WASHINGTON -- A "60 Minutes" investigation of stock trading by members of Congress singled out House Speaker John Boehner and former Speaker Nancy Pelosi as having personally profited from investments into companies whose interests were before Congress. The investigation makes a strong case that members of Congress have the ability to profit in the market from non-public information, but in the cases of Boehner and Pelosi the claims made by "60 Minutes" fall short under scrutiny.
Honest graft, as "60 Minutes" calls it, is a serious problem in Washington, with a massive industry called "political intelligence" devoted to digging up inside regulatory and congressional information so traders and companies can take advantage of it.
But by swinging and missing at Boehner and Pelosi, "60 Minutes" undermined its case.
The CBS News program flagged Boehner (R-Ohio) for buying health insurance stocks shortly before the public health insurance option was killed as part of health care reform. Boehner, of course, strongly opposed the public option as a matter of ideology, as did the entire House GOP.
The public option wasn't killed by Boehner, who had no real power in the previous Congress; it was done in by Blue Dog Democrats and a White House that didn't push for it. The public option returned from the dead repeatedly before finally being laid to rest -- and there's no reason to think that Boehner had any better insight into what was happening within the House Democratic caucus than anybody else reading news reports at the time.
And as Boehner says in the "60 Minutes" segment, the trade was decided upon and carried out by Boehner's longtime broker without any input from him. In context, it seems even less suspicious: Around the same time, Boehner broker purchased a range of other blue chip stocks, not just health care companies, a defense that a Boehner spokesman reiterated to the Huffington Post.
"The idea that the Republican Leader in the House opposed the 'public option' -- policy favored by the left of the left -- for personal profit is, frankly, stupid," a GOP aide, who didn't want to be quoted criticizing CBS, said.
Similarly, the knock on Pelosi (D-Calif.) leaves out critical details. "60 Minutes" charges Pelosi with purchasing 5,000 shares of Visa stock as part of an exclusive initial public offering and implies that her financial connection to the credit card industry had something to do with the halting of credit card industry reform.
"Former House Speaker Nancy Pelosi and her husband have participated in at least eight IPOs. One of those came in 2008, from Visa, just as a troublesome piece of legislation that would have hurt credit card companies began making its way through the House. Undisturbed by a potential conflict of interest, the Pelosis purchased 5,000 shares of Visa at the initial price of 44 dollars. Two days later it was trading at $64. The credit card legislation never made it to the floor of the House," CBS reports.
But CBS leaves out that fact that the bill passed out of committee at the very end of the legislative session, as Congress was dealing with the Wall Street implosion and bailout, and that the chamber then adjourned until the election. More importantly, Democrats didn't have the votes for it in the Senate and the notion that President Bush would have signed it if they did is far-fetched.
CBS goes on to report: "Congresswoman Pelosi pointed out that the tough credit card legislation eventually passed, but it was two years later and was initiated in the Senate."
The implication is, apparently, that the Senate forced Pelosi's hand. Throughout 2009 and 2010, the House consistently passed stronger and more progressive legislation than the Senate, but in the scenario laid down by CBS, it was the other way around when it came to credit card reform. But in 2008, before the stock transaction, the House had already passed the Credit Cardholders' Bill of Rights over the objections of industry lobbyists.
"Tonight's report failed to note that the legislation in question in this story was reported out of the Judiciary Committee on October 3, 2008 -- the day the House was consumed in passing TARP and also the last day the House was in session before the November election," Pelosi spokesman Drew Hammill said. "It failed to note than in September 2008, the House passed the Credit Cardholders’ Bill of Rights. In the next Congress, the House and Senate passed and President Obama signed the Credit Cardholders' Bill of Rights and the Dodd-Frank legislation, which included a stronger, more direct approach to addressing swipe fees."
Pelosi's office also noted that there was no preferential treatment. Her husband purchased the shares, participating in the largest IPO in history, which raised $17.9 billion. He continued to buy shares on the open market as the price continued to rise.
Operatives on both sides of the aisle, meanwhile, pointed out to The Huffington Post that Majority Leader Cantor (R-Va.) had dodged the "60 Minutes" bullet. The segment did not mention Cantor, who made several trades in 2005 that have come under scrutiny.
In March 2005, he bought stock in Merck and Encore Medical Corporation. In July, the GOP House passed medical liability reform, which Democrats at the time charged was a gift to Merck, which was under fire for its drug Vioxx, as well as other device makers.
CBS may have pulled its punch because producers worried about access: "60 Minutes" is working on a profile of the Virginia Republican and was with him over the past weekend, and Lesley Stahl will visit him Monday on the Hill, according to a source familiar with the arrangements.CBS did not respond to requests for comment.