EXCLUSIVE: Financial Documents Suggest GOP Rep. Bachus Profited from ‘Insider Trading’ on TARP Bailout
by Wynton HallU.S. Representative Spencer Bachus (R-AL) had access to highly sensitive financial information during the 2008 bailout debates that may have helped him earn tens of thousands of dollars by trading stock options, even as most Americans’ portfolios took a beating.
On Sunday, Rep. Bachus’s trading behavior came under fire in a 60 Minutes report based on Throw Them All Out, the book by investigative journalist and Breitbart editor Peter Schweizer that has triggered a political earthquake in Washington. Schweizer, who is also a Breitbart editor, devotes a significant portion of the book to exposing possible congressional insider trading.
Bachus’s trades during debate over the Troubled Asset Relief Program (TARP) raise serious questions about whether he invested based on information he acquired as a result of his political power.
“Here’s the rub: all too often his trades coincided with his congressional work,” says Schweizer. “Bachus was neck-deep in crucial financial decision-making at the highest levels.”
BigGovernment.com has obtained and reviewed Rep. Bachus’s Fidelity stock options trading records. The dates of the congressman’s trading patterns paint a troubling picture.
In the summer and fall of 2008, Rep. Bachus–who is the current chairman of the House Financial Services Committee–was then the ranking Republican on the committee. That gave him access to high-level private meetings and phone conversations with then-Treasury Secretary Henry Paulson, among other senior financial officials.
From July to November 2008, by executing well-timed, highly risky options trades throughout the turbulent period, Congressman Bachus made at least 40 options trades that netted him as much as $50,000 in capital gains.The timeline of Rep. Bachus’s trades is unsettling:
- July 14th: Bachus bets $4,500 that the financial sector will fall, and sells short. Bachus comes up a winner and cashes out the next day for $1,500 in profit.
- August 15th and 22nd: the Alabama congressman buys over $11,000 of SPDR sector option contracts, and sells them a few days later for $5,000.
- September 8th: Paulson gets a troubling call from General Electric CEO Jeffrey Immelt, saying GE is having trouble moving its bonds. Two days later, Bachus shorts GE options four times in a single day, more than doubling his money.
- September 10th and 15th: Bachus shorts GE a total of 12 times and comes up a winner 9 times—an impressive average for the high-risk options game.
- September 18th: Bachus and congressional leaders receive a private briefing from Paulson and Federal Reserve chairman Ben Bernanke inside then-Speaker Nancy Pelosi’s office. Bernanke warns of a total financial meltdown in a matter of days. The very next day, September 19th, Bachus shorts the market by buying contract options on Proshares Ultra-Short QQQ, an index fund that strives for results 200% of the inverse of the Nasdaq 100. He nearly doubles his money when he sells his shares four days later for over $13,000.
- October 21st: the Federal Reserve announces it will spend $540 billion to buy debt from money market mutual funds. The next day Bachus buys over $5,000 of options in Market Vectors TRN, and more than doubles his money.
How Rep. Bachus had the time to juggle his frenetic stock-picking with his actual job as a legislator remains unclear. But Schweizer says Spencer Bachus’s lucrative investment habit predates the 2008 financial crisis, stretching all the way back to 1997. In fact, in 2007, Bachus made enough supplemental income from buying stocks that he almost doubled his total $165,200 congressional salary with $160,000 in profits from his put and call options on stocks.
In Throw Them All Out, Schweizer catalogs several other incidents in Bachus’s unusually good stock track record, dating back nearly fifteen years, and concludes that “in over two dozen cases, representing more than two-thirds of all the trades he made, he guessed correctly.”
Jeff Emerson, a spokesman for Bachus, told Schweizer there’s nothing wrong with the congressman’s actions. “There is no conflict of interest,” says Emerson. “He asked the [U.S. House of Representatives] Ethics Committee if he could do this, and they said there’s no problem.”
Indeed, therein lies the real scandal; congressional insider trading is totally legal, no matter how egregious.
Schweizer is careful to point out that it is impossible to know with 100 percent certainty whether Rep. Bachus had perfect and prior insider knowledge that led to each of his scores of option trades. Furthermore, Schweizer notes that the Alabama congressman was hardly the only member of Congress engaged in aggressive and heavy trading throughout the financial crisis.
