Congress: Trading stock on inside information?

TL;DR

Congressmen and Senators in Washington engage in insider trading and self-dealing, taking advantage of their privileged positions for personal financial gain.

Transcript

60 minutes rewind the next national election is now less than a year away and congressmen and Senators are expending much of their time and their energy raising the millions of dollars in campaign funds they'll need just to hold on to a job that pays 174 thousand dollars a year few of them are doing it for the salary and all of them will say they'r... Read More

Key Insights

• 💁 Lawmakers in Congress engage in insider trading, exploiting their access to non-public information for personal financial gain.
• 👻 Congress exempts itself from insider trading laws, allowing members to trade stocks freely.
• 🤝 Lawmakers also profit from land and real estate deals, government earmarks, and access to initial public stock offerings.
• 💁 The stock Act, which aims to make trading on non-public information illegal, struggles to gain support in Congress.

Questions & Answers

Q: How do Congressmen and Senators engage in insider trading?

Congressmen and Senators have access to non-public information, and if they trade stocks based on that information, it is deemed legal. This privilege allows them to make profitable trades that regular citizens cannot.

Q: Why does Congress get a pass on insider trading?

Congress has conveniently defined the rules to exempt themselves from insider trading laws. The people who make the rules are the political class in Washington, protecting their own interests.

Q: Have congressional leaders violated any laws through stock trades?

There is evidence of congressional leaders engaging in stock trades based on non-public information. For example, Alabama Representative Spencer Bachus made profitable trades after closed-door briefings on the financial crisis.

Q: Are there other forms of self-dealing in Washington?

Yes, lawmakers also profit from land and real estate deals. For instance, former Speaker of the House Dennis Hastert received a federal earmark that increased the value of his land, which he later sold for a significant profit.

Summary & Key Takeaways

• Many lawmakers in Congress accumulate significant wealth beyond their salaries, with some engaging in insider trading on the stock market.

• Congressmen and Senators have access to non-public information and plenty of opportunities to trade on it, while being exempt from insider trading laws.

• Lawmakers also profit from land and real estate deals, government earmarks, and access to initial public stock offerings.