Congressmen Give Themselves a Loophoole Filled Insider Trading Bill

Since it has become widely known that members of Congress are exempt from insider trading laws, an uproar has forced Congress to bring themselves under the scrutiny of the SEC for insider trading laws.

It should probably come as no surprise, but Congress has put together a bill to regulate against insider trading by members of Congress that is so full of loopholes that it will actually make it easier.

Yale law professor Jonathan Lacey writes in WSJ:

Members of Congress already get better health insurance and retirement benefits than other Americans. They are about to get better insider trading laws as well...

Strangely, while insider trading by corporate insiders has long been the white collar crime equivalent of a major felony, the Securities and Exchange Commission has determined that insider trading laws do not apply to members of Congress or their staff. That is because, according to the SEC at least, these public officials do not owe the same legal duty of confidentiality that makes insider trading illegal by nonpoliticians.

The embarrassing inconsistency was ignored for years. All of this changed on Nov. 13, 2011, after insider trading on Capitol Hill was the focus of CBS's "60 Minutes." The previously moribund "Stop Trading on Congressional Knowledge Act" (H.R. 1148), first introduced in 2006, was pulled off the shelf and reintroduced. The bill suddenly had more than 140 sponsors, up from a mere nine before the show.

The "Stock" Act, as it is called, would make it illegal for members of Congress and staff to buy or sell securities based on certain nonpublic information. It would toughen disclosure obligations by requiring congressmen and their staffers to report securities trades of more than $1,000 to the clerk of the House (or the secretary of the Senate) within 90 days...

Publicly, House members echo bill sponsor Rep. Louise Slaughter (D., N.Y) in saying things like: "We want to remove any current ambiguity" about whether insider trading rules apply to Congress. Or as co-sponsor Rep. Timothy Walz (D., Minn.) put it: "We are trying to set the bar higher for members of Congress."

On closer examination, it appears that what Congress really wants is to keep making the big bucks that come from trading on inside information but to trick those outside of the Beltway into believing they are doing something about this corruption. For one thing, the rules proposed for Capitol Hill are not like those that apply to the rest of us. Ours are so broad and vague that prosecutors enjoy almost unfettered discretion in deciding when and whom to prosecute.

Congress's rules would be clear and precise. And not too broad; in fact they are too narrow. For example, the proposed rules in the Stock bill are directed only at information related to pending legislation. It would appear that inside information obtained by a congressman during a regulatory briefing, or in another context unrelated to pending legislation, would not be covered...

If the law passes in its current form, insider trading by Congress will not become illegal. I predict such trading will increase because the rules of the game will be clearer. Most significantly, the rule proposed for Congress would not involve the same murky inquiry into whether a trader owed or breached a "fiduciary duty" to the source of the information that required that he refrain from trading.

If enacted, the law of insider trading will remain one of many where one reality applies to Congress and an uncomfortable and insecure reality applies to everybody else. Just as Congress is protected from the vicissitudes of ObamaCare, Congress will remain safe from the vagaries of insider trading law. The rest of us will still be vulnerable.

Is Bernanke Leaking Inside Information to Goldman Sachs?

Bloomberg reports:

The biggest bond dealers in the U.S. say the Federal Reserve is poised to start a new round of stimulus, injecting more money into the economy by purchasing mortgage securities instead of Treasuries.

Fed Chairman Ben S. Bernanke and his fellow policy makers, who bought $2.3 trillion of Treasury and mortgage-related bonds between 2008 and June, will start another program next quarter, 16 of the 21 primary dealers of U.S. government securities that trade with the central bank said in a Bloomberg News survey last week. The Fed may buy about $545 billion in home-loan debt, based on the median of the 10 firms that provided estimates.

Now how the hell could primary dealers, who include Goldman Sachs and other banksters, know this, unless Fed chairman Bernanke and other Fed officials are leaking this information to the favored elite?

I mean, as a Primary Dealer, do you just one day wake up and say to yourself, "Aha, the Fed is going to buy about $545 billion in home-loan debt, next quarter." And 16 primary dealers all had this same vision?

WSJ has reported that Fed officials have leaked market sensitive information before. This is a damn outrage.  Bernanke justifies all this by holding the position that he doesn't announce the exact amount of buying. It could actually be $550 billion or maybe $551 billion. Puhleeze. They are sending the non-inner circle, an ethnic Sri Lankan Tamil, for example, Raj Rajaratnam to prison for eleven years for insider-trading that most assuredly is less valuable information than what the Fed is leaking to the elites.

Glenn Greenwald is correct, the country is fast becoming a country where there are two segments of society, an elitist group who can get away with anything and the rest of us who are burdened by more laws and regulations everyday.