Still, says Schweizer, the opportunities for misconduct and undue influence are too glaring to ignore.
“If you bet on a particular sector of the economy to fall over the course of a few days or weeks,” writes Schweizer, “how can you be sure that your subsequent decisions are not influenced by that bet?”
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102 Comments
Keep it fair……Don't forget the Democrats!!!!
America is Hoodwinked by politicians of all political persuasions, it seems only the Republicans are held accountable and of those just a chosen few!!!!
We need to put a stop to members of Congress using inside information to make money for themselves. Only then will the people begin to trust their representatives again.
I'm long tar and feathers.
I'm short confidence and patience.
Many, many, many, many more firings are required in 2012! 2010 was just the start.
I don't remember, was he one of the guys we attempted to replace in '10? I sure hope he was. It does seem like CBS focused on the R's (besides Pelosi) but at this point I just want all corruption out of there no matter what side it's festering on.
Keep it coming. Even if congress won't do anything about these criminals, exposure of them ought to set their constituents against them in these hard economic times. New candidates will have to promise to end this insider trading garbage. And then, will have to throw the newbies out when they don't keep their promise. A new congressional representative every term should disrupt some of their criminal behavior. A congress of criminals is what we have. No wonder they can't run the government decently. They are too busy playing the stocks.
Oughta be fun when all of Pelosi's stuff comes to light.
Now the democrats are in a pickle. If they want Bachus out, then they can't oppose the GOP wanting to throw out Pelosi. Fair is fair.
TERM LIMITS might just take care of some of this BS. Otherwise we're just asking for more and more of the same.
I can't wait to see if Jim Cramer talks about this tomorrow on his Mad Money show.
.
Disheartening, to say the least.
This Congressman should've spent his time making gov't more efficient, instead of making some easy money.
We have the power to get rid of every single congressman in office right now. Every American should vow today that they will not vote for any incumbent Congressperson in 2012. Let the primaries begin!
If he did…. then throw the phucker out!
I have a bumper sticker on my car that says "Throw all incumbents out." I do believe that is the only way to take back our government. The incumbents are too entrenched in the swamp that D.C. has become. There is way too much pressure on freshman congress critters to not rock the boat. All personnel who staff the offices have to go, too. We need to start over and then we the people need to remind them daily who they work for. Out with lobbyists. Out with incumbents. In with patriots who love their country first and will represent the constituents who sent them to D.C. They should not spend their time in D.C. They should spend most of their time in their home district with only a few trips to D.C. each year. I'm tired of supporting these leeches – I don't care what their political party is. If they're getting rich on my dime, OUT!
Disheartening yes, but zero tolerance for getting rich off the backs of us true American's. This is BS and incestuous…..
I have NO patience for this no matter what political party. I firmly believe both party's do it and we all must kick them all out.
"Indeed, therein lies the real scandal; congressional insider trading is totally legal, no matter how egregious."
If it's not illegal, it's at least unethical…Refer this to the "ethics committee"..Right..
I don't care if their name has a D or an R next to it. If they have been using their elected offices to build their personal finances they need to go. The laws have to change to make it illegal for anyone to engage in insider trading. No one should be above the law, especially the people sent to serve us.
Under Federal Law he committed Treason against the United States of America in time of War and he must be punished to the fullest extent that the Law allows.
Jeff Emerson, a spokesman for Bachus, told Schweizer there’s nothing wrong with the congressman’s actions. “There is no conflict of interest,"
lol… who does he think will believe that garbage?
Keep it fair? It should be about keeping them honest, regardless as to the letter after their name.
The Stock Act was first introduced in 2009 by some Democrats to specifically deal with congressional insider trading. It didn't get anywhere. They tried to revive it a couple more times and still it wouldn't go anywhere. Gee, I wonder why? The dam Dems don't want it either.
I just bet, after the 60 minutes segment on this, they will introduce it again and the press will call them heros. Of course, they will only mention the bad Republicans.
In the end the Repubs will take a beating and the Dems will skate. Just you wait and see…..
I would add, we should strip all the perks too, their health ins and their retirement plan is ridiculous. We kept raising their privileges thinking it would make them less likely to do these unethical things… It hasn't worked! Some time back it was even discussed that we should have reps work from offices in their districts, and only go to DC a couple of times per year. Lower salaries would insure they would need to continue working, which might leave them less time to figure out how to steal from us.
