Published December 01, 2011
As a result of the stock transactions revealed in my new book "Throw Them All Out" and featured on "60 Minutes," both the Senate Homeland Security and Governmental Affairs Committee and the House Financial Services Committee have been pushed to hold hearings on the subject of congressional insider trading.
Some of the individuals I have cited in the book as having engaged in stock deals serve on the very committees that will be conducting the hearings. That’s a little like asking a defendant to also be a juror at their own trial — an absurdity that could only happen in Washington.
Still, these hearings will give citizens and journalists a rare opportunity to see just how serious members of Congress truly are about cleaning up the cronyism and corruption rampant in Washington. It’s a pivotal moment that will hold electoral consequences.
Here, then, are some critical issues Washington watchers should look out for during the Senate Homeland Security and Governmental Affairs Committee hearings on December 1:
Two members of this committee were featured in "Throw Them All Out."
Sen. Claire McCaskill bought half a million dollars of Berkshire Hathaway stock just as the bailout was signed. Berkshire was a huge recipient of bailout money to the tune of $90 billion.
Will Sen. McCaskill explain what prompted her critically timed trade of $500,000 in Berkshire Hathaway stock?
Another member of the committee is Sen. Tom Carper, who also sits on the Health Subcommittee of the Senate Finance Committee. Sen. Carper was the point man on passing ObamaCare in 2009. He bought health care stocks that would benefit as he was pushing the bill, as I disclose in the book.
Will Sen. Carper explain his curiously timed health care trades? Or why he trades in health care stock at all, given that he was the point man for Obamacare’s passage? Stay tuned...
The House Financial Services Committee hearings will be held on December 6. Critical questions that must be addressed include the following:
Rep. Spencer Bachus, (R-Ala.), is one of the most egregious stock options traders in all of Congress. He also happens to be the chairman of the House Financial Services Committee the very committee that will be conducting the hearings in the House. Joining him will be Rep. Gary Ackerman, a congressman who received shares of stock he didn’t even have to pay for.
Will Rep. Bachus explain why he was engaged in 40 options trades during the 2008 financial crisis? And will Rep. Ackerman reveal why it’s okay to take take stock from a friend? We’ll have to wait and see.
Will the committees’ list of witnesses be comprised of experts who shrug at the need for congressional insider trading laws? Or will the witnesses represent a diverse range of legal and scholarly perspectives?
Early indications are that both Congressional committees have stacked the decks with witnesses who will diminish the need to make members of Congress follow the same insider trading laws that citizens are bound by.
Observers therefore should pay close attention to the witnesses called.
In "Throw Them All Out," I pointed out that during the 2008 TARP debate, eight members of the House Financial Services Committee were actively and aggressively trading financial and banks stocks before the bailout vote.
As the Wall Street Journal has also reported, senior staff members who work for members of this committee have also made very lucrative stock trades on banks, showing some remarkable timing. Will the hearings investigate these trades? And if not, why not?
Given Congress’s all-time low approval ratings, many citizens may not be terribly sanguine about the prospects for either of these hearings to produce serious results. However, members of Congress have a unique opportunity to respond directly to the will of the people by making it clear that the insider trading laws that apply to us also extend to members of Congress.
The eyes of the nation will be watching. And the voters stand ready to render their final verdict come next November.
Peter Schweizer is a fellow at Hoover Institution at Stanford University and author of the new book "Throw Them All Out: How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals and Cronyism That Would Send the Rest of Us to Prison."