Congressional Hypocrites Were Betting Against Stocks As Country Collapsed

The Business Insider ^ | 5-4-2010 | Henry Blodget

[blam]

Congressional Hypocrites Were Betting Against Stocks As Country Collapsed

Henry Blodget
May. 4, 2010, 5:09 AM

Yeah, baby! Citigroup's toast!

Remember all that scorn in Congress about evil shortsellers betting against America and bringing the country down?

Well, it turns out Congress-people did it, too. And they used derivatives to do it, which they now say they abhor.

(For the record, we have no problem with shortselling or derivatives, and we find the routine scapegoating of both after market crashes ludicrous. But if you're going to complain about how awful shortselling is and how evil and venal people are for doing it, you should probably abstain from the practice yourself.

And, yes, most of the folks here were just betting against stocks, not actually selling stocks short. But it's the same idea. To use their own tortured, populist logic, they were betting against the country and their 401k-holding constituents!)

Jason Zweig, Tom McGinty, and Brody Mullins in the WSJ:

Some members of Congress made risky bets with their own money that U.S. stocks or bonds would fall during the financial crisis, a Wall Street Journal analysis of congressional disclosures shows.

Senators have criticized Goldman Sachs Group Inc. for profiting from the housing collapse. And Congress is considering legislation to curb Wall Street risk-taking, including the use of financial instruments known as derivatives and of leverage, or methods that amplify returns.

[snip]

[i are a cowboy]

I want names

[FormerACLUmember]

Laugh it up, democrats.

[Diogenesis]

Who? How much? When?

[mlocher]

On Oct. 8 and 9, 2008—as the Federal Reserve was bailing out American International Group Inc.—an account Sen. Isakson held invested more than $30,000 in ProShares UltraShort 7-10 Year Treasury and UltraShort 20+ Year Treasury, the records show. These are "leveraged short" funds, designed to gain $2 for each $1 drop in the daily value of U.S. Treasury bonds.

Many of the examples given, including this one, are not stocks, but rather ETFs. It is true that market forces caused interest rates to drop (and hence bond values to rise) to very low (high) levels, making these "bets" safe ones. On the other hand, Congressmen, by spending trillions, have much more direct long term impact on interest rates and bond prices. Why would these bozos even want to balance the budget or cut spending?

This is a conflict of interest case if I have ever seen one!

[mo]

tar...feathers...rail...rope..lampost...what’d we leave out?

[Tupelo]

Names please.

[Diogenesis]

AIG chiefs pressed to donate to Dodd
As Democrats prepared to take control of Congress after the 2006 elections,
a top boss at the insurance giant American International Group Inc. told colleagues that Sen. Christopher J. Dodd
was seeking re-election donations and he implored company executives and their spouses to give.
The message in the Nov. 17, 2006, e-mail from Joseph Cassano, AIG Financial Products chief executive, was unmistakable:
Mr. Dodd was "next in line" to be chairman of the Senate Banking, Housing and Urban Affairs Committee, which oversees the insurance industry,
and he would "have the opportunity to set the committee's agenda on issues critical to the financial services industry."

---

"AIG's Small London Office May Have Lost $500B"
Ground zero for AIG's spectacular implosion, which has soaked up more federal bailout money
than any other entity, appears to have been a small London branch office
that may have lost nearly half a trillion dollars in bad deals."

[mlocher]

Thanks. Not only was there a conflict of interest with regards to the congressmen’s investments, they also set themselves up to benefit (as you pointed out) with corrupt practices.

[MizSterious]

Why no names in this article? I’d like to know WHO.