Well, it sounds like insider trading, and if it is then hang him (legally speaking of course) and any other congress critter, senatard, or political appointee as well, no matter the political party, connections, or "friends"
The downside for term limits is that it will just get these phuckers to do their dirty deed on warp speed instead steadily over the years.
Our society led by these a$$-bytes have brought us all down to the lower depths of Hell……
Are we doing the tax payer revolt/ stop paying thing now? $&@?!#%{¥£€!!! They have lost my consent to be governed.
And he should have wagered real money, rather then the chump change!
This story highlights the dangers of a professional political class. No where did our founding fathers envision people who would make careers out of politics. It was an aspect of the English system that they abhorred. They desired a system of laws that made no respect of persons, rather than a class of career politicians who could do as they pleased. We need to change the House of Representatives as often as we need to keep them honest, and not vote for incumbants just because they are incumbant. Laziness breeds contempt, and our nation has suffered untold damage due to people who have made careers out of being politicians who have contempt for the people.
Done!
On his plucking head!
All great points and should be enacted immediately. Of course all you listed is the one thing we can look forward to if their diddling destroys the world wide economy.
Hang the plucker!!
I'd like to see a single liberal news site report something like this about a Democrat. They'll run with the negative stuff about Republicans, but they'll bury anything bad about the left.
I don't know why this is a surprise. I'm sure it is tit for tat with most of Congress.
We know they (politicians) are crooked. That's what a career politician usually is.
But since Congress is mostly Democrats right now it probably leans heavy in their favor.
We need to get them out and put in Congressmen that will be honest and pass the trading bill.
We also need to set term limits for congressmen. There's too much temptation for this behavior.
We also need to get rid of lobbying.
We the people, need to take back our country.
I agree with your "warp speed" prediction, but that will lead to MORE mistakes, which will allow us to put many more of them behind bars, once we have a good law on the books.
.
It is such a travesty that this great nation is being brought down by the several hundred members of congress and the senate.
There's a large amount of scum on both sides of the political aisle. These are the ones taking advantage and expanding the size of government. It's both R's and D's.
Well who do you think is going to sponsor that legislation? Term limits is the only way, but fat chance anything like that would pass either.
I actually cried last night, thinking about how corrupt my government is. This is not what this country was supposed to be. If we all read the Federalist Papers, we would be so much smarter and wiser. Our Founding Fathers were so wise…
Danger!!!!!!!!! Remember when a few Congressmen were caught breaking campaign finance laws?
A reminder: Nothing tangable BUT, out pranced McCain and Feingold cheek to jowl "promising' America there would be…NEW LAWS!
Yes! Aren't we just THRILLED!
It seems Americans WERE and completely off guard.
Now watch for it! It will come from Washington VERY SOON! Several congressmen are going to call for NEW LAWS to "address this problem." and all they'll be doing is making life easy for the likes of Pelosi , Bachus and other losers.
The new laws will do NOTHING to deal with these jerks and will infringe on OUR rights to free speech and property rights. They're planning it right now! And in true Left Wing fashion it will punish the innocent and let the guilty off! THAT's what McCain Feingold was all about! And it was called "Campaign Finance Reform."
Like,THAT worked, didn't it?
I don't care what party they are a part of…they need to be prosecuted…period!
http://www.youtube.com/watch?v=eAaQNACwaLw
http://www.americanthinker.com/blog/2011/10/willf...
those that didn't watch 60 minutes would be well served to watch
I knew there was corruption in DC, but had no idea there were new industries cropping up in regard to non public information gathering by hedge fund managers. I feel like a dumbschit for working hard, following the rules and paying taxes. Apparently the only folks that aren't LOOTERS, are people like you and I. WOW.
damn straight. Shady is shady, regardless of the party.
THAT is the biggest difference between conservatives and liberals. We'll punish our own if we catch their hands in the cookie jar. It comes down to one character trait. Morals.
It's high time we need to throw out dirty, crooked politicians from Congress and the White House in 2012, Republican and Democrat!
Heads on a Stick! Heads on a Stick!
Story of the century!
