U.S. House Minority Leader Nancy Pelosi
Carolyn Lochhead, Chronicle Washington Bureau
Tuesday, November 15, 2011
Washington — House Minority Leader Nancy Pelosi’s office accused the news program “60 Minutes” of omitting key information from its report Sunday on how members of Congress use privileged information to profit from stock trades.
Pelosi spokesman Drew Hammill also called the report “a right-wing smear” based on a new book by conservative author Peter Schweizer of the Hoover Institution, a think tank based at Stanford University. The book is titled: “Throw Them All Out: How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of Us to Jail.”
Pelosi, a San Francisco Democrat, was highlighted in the report along with House Speaker John Boehner, R-Ohio, and House Financial Services Committee Chairman Spencer Bachus, R-Ala., among others.
In an interview Monday, Schweizer said the “most egregious” allegations of insider trading concerned Bachus. At the height of the 2008 financial panic, Bachus participated in private briefings by Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson warning that the financial system was about to collapse.
The next day, “60 Minutes” reported Sunday, Bachus bought a stock fund designed to rise in value when the market sank.
Studies led by Georgia State University Professor Alan Ziobrowski found that stock portfolios of senators beat the market by 12 percent annually, while those of House members by about 6 percent, returns he called abnormal.
“There is no law that says a congressman can’t go into the cloakroom, hear some information that is about to have an important impact on a company and then, before it becomes public, go right to his stockbroker and trade,” Ziobrowski said. “It is a tremendous temptation.”
The “60 Minutes” segment suggested Pelosi had a conflict of interest because she and her investor husband, Paul Pelosi, bought stock in Visa, the credit card company based in San Francisco, in March 2008 while a bill that would limit the fees credit card companies could charge merchants was pending in the House.
The Pelosis bought Visa stock three times in 2008: 5,000 shares at $44 each in an initial public offering March 18; 10,000 shares after the IPO at $64 on March 25; and 5,000 shares at $86 on June 4.
The credit card fees bill, by then-House Judiciary Committee Chairman John Conyers, D-Mich., passed his committee on Oct. 3, 2008, but did not reach the full House. Pelosi was speaker at the time and controlled which legislation came to the floor.
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