Can Rep. Bachus and His Money-Crazed Congressional Colleagues Be Stopped from Insider Trading?
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Giving the public a view of what members of Congress are trading would level the playing field. It would, of course, communicate both good and bad financial information to the markets. If traders had seen that Rep. Bachus was shorting the market the day after his meeting with Paulson and Bernanke in 2008, trading activity may have gone quite differently that day.
Some members of Congress, including Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell, have been trying to weaken the STOCK Act. That leaves the possibility of either no law at all or a law that's useless. “What really concerns me is that we’ll get something passed here, but it won’t do much good,” said Professor Ziobrowski. “They can make something illegal, but if you don’t have the proper tools to uncover the crime, what good is it?”
The American public is strongly opposed to insider trading. But if members of Congress are being asked to basically police themselves through the passage of a new law, it will be difficult to get something with real teeth. Still, keeping the topic front and center in the public mind is a good way to give members pause the next time they decide to violate their ethical duty to the public and use their office to enrich themselves.
*The study, “Abnormal Returns from the Common Stock Investments of the U.S. Senate, Alan J. Ziobrowski, Ping Cheng, James W, Boyd, and
Brigitte J. Ziobrowski, was published in the Journal of Financial and Quantitative Analysis (Dec. 2004).
Lynn Parramore is an AlterNet contributing editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of 'Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.' Follow her on Twitter @LynnParramore.