The Wall Street Journal has a good story on members of Congress who, while publicly criticizing speculators, were themselves making bets against the housing market or even against U.S. Treasury Bills. Maybe the SEC will investigate them for insider trading because they have exclusive knowledge of how much damage they and their colleagues will do to the economy through legislation and are seeking to profit by investing in their own incompetence? We look forward to the Senate hearing on this one. Says the Journal:
Some of these legislators have publicly criticized practices such as short-selling, or betting on a security to decline. In February, Sen. Johnny Isakson (R., Ga.) argued on the Senate floor that "we don't need those speculating in the marketplace to take unfair advantage of the values of equities that are owned by Americans all over this country for the sake of making a buck on a short sale."
On Oct. 8 and 9, 2008—as the Federal Reserve was bailing out American International Group Inc.—an account Sen. Isakson held invested more than $30,000 in ProShares UltraShort 7-10 Year Treasury and UltraShort 20+ Year Treasury, the records show. These are "leveraged short" funds, designed to gain $2 for each $1 drop in the daily value of U.S. Treasury bonds.
Sen. Isakson said his account is professionally managed by Morgan Stanley Smith Barney and he has no control over it.
