Members of the US Congress allegedly exploited classified economic information to earn money.
Nine US lawmakers traded banking stocks before or during the latest crisis in the financial sector that was triggered by the Silicon Valley Bank (SVB) collapse on March 10, analysis of open data by research agency Quiver Quantitative has shown.
New Jersey Democrat Josh Gottheimer sold his SVB shares on March 9, earning up to $15,000 just a day before the collapse.
This move could be attributed to almost supernatural premonition, yet however, there is another explanation – the congressman in question was a member of the financial services committee since 2019 and this, by definition, means that he possessed classified information about the economy.
Further research showed that Gottheimer was the sort of Gordon Gekko among the House of Representatives – last year he struck roughly 380 stock market deals. The spokesperson for the congressman stated that he made his economic decisions at the discretion of his financial adviser, adding that Gottheimer is in process of establishing a blind trust – a mechanism which allows for a civil servant to keep his riches without really knowing what’s going on with them and being unable to somehow use political influence for profits sake.
This financial advisor defense was similarly used by another US congressmen questioned by the public about stock market operations.
An investigation carried out by a prominent US newspaper showed that this case is only the tip of the iceberg – nearly a fifth of American lawmakers or their close relatives conducted stock market transactions with equity of the companies affected by their legislative work.
This practice of enrichment via political means has sparked outrage in US society. Sherrod Brown, a senator from Ohio is pushing a bill that will limit the ability to conduct financial operations for members of Congress.
“Members of Congress are supposed to serve the American people, not their stock portfolios,” he stated in a press release.
He added that politicians “have more inside information” and are able “to know more about the economy.”
The Silicon Valley Bank collapse at the beginning of March ignited angst among investors all over the world, causing a domino effect in the banking sector.
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