s Hoover Institution was recently profiled on 60 Minutes. He exposed abhorrent behavior in which both Democrats and Republicans engage: insider trading.
Apparently, members of Congress are not subject to insider trading laws, despite having access to far more material, non-public information than the average American, or, for that matter, the typical hedge fund manager. Until I watched this 60 Minutes episode, I had no idea this was the case.
For instance, a Senator on the Armed Services Committee with classified knowledge of a forthcoming Defense Department weapon system contract with Company X, can legally act on that material, non-public information, and buy that company’s stock prior to public disclosure. Any other American would go to prison for engaging in similar activity.
These hypocrites are putting people in prison for doing what some of them do each day. This behavior is outrageous, unacceptable, and worthy of scorn.
America is truly broken.
I encourage everyone who reads this post to pass it along, and demand their members of Congress to support legislation that bans this corrupt and self-serving practice.
All investment decisions are based on inside information. Perhaps it ought not be illegal in the first place.
What counts as “public”. If lobbyists are able to gather “inside” information which they can “sell” to investors, then how does that differ from an article in the WSJ which only a minority of Americans read? Any definition of “insider trading” is necessarily arbitrarily defined because the line between “inside” and “public” is virtually undefinable, thus nearly impossible to enforce justly.
Elected officials back to our founders invested based on what they thought the government would do, therefore, the system is no more broken than it has ever been. With our better research capabilities and instantaneous knowledge it is likely less broken than before.
Congress and lawmakers always have been fond of exempting themselves from rules they make for others. This is only one more example. Indeed, the power to appropriate Other People’s Money by Police Force is a nearly irresistible temptation
All investments are not based on inside information. Those who have access to that information have a decisive advantage over those who do not. Investing is a zero sum game. There are winners and there are losers. If people could legally act on material non-public information as a matter of course, there would be no reason for outsiders to invest, because they would nearly always lose.
While Congress is demanding prosecution of people who acted on material, non-public information, they are doing the exact same thing on a grander scale. I’m frankly disgusted by it. The clip at the beginning of the post only shows Republicans engaging in these practices, but the full episode shows Democrats engaging in these practices with Congresswoman Pelosi, again, as exhibit A.
I agree – all investment decisions aren’t inside decisions. Thanks to your friend for bringing this to light. I would have never thought the practice of politicians doing this was so legal! I wonder how much it frustrated CBS and 60 Minutes to have to show Democrats participating in this, too? 😉
I heard Schweizer’s book and the light it sheds on the issue is causing some politicians to start looking at changing the laws. (Of course, whether it happens or not is another matter.) Interesting (but not surprising) how he beat the press to this issue. It’s also interesting to me that he’s effectively done more to get laws changed in a matter of days than Occupy has done with months of squatting. Wouldn’t it be great to have this book cause the true “shake up” that we need? I fear our apathy, however…
You’re right. He just quietly did his research for a year and bam! he publishes a book that will hopefully influence public policy.
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I still haven’t seen the episode, although I plan to, but from what I’ve read, there is an impression that while the recommendation to ban this practice may be worthwhile, the examples the show picked (Boehner and Pelosi) were misleading and unfair.
I don’t know how real this problem is, but I think that in this instance even the appearance of impropriety is enough reason to outlaw it, because it undermines confidence in our government.
I think it would be hard to call any piece on this either misleading or unfair if it’s true that these politicians have engaged in this practice, and it seems in fact that they have.
Short of that, however, I agree with your point that even the appearance of it is reason enough to outlaw it for the very reason you say – it undermines confidence.
Pelosi is actually notorious for this kind of stuff. In addition to her 60 Minutes spiel, she was also a hardcore supporter of the Pickens plan to use more natural gas. While I agree with some aspects of the plan, I certainly wouldn’t be championing it while I had tens of thousands (or hundreds of thousands) of dollars in funds that would directly benefit from the Pickens Plan.
Anyway, 90% of Congress is corrupt in one way or another. The fact that this practice still exists is firm evidence of that.
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