Because he gets to make the rules!
The top Republican on the House Financial Services Committee struck paydirt on a stock option last year after betting that a Chinese advertising company would jump in value.
In a single transaction on Dec. 10, Rep. Spencer Bachus of Alabama made up to $15,000 off an investment he had held for just two weeks, according to his congressional financial disclosure statement. He sold on the same day that the company, Focus Media Holding Ltd., got a market bounce off its announcement that it would acquire a competitor.
The trade was among dozens made in 2007 by the powerful congressman, whose public statements alone can influence markets. Most of his trades were short-term options in which Bachus bet that a stock price would rise or fall and made a quick profit or loss accordingly. Sometimes, he made several trades in the same week, supplementing his $165,200 annual congressional salary with up to $160,000 for the year.
Most members of Congress hold some stocks or mutual funds. Bachus' rapid-fire trades, however, are unusual for a leading member of Congress, particularly one with such a key market role.
The committee has its hand in just about every policy issue involving the financial sector, delving recently into credit card regulation, hedge fund reform and efforts to shore up mortgage giants Fannie Mae and Freddie Mac.
As the top Republican on the committee, Bachus has been heavily involved in government negotiations over the ongoing mortgage crisis and its fallout on Wall Street. Last week, for example, Bachus was among the congressional leaders briefed before the Bush administration announced it would bail out the massive insurer American International Group Inc., whose failure could have sent markets into free fall.
While some executive agencies restrict their leaders' investments to prevent conflicts of interest, lawmakers have given themselves broad freedom to invest in the markets. Some say Congress is involved in so many issues that it would be impossible to establish meaningful rules without banning investing altogether.
(JackRabbit Café editor's note: So, if a member of Congress is serving on committees assigned to regulate financial matters, ban investing altogether!)
Interestingly, a quick look at Bachus' Wikipedia page shows that this Wall Street gambler seems to exhibit shades of hypocrisy regarding other forms of gambling:
Bachus: "There have been studies by Harvard University, University of Pennsylvania, McGill University in Canada, American Psychiatric Association — all of these say the younger someone starts gambling, the more likelihood that they become a compulsive gambler. Addicted to gambling, just like addicted to drugs. So there is a correlation between drug dealers and gambling sites." — October 2006, CNN
Call your bookie, er, dealer, er, broker, Spencer; it might be a good time to buy.
No comments:
Post a Comment