Legal Congressional Bribery Exposed by 60 Minutes

CBS 60 Minutes has another bombshell report. It seems while handing cash under the table to members of Congress is graft, offering pre-IPO stock, guaranteed to make a profit for an elected representative...isn't. In Congress: Trading stock on inside information, we have yet another blow by blow playbook on how to use your elected public office to get rich quick.

Where have we heard about pre-IPO stock options being doled out as graft before? Something about Citigroup, Goldman Sachs handing out pre-IPO stock options as kickback, favorable pricing and hyping the hell out of worthless startups? That's right, during the 2000 Internet bubble, known as the dot con era, pre-IPO stock was handed out like candy to a select few. Seems this type of corruption didn't go away with pets.com, instead it' has made it's way to Congress.

 

 

Here is the CBS transcript for the above report.

Pre-IPO stock is something the little guy cannot even get access to. It's rigged by the SEC. The CBS report comes on the heels of Roll Call's damning two year study on Congressional wealth. Roll Call proves Congressional members most often enter office middle class and walk out multimillionaires.

Members of Congress had a collective net worth of more than $2 billion in 2010, a nearly 25 percent increase over the 2008 total, according to a Roll Call analysis of Members' financial disclosure forms.

Nearly 90 percent of that increase is concentrated in the 50 richest Members of Congress.

That's right Congressional members got rich while we lost our jobs in mass. Green is also neither red or blue, as we've discovered no matter which party or Presidential candidate is elected.

While wealth overall is scattered fairly evenly between the two parties, there is an interesting divide in the two chambers. Democrats hold about 80 percent of the wealth in the Senate; Republicans control about 78 percent of the wealth in the House.

The researcher who exposed much of individual stock trades is die hard conservative radical Peter Schweizer. This guy is one whacked dude on economics, as in Glenn Beck, Sarah Palin level of whacked. That said, a stock trade and timing is a stock trade and timing and this time, it looks like he did his homework. Schweizer spent years pouring over Congress member's financial statements, tracing out stock transactions from tax returns and other public records. His book title on his finds, Throw Them All Out, captures America's sentiment towards representatives these days.

It was in his Tallahassee office that Schweizer began what he thought was a promising research project: combing through congressional financial-disclosure records dating back to 2000 to see what kinds of investments legislators were making. He quickly learned that Capitol Hill has quite a few market players. He narrowed his search to a dozen or so members—the leaders of both houses, as well as members of key committees—and focused on trades that coincided with big policy initiatives of the sort that could move markets.

Of course Congress made trading stocks with insider knowledge, or more importantly, the ability to pass or bury a law, perfectly legal.

Once again, the foxes are in the hen house.

Bachus was known in the House as a guy who liked to play the market, and in fact he was pretty good at it; one year, he reported a capital gain in excess of $150,000 from his trading activities. More striking is that Bachus boldly carried forth his trading in the teeth of the impending financial collapse, the nightmarish dimensions of which he had learned about first-hand in confidential briefings from Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke. On Sept. 19, 2008, after attending two such briefings, Bachus bought options in an index fund (ProShares UltraShort QQQ) that effectively amounted to a bet that the market would fall. That is indeed what happened, and, on Sept. 23, Bachus sold his “short” options, purchased for $7,846, for more than $13,000—nearly doubling his investment in four days.

Around the time Congress and the Bush administration worked out a TARP bailout, Bachus made another options buy and again nearly doubled his money. The House turned down the TARP proposal, and Bachus’s own Financial Services Committee remained clued in to revisions of what became the final TARP package. In the earlier closed-door briefings, Bernanke had warned the congressional members that a “meltdown in the global financial system” was imminent and that it would spill over into the broader economy if something wasn’t done. With TARP completed, Bachus seemed confident in its effect, now buying options that effectively bet that the market would rise—to mixed results.

Remember when financial reform was reduced to lobbyist loophole swiss cheese? The above might have something to do with it. Even when the entire globe is in meltdown, we could not get regulation on derivatives.

It's possible some elected officials could see the writing on the wall with markets. Case in point, we bought Proshares ultra short financials early 2008, but decided to buy it based on a host of financial facts that were publicly available. On the other hand, we sold the minute TARP popped up, knowing Congress would bail out the Banksters. It's no grand secret everyone Congress is owned, lock, stock and barrel by lobbyists and corporations. Corporations getting whatever bill and favor they want through Congress is so guaranteed, yes, you can bet your retirement account on it.

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Comments

LOL

While ridiculous photos, prostitutes and interns get the headlines, it's pretty rare those situations can get an amendment added to a law which governs the land or some legislative clause lobbyist do not like, removed. The fact even if a bill passes, conferees can go in after the fact and strike out major portions of a bill, says it all, that's usually 6 Congressional members, chosen by Senate/House leadership, simply trashing amendments and clauses after a bill has passed both Houses.

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