Congress Members Bet on Fall in Stocks

This can’t possibly be a good sign. WSJ reports:

from Asy arch at Wikimedia Commons

Photo: Asy arch (CC)

Some members of Congress made risky bets with their own money that U.S. stocks or bonds would fall during the financial crisis, a Wall Street Journal analysis of congressional disclosures shows.

Senators have criticized Goldman Sachs Group Inc. for profiting from the housing collapse. And Congress is considering legislation to curb Wall Street risk-taking, including the use of financial instruments known as derivatives and of leverage, or methods that amplify returns.

According to The Journal’s analysis of congressional disclosures, investment accounts of 13 members of Congress or their spouses show bearish bets made in 2008 via exchange-traded funds — portfolios that trade like stocks and mirror an index. These funds were leveraged; they used derivatives and other techniques to magnify the daily moves of the index they track.

There’s no evidence the legislators and their spouses used privileged information or failed to follow rules on disclosure. Congressional rules permit lawmakers and their families to invest in—or bet against—publicly held companies they oversee through committee assignments, as well as broader markets or indices. While some made money, others lost.

Some of these legislators have publicly criticized practices such as short-selling, or betting on a security to decline. In February, Sen. Johnny Isakson (R., Ga.) argued on the Senate floor that “we don’t need those speculating in the marketplace to take unfair advantage of the values of equities that are owned by Americans all over this country for the sake of making a buck on a short sale.”

[Read more at WSJ]

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  • http://disinfo.com ralph

    WTF?!? If this pans out: Remember, remember the 5th of November…

    Since when do members of Congress get to bet against America? INSANE!!!

  • Spooky

    On the one hand I can completely understand the urge to take advantage of an opportunity in the market that you see coming. On the other hand, those who influence the market directly or with a marginal degree of separation shouldn't be able to do so. And then on the other hand, Congress and Wall Street can get fucked with a rake for all I care.

  • Spooky

    On the one hand I can completely understand the urge to take advantage of an opportunity in the market that you see coming. On the other hand, those who influence the market directly or with a marginal degree of separation shouldn't be able to do so. And then on the other hand, Congress and Wall Street can get fucked with a rake for all I care.

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