Insider trading is usually illegal and a major issue for securities law enforcement agencies. However, insider trading by people in Congress, their staff and lobbyists is perfectly legal. The financial news program Marketplace reported this on September 17, 2009. At 9:35 – 13:50 of the 2009 Marketplace program, they reported that House minority leader John Boehner (Republican, Ohio) and Senate minority whip Dick Durbin (Democrat, Illinois) both made insider trades after they were told at an emergency meeting in September 2008 that the U.S. financial system was near collapse and urgently needed a bailout.
The next day Boehner traded out of a fund that was betting on a spike in inflation. Amazingly, Boehner was betting in 2008 that Congress, among other responsible parties, would fail to keep inflation under control. Durbin traded out of a mutual fund and put his money with Warren Buffett. Both denied taking any advantage of any inside information, even though that was obvious nonsense. Incredibly, Boehner went even farther and said that his stock broker made the trade without Mr. Boehner’s knowledge. Boehner’s feeble rebuttal is just the Martha Stewart “I didn’t do it” defense to insider trading. She earned convicted felon status for what she did. Boehner and Durbin never will.
Marketplace reported that over the last 15 years, people in Congress get better returns on their stock and securities trades than just about anyone else. The Wall Street Journal picked up on this issue a couple of days ago and reported that an aide to Nevada Senator Harry Reid made $3,500 on an insider trade. Of course, efforts to close the loophole have zero chance of success. Congress would need to regulate itself and there is too much easy money at stake for that.
Under the circumstances, any assertions from anyone in Congress about their high ethical standards rings false. This is just one example of bipartisan sleaze as usual in Washington. In fact, ethics is arguably irrelevant. The only thing that counts is what is legal and isn’t. For Congress, unless an activity is illegal, money talks and ethics walks.