CBS’s 60 Minutes episode Sunday implied that members of Congress, including the Democrat House Minority Leader, engaged in “soft corruption.”
Essentially, Pelosi, House Speaker Jon Boehner and fellow Congress members were informally accused of insider trading—which is a gray area for members of Congress, who are allowed to trade in the industries they regulate.
Share Purchases Are Unethical, if Not Illegal
Insider trading, or when stock is bought or sold based on information unavailable to the public, is illegal and can carry heavy penalties. (Remember Raj?) In the case of Congress, the laws still apply, but are much less defined.
For instance, a Congress member could be chair of the defense committee, hear non-public information about impending rules governing that industry, and then buy and sell defense stocks based on it. Pelosi, Boehner and other members of Congress are under suspicion of unethical activity, but have not been charged with anything illegal—yet.
Buying and Selling Stock During Legislative Debate Was Suspect
A few examples demonstrate what “60 Minutes” means by “soft corruption.” In 2008, Pelosi and her husband had the privilege of buying stock in Visa for $44 during its initial public offering. (Read more on IPOs here.) At the time, regulatory legislation for credit card companies was in the process of being rejected, meaning Visa would keep its autonomy and stock was expected to do well.
CBS also implicated current House Speaker John Boehner and Representative Spencer Bachus in slightly different unethical trading situations. Both of them purchased stock around the same time legislation concerning the industry was going through the House.
In Boehner’s case, he bought health care stocks just days before legislation that would create government health insurance was killed. In Bachus’s case, during the 2008 financial meltdown, when he was meeting with the Treasury Secretary and Federal Reserve Chairman, who were predicting broad financial collapse, he bought stock options that that counted on the market dropping.
60 Minutes Claims Countered by Pelosi’s Track Record
Now, Pelosi and her representative have countered the claims presented by 60 Minutes by pointing out that many pieces of anti-credit card legislation were passed while Pelosi served as Speaker. During the Congress after that, President Obama signed pro-consumer legislation such as the Dodd-Frank bill, which cracked down on fees allowed by the companies. They have also taken issue with the fact that CBS based its report off of a book by conservative writer Peter Schweizer about “soft corruption”—although CBS says they have verified all information independently.
Pelosi insists she wouldn’t act on information obtained unethically and Boehner says his trading decisions are made by his advisor, but the accusations, coming to light while Occupy Wall Street protests the lopsided power held by the 1%, are serious.
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