If you're a member of Congress overseeing the government's response to the biggest financial collapse in a century, your personal trades should be beyond reproach. That's doubly important if you're the Majority Leader. It looks as if John Boehner, and many of his colleagues on both sides of the aisle, engaged in dubious transactions that fall far short of that standard.
Today, the Washington Post drew attention to the timing of Boehner’s 2008 trades. The day before Bush announced that Congress had agreed to his $150 million stimulus package to prop up the struggling economy, Boehner traded anywhere from $50,000 to 100,000 of his mutual fund into U.S. treasury bonds. This was one of only two trades over $50,000 that Boehner made that year. Not only does the timing of the trade seem convenient, the movement into government bonds, on the eve of a huge expenditure by the government, is suspicious.
Boehner was not alone in conspicuous trades immediately before the stimulus. At least 34 lawmakers, Republicans and Democrats alike, reportedly traded in the two days before Bush announced his stimulus package. Every Congressmen implicated in these deals emphatically denied involvement, with most arguing that their money was managed by an impartial third party.
(The Post provides a useful graph correlating the timing of lawmaker’s trades with Treasury Secretary Hank Paulson’s activities here.)
Although there is no evidence these trades violated existing ethics laws, they certainly raise concerns. Sayeth Bush’s chief ethics lawyer:
They shouldn’t be making these trades when they know what they are going to do... And what they are going to do is then going to influence the market. If this was going on in the private sector or it was going on in the executive branch, I think the SEC would be investigating.
Perhaps the Obama administration knew about these trades when it pushed for the Stock Act. The Act, which passed in March, prohibits lawmakers from acting on inside knowledge of the market based upon their official duties. The Stock Act ostensibly resulted from scrutiny into how the stocks of members of Congress dramatically outperformed the market from 2007 to 2010. But even after the Stock act, Congressmen, unlike most public servants, are still allowed to trade stock of companies that they oversee. That presents a glaring conflict of interest.
Where's there’s smoke, there’s fire. Even the appearance of a financial conflict of interest should be enough to refrain from action. John Boehner is rich enough already. The financial collapse in 2008 hurt almost every American, except, it seems, those whose staggering incompetence precipitated the crisis.
Will Darrell Issa investigate his leader's trades? Not likely.
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