Hoover Institution scholar Peter Schweizer is making huge waves this week with advance coverage of his book “Throw Them All Out” on “60 Minutes” and in a Newsweek piece by Peter Boyer.
CBS and Newsweek focused on Schweizer’s contention that because Congress exempts itself from laws it imposes on the rest of us, senators and representatives can engage in insider stock trading with impunity. Among the most outrageous examples, according to Schweizer, is that of former House Speaker Nancy Pelosi, who, with her millionaire husband, bought between $1 million and $5 million (members of Congress only have to report such investments in broad categories rather than nickels and dimes like the rest of us) in an initial public offering from Visa. The Pelosis paid $44 per share.
According to Wynton Hall of Big Government.com (Schweizer is also an editor there), the Pelosis did rather handsomely on this investment because “two days later, the stock price rocketed to $65 per share, yielding a 50 percent profit. The Pelosis then bought Visa twice more. By their third purchase on June 4, 2008, Visa was worth $85 per share.”
In the “60 Minutes” segment, Pelosi snarkily dismisses reporter Steve Croft’s question about an apparent conflict of interest as if no sane person would ever even think of asking. But the Visa IPO was not the first time the Pelosis have done well on IPOs in which the government played important roles in determining the initial price of offerings.
As Hall notes, Schweizer’s research makes clear that the Pelosis “have participated in at least 10 lucrative IPOs throughout her career. In 1993, Pelosi purchased IPO shares in a high-tech company named Gupta and watched the stock price leap 88 percent in 24 hours, then seized the profits by selling the stock the next day. The Pelosis did the same thing with Netscape and UUNet, resulting in a one-day doubling of their initial investment. Other fast and lucrative IPO flips included Remedy Corporation, Opal, Legato Systems and Act Networks.”
The point here is not that Pelosi has profited immensely while serving in Congress — and quite possibly as a result of knowledge and information she would not otherwise have had — but rather that what she did is apparently entirely legal.
Members of Congress are not covered by the same anti-insider trading laws that the U.S. Securities and Exchange Commission has used for decades to jail corrupt brokers, corporation officials and other investors. As Schweizer told Newsweek, “the only group in America that we exempt is politicians, who are probably the last people about whom we should be saying, ‘Oh, we’ll take their word for it.’ That’s what’s so amazing to me.”
It shouldn’t be, because here’s something else to think about: The same politicians who aren’t covered by anti-insider trading laws also exempted themselves from the Freedom of Information Act. So the public has no access to the emails, correspondence, memos or other communications by or to individual Congress members. No wonder more than 70 percent of the American people support the term-limits initiatives opposed by both parties in Congress.