Let's see from the Washington Times: Tuesday, April 21, 2009…
On the day the new Congress convened this year, Sen. Dianne Feinstein introduced legislation to route $25 billion in taxpayer money to a government agency that had just awarded her husband’s real estate firm a lucrative contract to sell foreclosed properties at compensation rates higher than the industry norms.
Mrs. Feinstein’s intervention on behalf of the Federal Deposit Insurance Corp. was unusual: the California Democrat isn’t a member of the Senate Committee on Banking, Housing and Urban Affairs with jurisdiction over FDIC; and the agency is supposed to operate from money it raises from bank-paid insurance payments – not direct federal dollars.
Documents reviewed by The Washington Times show Mrs. Feinstein first offered Oct. 30 to help the FDIC secure money for its effort to stem the rise of home foreclosures. Her letter was sent just days before the agency determined that CB Richard Ellis Group (CBRE) – the commercial real estate firm that her husband Richard Blum heads as board chairman – had won the competitive bidding for a contract to sell foreclosed properties that FDIC had inherited from failed banks.
About the same time of the contract award, Mr. Blum’s private investment firm reported to the Securities and Exchange Commission that it and related affiliates had purchased more than 10 million new shares in CBRE. The shares were purchased for the going price of $3.77; CBRE’s stock closed Monday at $5.14.
Spokesmen for the FDIC, Mrs. Feinstein and Mr. Blum’s firm told The Times that there was no connection between the legislation and the contract signed Nov. 13, and that the couple didn’t even know about CBRE’s business with FDIC until after it was awarded.
Bachus barely registers on any scale.
Any moron who even remotely tries to downplay the scale of other graft in Washington from GE to Soros to Warren Buffet and all the way back to Chicago's own slum lords prowling the halls of your White House like its all the same "wrong is wrong" by using this Bachus stuff, Bernie Madoff would like to discuss his shoplifting charges with you.
They are keeping it fair, they've let the cat out of the bag on Nazi Pelosi as well..
Personally I'm ready to rehabilitate Bernie Madoff and put him in charge of unwinding the dealings of all these political prostitutes. He is indeed a piker next to them. He didn't understand where the real opportunities lay.
Little did Bernie know all he had to do was join his party of choice in the throne room and he'd have been one of the Untouchables too.
If you want less efficient markets operating on less information, then go after "insider trading". Me? I'd rather what they know be incorporated into market prices so that the market can operate more efficiently. This is a distraction from the real issue, which is the power of government to affect so many economic decisions in the first place.
Party doesn't matter in the least.
You play, you pay.
Agree with your last sentence, but how does insider trading make the market more efficient?
It makes you wonder……
You keep promoting your new candie "Heads on a Stick". Product Marketing isn't appreciated here!
(I'll take about 26 of them myself before the next election cycle if you please)
I'll stand by this against anything:
The health of a Nation is inversely proportional to the number of Lawyers it contains.
- Me, unless somebody said it first…..
On the surface, yes.
Scratch beneath the surface and this nation is being brought down by a corrupted educational system.
Like the books title says, "Throw Then ALL Out!".
We need to replace them ALL, every single one.
Maybe a couple of the Tea Party crew elected in '08 are OK.
We can keep Cantor and West and the new guy in SC, but that's about it.
No one argues that Mexico isn't an extremely corrupt government. When Mexicans enter the US, do they leave their tolerance for corruption at home?
" All laws that apply to the American people SHALL apply equally and WITHOUT EXCEPTION to ANY elected official, State and Federal…" If we don`t demand this – accompanied by term limits, in the 2012 group of wanna be`s – it`s on us. no excuses- no compromise, we don`t get control back this cycle – we never will. You choose. http://www.starznbarz.com
"Jeff Emerson, a spokesman for Bachus, told Schweizer there’s nothing wrong with the congressman’s actions. “There is no conflict of interest,” says Emerson. “He asked the [U.S. House of Representatives] Ethics Committee if he could do this, and they said there’s no problem.”
NEWSFLASH – The two wolves and the pig have reached a unanimous decision on who to have for breakfast!
Funny, but not. I was on another thread about this and the dems seem to want to say, "But so and so, R, did it first."
I'm sorry, what's the point? Oh, yes. Whomever is guilty should be thrown out. What idiots. Children in adult bodies.
