March 25, 2020

Senators Sell Stock

“Senate Intelligence Committee Chairman Richard Burr sold up to $1.7 million worth of stock on Feb. 13 in 33 separate transactions after offering public assurances the government was ready to battle the virus… Senator Kelly Loeffler also sold millions of dollars in shares in the weeks after lawmakers were first briefed on the virus, according to public filings… Republican Senator James Inhofe and Democratic Senator Dianne Feinstein also sold stock, according to filings, but both said they were not involved in the transactions.” Burr claimed that his trades were based on publicly available information, while Loeffler stated that she was not involved in the trades and only learned about them several weeks later. Reuters

Both sides are most critical of Burr:

“Even if senators are not technically engaged in illegal activity, selling off hundreds of thousands or millions of personal stock right before the stock market craters is not a good look as many Americans scramble to figure out how they will pay for rent or groceries.”
Ella Nilsen, Vox

“For a public servant, it's pretty hard to imagine many things more immoral than doing this. Richard Burr had critical information that might have helped the people he is sworn to protect. But he hid that information and helped only himself. Instead of sounding the alarm, alerting the country, goading the government into action as an ethical person would have done, Burr told easy lies that in the end may have killed people.”
Tucker Carlson, Fox News

“In a Feb. 7 opinion piece for Fox News, [Senator Burr] and his co-author, Senator Lamar Alexander of Tennessee, a Republican, boasted of how well Congress and the Trump administration had prepared America to deal with whatever public health threats came its way… On Feb. 13, Mr. Burr began a series of stock sales…

“There may, of course, be perfectly reasonable explanations for what, initially, appears to be illegal — and morally reprehensible — behavior. Mr. Burr and Ms. Loeffler deserve the opportunity to provide those explanations. The Senate should initiate an ethics investigation of all accusations, and, if warranted, refer relevant findings for criminal prosecution… That said, explicit criminality aside, the real scandal here is the way in which these public servants misled an already anxious and confused public. In times of crisis, the American people need leaders who will rise to the occasion, not sink to their own mercenary interests.”
Editorial Board, New York Times

“Americans have been generally frustrated by a certain level of unfairness surrounding the response to coronavirus: It seems like every wealthy actor and athlete in the country has been tested for the virus while the average Joe struggles to even find out where testing exists. But for a sitting US senator to profit off of this disaster in so callous a way is simply beyond the pale

“Burr’s defense that he liquidated a third of his wealth because he saw a segment on CNBC that spooked him is flat out not going to cut it… People are scared and with good reason: They are losing their jobs, fearful for their health, disconnected from loved ones and nobody knows what is going to happen. If Richard Burr can’t put the interests of the American people above his own financial interests, then he must resign.”
David Marcus, New York Post

Other opinions below.

See past issues

From the Left

“There is clear evidence that members of Congress profit from their position through equity trading—a problem that was more acute before the passage of the 2012 STOCK Act, which tightened insider-transaction rules for public officials… One analysis of 61,998 stock trades made from 2004 to 2010, for instance, showed that politicians outperformed the market by 20 percent, with the portfolios of high-ranking Republicans beating the market by a whopping 35 percent…

“The fix is simple and obvious, deployed in many of our peer countries: Just don’t let public officials be active investors. One option would be to require members of Congress, their household, and their staff to sell individual equities and instead to put their money in things like index funds and diversified mutual funds. This would mean that politicians would benefit from bull markets, but that they would be unable to make bets on specific companies and market sectors. Another option would be to ask members of Congress to put their holdings into a blind trust… The country should not have to wonder whether politicians’ stock trades were corrupt. It should not have to think about politicians’ portfolios at all.”
Annie Lowrey, The Atlantic

“Members have repeatedly exempted themselves from laws applicable to the rest of us. Examples include the Freedom of Information Act; the Government in the Sunshine Act; Title VII of the 1964 Civil Rights Act; the conflict-of-interest prohibition of the federal criminal code, 18 USC 208; the Occupational Health and Safety Act; and, the National Labor Relations Act… Congress also indulges in legalized extortion of its members. For both Republicans and Democrats, plum committee assignments and chairmanships are awarded by the Republican and Democratic leadership based on party fundraising…

There is no magic elixir for the alarming moral derelictions of Congress. Members should be forbidden to own or invest in anything worth more than $75,000, except for Treasury notes, bills, bonds, and a home. All statutory exemptions of Congress from laws of general applicability should be repealed. Making committee assignments or chairmanships turn on a member’s fundraising for the RCC or DCCC should be prohibited… But corruption has a thousand faces. The best laws will be circumvented unless reinforced by public opinion. Members of Congress who betray the public trust should be ostracized.”
Bruce Fein, The Nation

From the Right

“It’s entirely possible that most or all of these transactions were innocent. After all, who didn’t consider taking some profits earlier this year as stocks rose to all-time highs at such a dizzying pace? But… voters should never have to wonder about their lawmakers’ integrity. It’s not enough that members of Congress report their trades a month after the fact. People with intensively managed investments simply shouldn’t be in public life. If they want to serve, they should buy and hold simple investments that follow the market as a whole, perhaps fixed-year retirement funds. Lawmakers especially should refrain from timing markets — good advice for anyone who doesn't have inside information but especially good for members of Congress seeking to avoid conflicts of interest.”
Editorial Board, Washington Examiner

Others counter, “Should Members of Congress be barred from owning individual stocks? Good luck getting successful people to run for office if they’d have to liquidate their portfolios. What about bonds? And should Congressional staff be banned from investing, too? Puffing with indignation is easier than parsing the details… It’s politically imprudent for people in Congress to trade actively, and this example shows why. A blind trust is better for public confidence, though that hasn’t kept Senator Feinstein’s name out of the news. In the end, the judgment on a politician’s financial dealings is like much else: for the voters to decide.”
Editorial Board, Wall Street Journal

Some argue that “Burr didn’t sell his stock until three weeks after the briefing. Why would he wait 21 days? That’s an eternity in the stock market… Loeffler and her husband have a combined net worth of over $500 million. If we take the midpoint of the $1.2 to $3.1 million range indicated on the Senate disclosure form, the third party investment manager sold stock valued at $2 million. The market has fallen by roughly 33 percent. So the Loeffler saved $700,000 by selling the stock. This equates to .14 of one percent, or .0014 of their net worth…

“According to her spokesman, Tom Mentzer, ‘All of Senator Feinstein’s assets are in a blind trust, she has no involvement in her husband’s financial decisions.’... There is insufficient information available about Sen. Inhofe’s transaction or the circumstances surrounding it to make a judgement… The only situation that can possibly be questioned, that is even a close call, in my opinion, would be Sen. Burr’s.”
Elizabeth Vaughn, RedState

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