The Bloomberg Markets scoop about Treasury Secretary Henry Paulson's meeting with money managers at which he disclosed to them his plans to seize Fannie Mae and Freddie Mac while he was telling the public something else is attracting a bit of attention elsewhere. Ben Smith has a post at Politico pointing out that a lot of those at the meeting are Democratic political donors. And Jesse Eisinger has a post at ProPublica calling for a congressional inquiry to get to the bottom of whether any of those at the meeting made money by shorting Fannie or Freddie after the tip from Secretary Paulson. But the New York Times, the Wall Street Journal, and CNBC have held back from the full-scale pile-on or swarm that you sometimes see on a big or not-so-big story like, say, Governor Perry's memory lapse. Maybe it's because Henry Paulson is out of office. Or maybe the other news organizations don't want to give Bloomberg Markets credit for the scoop that Bloomberg Markets developed out of envy or out of a desire not to call attention to the fact that they didn't develop the news on their own.
The next logical step in the press coverage is to try to get the SEC, the U.S. attorney's office for the Southern District, the New York State attorney general's office, or the district attorney of New York County to say whether they've opened an initial inquiry into trading in Fannie or Freddie following the meeting by those who attended it. Ordinarily, I'm against pre-charge leaks by prosecutors as a violation of due process. Even if those who attended the meeting did trade on the information — and it's not clear than any did — it'd be a hard case for a prosecutor to make that something a money manager was told by a high government official at an official meeting constituted information that it was illegal to trade on. The error, arguably, was not the money managers' but rather Mr. Paulson's in giving out the information and in seizing Fannie and Freddie.