Lawmakers reworked financial portfolios after talks with Fed, Treasury officials

Nelson “has often sought and had one-on-one conversations with numerous cabinet secretaries under both President Bush and Obama on dozens of issues before Congress,” Thompson said in an e-mail. “That’s what good legislators do, they seek dialogue and understanding at the senior level about local, state and federal policy matters, as well as foreign policy issues.”

Paulson, through a spokeswoman, declined to discuss his conversations with members of Congress during the financial crisis.

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Explore trades by members of Congress that overlap with meetings and phone calls with Treasury Secretary Paulson.

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Lawmakers trade stocks in firms
lobbying before their committees

Dan Keating, David S. Fallis, Kimberly Kindy and Scott Higham

EXCLUSIVE | A review by The Washington Post finds almost one in every eight trades by members of Congress since 2007 have intersected with legislation.

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Capitol Assets: A Post investigation

FULL COVERAGE | The Washington Post examines the intersection between the personal
finances of members of Congress and their work on Capitol Hill.

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• Graphic: Capitol Assets scorecard
• In Congress, relatives lobby for bills before family members
• Capitol Assets: Congress’s wealthiest mostly shielded in deep recession
• Graphic: How lawmakers handle their money

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• Congress members back legislation that could benefit themselves, relatives
• Congress’s financial winners and losers
• Congressional ethics committees protect legislators, critics say
• Gallery: The 25 wealthiest and 25 least wealthy members of Congress
• Methodology: How The Post calculated congressional wealth
• Members of Congress trade in companies while making laws that affect those same firms
• Graphic: Overlapping interests?
• Lawmakers reworked financial portfolios after talks with Fed, Treasury officials
• Explore the transactions
• Lawmakers sell off stock in company included in Senate investigation
• Capitol Assets: Some legislators send millions to groups connected to their relatives
• Congressional earmarks sometimes used to fund projects near lawmakers' properties
• More from this series

Series: Breakaway Wealth

How the rich are pulling away from the rest of America

Lowering risk

Toward the end of the summer of 2007, the foundation of the nation’s real estate market started to shake. On Aug. 6, the American Home Mortgage Investment Corp., the nation’s 10th-largest mortgage firm, filed for bankruptcy.

Three days later, Paulson was headed to work at the Treasury Department when he received word that the U.S. mortgage crisis and tightening credit markets were spreading to Europe, he would later write in his autobiography, “On the Brink: Inside the Race to Stop the Collapse of the Global Financial System.”

Paulson and Bernanke put their staffs on full alert. The Fed crafted a loan package for the nation’s banking industry. Treasury lawyers scrambled to figure out a way to stabilize the increasingly volatile markets, Paulson recalled.

On Aug. 9, the Dow fell nearly 400 points, its second-biggest one-day drop in five years. The next day, the Fed issued a statement pledging to “provide reserves as necessary . . . to promote trading in the federal funds market.”

At 4:30 p.m. on Aug. 13, 2007, as the markets closed, Paulson called Sen. Kent Conrad (D-N.D.), chairman of the Budget Committee, according to the Treasury secretary’s appointment calendar.

The next day, Conrad adjusted his family’s portfolio for the first time in four months. Conrad reported that a total of between $150,000 and $300,000 was shifted out of three mutual funds in his wife’s 401(k) retirement account. He moved $100,000 to $250,000 of that money into a lower-risk money-market fund within the retirement account.

That year, Conrad had two other calls and one meeting with Paulson. He reported 29 other transactions during the year, including three that exceeded $50,000.

Conrad said his conversation with Paulson had nothing to do with his trades the next day.

“There is absolutely no connection between the two,” Conrad said. “Our records show that Paulson called me about the debt limit extension and that had nothing to do with the reason for my making the trades.

“The decision that my wife and I made with our financial advisers to diversify into lower-risk investments had everything to do with what was happening that was on the front pages over every paper, including yours. His call to me had absolutely nothing to do with those issues.”

Trading amid stimulus plans

By the beginning of 2008, the Bush administration had decided to take a more aggressive approach to confront the growing economic crisis. On Jan. 2, the president told Paulson to consult with members of Congress, investors and the nation’s business leaders to come up with a strategy.