Lets waterboard the whole bunch of them and find out the truth and then throw them out.
Excellent. Thanks to Breitbart. Lets keep THIS on the burners for the next twelve months. This is issue #1.
Do you suppose this could be a teaching moment of parents to their wayward college educated fool children?
The criminals are all in one place: Washington DC. Protest that!
You hit the nail on the head.
Beck said only 15 of the 70 Tea Party House members have kept their word. Fine. They were warned. O.U.T.
Next. We keep doing this until we fix the problem. The solution: Congress SHOULD be afraid every two years and be held accountable for their criminal conduct. We do that by NOT re-electing them to their permanent wealth jobs.
Can Breitbart's investigative team find out when the benefits begin for those elected to Congress? I think we should know when they qualify for permanent benefits and retirement as I think it is one year in office. We need as much light on these cockroaches as possible for the next 12 months. Perhaps their constituents will wake up and boot all incumbents.
It is true. They write the laws to protect themselves. Therefore there is no conflict of interest (rule of law for the rest of us imposed by Congress).
You are correct. 536 people responsible for the destruction of the United States; all members of Congress plus the President. No different than Greece and every other failed system including communism: They enrich themselves with their green agenda and any other kook ideas (look at the Euro socialist experiment) and destroy the people's lives who have financed their abuse.
…if he took one for the team or merely himself. For such a successful grifter to have existed in the financial game, it took a lot of people not only looking the other way but outright ignoring Bernie's bookkeeping. No auditing in America?
Perhaps, if their motive was the good of the country, as opposed too, what’s in it for me? Barry’s Brats are the Cousin Eddie generation, holding out for a management position.
Huh? Insider trading is an artificial construct in the financial markets. It is 100% fabricated through manipulating the outcome when committed via the government. I'll bet you the brokerage houses themselves invested according to the trades THEIR politico were making. Comprehend.
The amount of monies in the system are basically fixed. For one to do well in Company A there will also be a loss of value in Company B. There has never been an across the board appreciation in the valuations of the companies making up any of the Exchanges. A correction from deflation/inflation certainly but even within that you still get your winners and losers.
The true issue here is actually this:
Where do the financial interests of the politico meet the American financial and industrial sectors. I'll bet you see more $$$ in government contracts being awarded to family and friends than has ever been made by any member of the politico's personal broker.
Any wonder the lawyers were themselves the first to realize the importance of holding sway over government from within?
Too bad the Kennedy's are sacrosanct. I'd bet old Joe made a killing off of political precognition.
Let's get this straight— Congress started raising salaries and benefits so congress critters would be less likely to steal from us, right? I mean, if we feed them well and give them more retirement and better medical and all sorts of perks, they surely won't then go out and take advantage of the power we gave them, right?
We have the power and the ability to FIRE every single congressman every two years…and we damn sure SHOULD!!
However, if you watched the 60 Minutes "expose" you would have noticed that whenever a Republican was named, the party affiliation was also mentioned. However, when a Democrat was mentioned, no party affiliation was mentioned, in every single case.
Bias raises it's ugly head in the most subtle of ways.
This is why so much money is spent to get into politics. You wonder why these pols jump through all these hoops to get these positions and this is why. Power and money. it is corruption and something should be done.
It's John and Ken's brand (KFI 640 firebrands). I'll have to tell them it's time to productize!
Make a list of ALL pols in Congress and tell the people exactly what they are doing with insider trading. Let the facts fall where they are and lets clean house and start over. NO EXECPTIONS. NEVER STOP LOOKING.
It will take a great deal more than that before I EVER trust a politician.
"I'll bet you the brokerage houses themselves invested according to the trades THEIR politico were making. Comprehend."
Yes and calling all of their buddies, and their buddies did likewise.
The whole thing stinks to high heaven.
Bacchus – Roman god of wine and inspired madness.
What's in a name, right?
Thank you for the info…I looked it up and posted it here for others. The fraud in our White House is circumventing our Congress AND…most importantly…our Constitution…and it needs to be stopped.
Everyone needs to call/email your reps and tell them to support this bill to kill the executive order privilege as is…ASAP! It is nothing more than a tool for the dictator 'wanna be'!
http://www.govtrack.us/congress/bill.xpd?bill=h11...
