The perception among many Americans is that there’s no shortage of corruption in Washington or on Wall Street, and a new report finds possibly unseemly activities between dozens of Capitol Hill staffers and the businesses their offices tasked with keeping honest.
At least seventy-two Congressional staffers traded stock shares of companies their bosses were involved with overseeing and writing laws for in 2008 and 2009, a Wall Street Journal investigation found Monday.
Although the aides in question denied that they were involved with unethical activity, their positions afford them access to information that individuals who are trading could profit from. “Even if they had done so,” the Journal notes, “it would be legal, because insider-trading laws don’t apply to Congress.”
The report points to staffers from both major political parties who could be at fault, and says the activities were occurring primarily in the financial services and energy industries. It opens by highlighting the activities of Chris Miller, an energy policy aide to Senate Majority Leader Harry Reid (D-NV).
Chris Miller nearly doubled his $3,500 stock investment in a renewable-energy firm in 2008. It was a perfectly legal bet, but he’s no ordinary investor. ..
Jim Manley, a spokesman for Mr. Reid’s office, initially defended Mr. Miller’s purchase of shares in the company, Energy Conversion Devices Inc. He said the aide had no influence over tax incentives for renewable-energy firms, and that other factors boosted the stock.
But on Sunday, Mr. Manley added: “Mr. Miller showed poor judgment and Senator Reid has made it very clear to Chris and all his staff that their actions must not only follow the law, but must meet the higher standards the public has a right to expect from elected officials and their staffs.”
In another example, an unnamed aide to a Republican on the Senate banking committee made a profitable purchase of Bank of America shares before the government’s “stress test” on financial institutions was released last year. Another aide to energy-interested GOP lawmakers allegedly made money by trading renewable energy stocks.
The Journal notes that some aides traded up to tens or even hundreds of thousands of dollars in shares of companies their bosses are responsible for overseeing.
Perceptions of potentially dodgy links between Capitol Hill and Wall Street have been deeply exacerbated in recent years following the taxpayer-funded bailouts of financial institutions following the economic meltdown of 2008. This story only adds fuel to that fire.
Yet the Journal’s insinuations may be overblown, posits business writer Felix Salmon of Reuters. Describing the article as a “non-story,” he argues that the instances of profitable trading activity among the aides surveyed were hardly more prevalent than those in the populace at large.
“The fact is that if you took two years of trading data from 1,700 upper-middle-class American households, you’d certainly find a handful of profitable trades in there,” Salmon wrote. “And there’s no indication in the WSJ story that what they found was anything more than you’d expect from chance alone.”