Pelosi fires back at report on 'insider trading'
AP Photo/J. Scott Applewhite
A television report that questioned whether members of Congress are making investment decisions based on insider information drew a heated response from former House Speaker Nancy Pelosi, one of those highlighted.
A report on CBS' "60 minutes" on Sunday said Pelosi was among several lawmakers — including Republicans such as House Speaker John Boehner — who had profited from transactions that raised the possibility of conflicts of interest.
The report said Pelosi and her husband participated in a 2008 IPO involving Visa even as legislation that would have hurt credit card companies was being considered in the House. Pelosi was speaker at the time and the legislation failed to pass in that session.
In an exchange with CBS correspondent Steve Kroft, Pelosi denied that the transaction was a conflict of interest. And in a statement on Sunday, after the show aired, Pelosi spokesman Drew Hammill said the report failed to note her work for the rights of credit cardholders.
"Congress has never done more for consumers nor has the Congress passed more critical reforms of the credit card industry than under the Speakership of Nancy Pelosi," Hammill said.
It is not illegal for members of Congress to buy stocks or make land deals based on information they're privy to through their positions. And the profits are often substantial.
A recent study of House members' stock transactions showed them beating the markets' return by about 6 percentage points annually from 1985 to 2001. A 2004 study involving the same authors showed senators beating the market by 12 percentage points annually.
Those results "are way outside the boundaries of random luck," said the studies' lead author, Alan Ziobrowski, a business professor at Georgia State University.
Ziobrowski said Congress is preoccupied with three things: regulation, taxes and the federal budget.
"If you know a piece of legislation is coming down the line and you can trade in that, you can make a lot of money," he told msnbc.com.
The "60 Minutes" piece was all the buzz on Capitol Hill on Monday, where House Majority Leader Eric Cantor (R-Va.) declined to say whether he would support a law making it illegal for members of Congress to engage in insider trading.
"I'm not familiar with the details of the Stock Act, but I know it was mentioned in the program last night. My sense is that it requires more disclosure, I'm for increased disclosure, if there is any sense of impropriety or any appearance of that, we should take extra steps that the public's cynicism is addressed. We are not here to be hiding anything. I've always been very supportive of full disclosure," he said at a pen-and-pad discussion with reporters.
Cantor also dodged a question about whether members of Congress should be subject to the same insider trading laws as the ones restricting the finance professionals.
"I'm not as familiar with what triggers insider trading and the specifics of the laws. What I can tell you is that we are accountable to our constituents and we should be providing the kinds of information that would satisfy any kind of perception of impropriet," he said. "Many members don't actively trade in their portfolios, I don't. Full disclosure though can satisfy some of the questions; we should put that in place."
Pelosi's spokesman, Hammill, said the CBS report left out critical information. He said the legislation in question was passed out of the House Judiciary Committee on Oct. 3, 2008, the last day the House was in session before the election break that year and a time when the House was grappling with TARP. He noted that the next Congress passed the Credit Cardholders' Bill of Rights along with the Dodd-Frank legislation, which he called "a stronger, more direct approach to addressing swipe fees."
Hammill also criticized CBS' use of one source for the report, conservative author and editor Peter Schweizer.
"It is very troubling that '60 Minutes' would base their reporting off of an already-discredited conservative author who has made a career of out attacking Democrats," Hammill said.
Schweizer is a research fellow at the Hoover Institution at Stanford University and is the editor of Bigpeace.com, a website focused on national security founded by conservative activist Andrew Breitbart.
In a follow-up story on Monday, CBS News said they had verified every piece of information included in the report.
CBS noted that the "60 Minutes" report also discussed transactions of Boehner and another Republican, Rep. Spencer Bachus, who denied any impropriety.
Boehner said he leaves daily transactions to a broker. "I have not made any decisions on day-to-day trading activities in my account," Boehner told "60 Minutes."
NBC News' Luke Russert and Frank Thorp contributed to this report.