These same immoral, unprincipled people would throw you & me in jail for the same offence(s).
They should be held to a HIGHER Standard.
“Our government… teaches the whole people by its example. If the government becomes the lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy.” Louis D. Brandeis
You know I have to say I am embarrassed. Bachus (pronounced back-us not bock-us like the media likes to say) is my congressman. I always liked the guy. He always struck me as a decent stand-up kind of guy and never faces any real challenge because he represents a heavily Republican district. Even got an email from him telling me what a great guy McCain is and why he's supporting him. I replied there is no way on God's green earth I could ever vote for McCain for a myriad of reasons. Got a nice email back (generic) saying he respected my opinion, yada, yada, yada.
But now all this comes out and I am in dismay. Turns out he's a sleazeball. I always laughed at people who would say "All politicians are corrupt" because they really were not well informed. I have to say I really don't care if he's a Republican…a conservative one at that. He is scum and one more reason Washington is out of control. Until America rises up and cleans house of everybody this problem will continue to exist and we will all pay the price.
I fear for our country…more so than ever in my life
To show insider trading you must show he knew a fact that the general public did not. Having an opinion that turns out to be correct more than the general public is not insider trading. The only thing that might come close in the list above is the September 18th event because that meeting was closed door, but then you would have to look at what info was in the press that day versus what he learned from Bernacke. The GE bond trading was public unless GE CEO said more than what was reported here.
If he was using congressional assets and time for trading, that would bust him.
i say we just hold them under until the bubbles stop.
Hmm. To keep it fair, we need to look carefully at this. I expect that this is what the investigative report will accomplish.
For example, if in fact Bachus checked with the ethics committee and got clearance before embarking upon his financial dalliances, or we learn that this was a long-accepted practice by the committee, then our ire really needs to be focused on understanding why it's considered acceptable, and changing it as (is almost certainly) appropriate.
It certainly looks terrible from here, and I'm reminded a bit of the British MP expense-padding scheme revealed last year. That was winked at, but not officially accepted — and a lot of the bums were thrown out.
This trading may be officially accepted! And if so, we would start by reviewing, and probably throwing out, the ethics committee and starting that process over from scratch.
The big question: How do we create a system that incentivizes good behavior? Our current scheme, unfortunately, tempts even good people to play along, and many of them are far from good people.
===|==============/ Keith DeHavelle
Term limits creates MORE of it. You will create a lot of lame ducks!
More precisely, he was the god of wine and pleasure. A self-gratifying hedonist.
Wow. There's no parallel there at all, is there?
The elected layer of government is like the top 1/4" of sugar frosting on a cake that is 18 feet deep, made of dung that is 80-years old. Changing the frosting is not going to 'fundamentally transform' the 'flavor' of our out-of-control government. Only a deep, wide and consistent movement of the people can overcome this monster that is quickly becoming our slave master. It must start (and perpetuate) with principled action guided by Constitutional insight and wisdom. It is not anything that will appeal to MTV or SNL.
Looks like all you MFer Ds and Rs are starting to get your beat down. It's about time! THIS is the non-partisan type of reporting I support. Sounds like these congress members were busing shorting the mess instead of sorting the mess.
the late Paul Harvey did one of his radio commentaries on congressionial insider trading in 2002. The biggest 2 offenders during the time he stated were JOHN KERRY and JOHN GLENN, two commie rats. During the aftermath of 9/11, the stock market dropped an avg of 16%, yet the commie pig Kerrys portfolio increased 23%. Can you say insider trading?
Both parties are two different sides on the same corrupt coin! Washington is a cesspool BUT the good news is that the citizens are catching on….All you professional politicians should take note your days are numbered!
one-trust funds would be even better. that way they couldnt add to them while in office.
throw. him. out.
Why is insider trading NOT a crime if you're a Senator or Congressman? WTH?
Whenever does U.S. Representative Spencer Bachus have the time to do 'congress-stuff' ? Is trading like a part-time job one can do whilst posing as a U.S. Rep?
I've asked my Representative to put forward a bill that does away with the special treatment members receive on taking lobbyists money and insider trading. I've asked him to call for a roll call vote. The measure will not pass, but these Congessmen and women need to have thir vote plastered all over the press.
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