Greenwald states:

[L]aw is no longer what it was intended to be - a set of rules equally binding everyone to ensure that outcome inequalities are at least legitimate - and instead has become the opposite: a tool used by the politically and financially powerful to entrench their own power and control the society...elites are immunized for egregious crimes while ordinary Americans are subjected to merciless punishment for trivial transgressions.

This is the only way to understand how Bernanke can get away with leaking his next moves to the elites, while Rajaratnam gets thrown in prison for what shouldn't even be considered a crime.

When power centers are created, and the Federal Reserve is a huge power center, the elite figure out how to use such a power center for their own benefit. It is really time to end these power centers, the world will get along much better without them.

OUTRAGEOUS: Bernanke Briefing Elitists in Advance of Fed Moves

If you ever suspected the financial game was rigged against you and in favor of the elitist banksters, new evidence has emerged that you are absolutely correct. WSJ's Susan Pulliam reports on the edge Fed chairman Ben Bernanke and other Fed officials are giving the insider elitists. Read this and weep:

Hours after an Aug. 15 meeting with Federal Reserve Chairman Ben Bernanke in his office, Nancy Lazar made a hasty call to investor clients: The Fed was dusting off an obscure 1960s-era strategy known as Operation Twist.

The news pointed to a boom in long-term bonds.

It was a good call. Over the next five weeks, prices on 10-year Treasury bonds soared, offering double-digit returns in an otherwise dismal year.

By the time the Fed announced its $400 billion Operation Twist on Sept. 21, the window for quick profits had all but slammed shut.

Ms. Lazar is among a group of well-connected investors and analysts with access to top Federal Reserve officials who give them a chance at early clues to the central bank's next policy moves, according to interviews and hundreds of pages of documents obtained by The Wall Street Journal through open records searches. Ms. Lazar, an economist with International Strategy & Investment Group Inc., wouldn't comment for this article.

The access is part of a push by hedge funds and other traders to get more information about the inner workings of government. Developments in Washington have become more important after the financial crisis in 2008 spawned new regulations and a stronger hand by lawmakers in businesses...

Such talks are perfectly legal but create a delicate dance for the Fed, which tries to sate its need for information to help guide monetary policy without giving Wall Street an unfair advantage over Main Street.

Mr. Bernanke discusses only matters already public, a spokeswoman said. But hedge fund managers and Wall Street executives who meet regularly with him and other Fed officials—both in his office and through advisory committees—say they get valuable insights during the face-to-face talks.

"It's like an inquisition, they have a topic," said Laurence Fink, chief executive of investment-management giant BlackRock Inc. "By the questions they ask, by definition, you know what's on their mind."...

Mr. Fink had phone calls and meetings with Fed officials ten times over the past two-and-a-half years, according to their calendars and open records requests. He said most of the conversations related to BlackRock's role as a paid adviser to the New York Fed about complex financial structures formed during the financial crisis.

New York Federal Reserve Bank President William Dudley also meets regularly with investors, both in his office with individuals and in committee groups. The New York Fed, one of 12 regional banks that constitute the Federal Reserve System, has the strongest ties to investors because it conducts the Fed's bond-market transactions...

Over the past two-and-a-half years, Mr. Dudley has had dozens of private meetings, according to his calendar, which lists SAC Capital Advisors, Citadel Investment Group, Duquesne Capital Management, and Tudor Investments, among others. Lloyd Blankfein, chief of Goldman Sachs Group Inc., and Mr. Fink, of BlackRock, also had private meetings, according to Mr. Dudley's calendar...

Worries about Fed access surfaced a year ago. On Aug. 18, 2010, former Fed governor Laurence Meyer, who runs a research service predicting and analyzing Fed actions, told clients in a note the central bank's "bazooka is loaded" to buy bonds to stimulate the economy.

The note described how the Fed's "doves," members inclined to ease monetary policy, had said the Fed couldn't "sit on its hands," according to Mr. Meyer's account. An Aug. 20 note included some specific information about the Fed's balance sheet.

A week later, Mr. Bernanke said during a speech in Jackson Hole, Wyo., that "policy options are available to provide additional stimulus" to the economy. Stocks rose on the news, which by then had given Mr. Meyer's clients plenty of time to profit.

Can you imagine how much better your investment portfolio performance might be if you had access to Bernanke and Dudley, the way the elitist do?

Not only is the Fed manipulating interest rates lower for the benefit of  the banksters, they are providing the banksters with an advance play-by-play of how the manipulations are going to be done and when. Bottom line: The Fed is a tool of the elitists who benefit from every move the Fed makes. There is nothing the Fed is doing that helps out the average person (in fact, it hurts the average person by the inflation creation it does do) , it should be ended, now.