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Following an investigative report by 60 Minutes, support has grown rapidly this week for legislation that seeks to stop members of Congress from profiting from their own inside knowledge.
November 17 -
Financial Services chairman says he never used insider information in making trades, and the market's poor state in 2008 was well-known.
November 16 -
A new book and piece by 60 Minutes have raised issues about whether Rep. Spencer Bachus traded on private information he received from regulators during the financial crisis.
November 15
WASHINGTON — The chairman of the House Financial Services Committee is claiming vindication following the dismissal of ethics allegations against him.
Rep. Spencer Bachus, R-Ala., was under scrutiny for stock option trades he made shortly after meeting with Federal Reserve Board Chairman Ben Bernanke and Treasury Secretary Henry Paulson near the height of the financial crisis in September 2008. At the time, Bachus was the top Republican on the House committee with jurisdiction over the U.S. financial system.
The trades earned a profit for Bachus when the markets declined. Following a "60 Minutes" report on the Alabama congressman's trades, as well as investments made by other members of Congress, the Office of Congressional Ethics opened an investigation into whether he engaged in insider trading.
The office's board voted 6-0 on Friday to dismiss the allegations, according to a statement released by Bachus' office.
"The OCE's unanimous dismissal of these false allegations is a welcome conclusion to a destructive and disruptive, media generated assault," Bachus said in the press release. "It has been a long, painful, and frustrating experience to have a reputation built over many years sullied by untrue accusations."
Bachus thanked Harvey Pitt, the former chairman of the Securities and Exchange Commission, among others, for reviewing the allegations and publicly coming to his defense, as well as the Republican voters in Alabama's Sixth Congressional District, who nominated him for re-election on March 13.
"Perhaps the most gratifying aspect is that my constituents who know me best recently reaffirmed their faith in my character and my ability to serve their interests," Bachus stated, "and my personal commitment to them is to continue to serve with the highest level of effectiveness and accountability."
"Finally, I want to thank the OCE staff for their professionalism and the OCE Board for unanimously coming to the right conclusion," Bachus added. "While their review and report should never have been necessary, I am pleased that they have helped clear my name."
Bachus addressed the substance of the allegations he faced in a letter sent shortly after the publication of a book, "Throw Them All Out" by Peter Schweizer, which formed the basis of the "60 Minutes" story. In the letter, he mocked the idea that he had access to inside information from Paulson and Bernanke.
"This meeting was so 'secretive' that members of the press knew about it beforehand, were waiting outside the door, and a press conference was held immediately after the meeting to inform the public about what we discussed," Bachus wrote.
"The idea that I or anyone else needed this meeting to know our financial markets were in trouble is just laughable. You would have had to be living under a rock not to know by September 18, 2008 that the economy was in bad shape."
The Office of Congressional Ethics is a non-partisan office that launches preliminary investigations of members of Congress and decides whether to refer the cases to the House Ethics Committee, which then has the power to punish members when it finds ethics violations.
Although Bachus' case was eventually dismissed, the attention it received helped build support in Congress for a new law that cracks down on insider trading by members of Congress.
