CBS’ flagship 60 minutes programme carried a feature Sunday night that looked at whether Congressmen have been trading stocks based on insider information. It’s a theme that’s been well covered in the blogosphere but last night it reached prime-time.
CBS didn’t allege any illegal behaviour — Congressmen aren’t subject to the same legal rules around the use of material non-public information as the rest of us — but it did refer to circumstantial evidence that members of the House may have taken advantage of confidential information they received.
Here’s the video (it’s about 15 minutes long):
Americans are fed up with their politicians — witness Occupy Wall Street, the Tea Party or single-digit approval ratings for Congress. Even if, as is likely, Congress has done nothing illegal, the CBS report will only (justifiably) anger people more.
For what it’s worth, we found the Spencer Bachus (R) and Nancy Pelosi (D) allegations the most disturbing. But to repeat, no laws have been broken. However, this only further supports the view that the American game is legally rigged to favour the rich and powerful. We saw last year in the UK how corrosive politicians playing the system can be to the body politic.
Fortunately, FT Alphaville has a couple of ideas for how to fix this mess.
1. Beat ‘em: A perfectly sensible bill has been gathering dust in Congress. The “Stop Trading on Congressional Knowledge Act” would increase disclosure and prohibit trading on stocks that are influenced by “pending or prospective legislative action”. It should be passed. (Additionally, Congressmen should place their investments in a blind trust when they take political office.)
2. Join ‘em: This is offered in jest but since Congress doesn’t have a great record at looking out for the wider interest, how about giving the rest of the country the option to take advantage of its smarts? When President Obama was selling his health-care plan he often said that ordinary Americans should get the health-care available to those in Congress. Extending this logic suggests that US 401(k)’s should be able to invest in what we’re calling The Keep America Safe Job-Creating Congress ETF, a fund that tracks the investments of this nation’s lawmakers.
Any takers?
Related links:
Insider trading in the House… – FT Alphaville
Insider trading: go for it, Senator – FT Alphaville
Megan McArdle on Congressional Insider Trading – ProfessorBainbridge.com