The next day, Sept. 19, Bachus traded “short” options, betting on a broad decline in the nation’s financial markets, and collected a profit of $5,715. Also that day, he cashed out options in which he had bet that General Electric stock would rise, and collected a $12,713 profit, before GE’s stock price started to tumble, The Post found.
The short options betting on an economic downturn were reported in “Throw Them All Out,” which was the basis of the “60 Minutes” story, which aired Nov. 13. Bachus criticized the reports, calling allegations that he engaged in insider trading “absolutely false.”
But the book inaccurately said Bachus bet on GE’s price to fall rather than rise. Schweizer acknowledged his mistake but said it made no difference to his larger point.
In a letter to the publisher, Bachus attacked the book for the mistake about GE. “The book is absolutely false and factually inaccurate when it states that I ‘shorted General Electric options’ and did so ‘four times in a single day.’ ”
He also said there was no inside information provided in the briefing by Paulson and Bernanke.
“The idea that I or anyone else needed this meeting to know our financial markets were in trouble is just laughable,” he wrote in the letter. “You would have to be living under a rock not to know by September 18, 2008 that the economy was in bad shape.”
He said a press conference held immediately after the briefing revealed what was discussed.
“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,” he wrote.
In October, Bachus bet on the market going up, but this time he lost $21,558.
Bachus said he gave up his “hobby” of trading when he became chairman of the Financial Services Committee after the Republican takeover of the House in November 2010. Although he has sometimes made money on trades, his financial disclosures indicate that his net worth has been cut in half during his time in Congress, declining from up to $2.3 million in 1995 to up to $1.1 million at the start of this year.
Bachus was elected in 1992. Before coming to Congress, he served in the Alabama Senate and worked as a lawyer. He is originally from Birmingham and lives south of the city in Vestavia Hills.
The Senate passed its version of the Stock Act last week. The legislation will make it easier for SEC officials to prosecute insider-trading cases against members of Congress, their staff and top officials in the executive branch. It will also require them to disclose all stock trades every 30 days.
Earlier stories in The Post and the Wall Street Journal described the lack of stringent rules governing Congress and the conflicts presented by assets owned and traded by lawmakers and their public roles. Post stories detailed the reporting weaknesses in the disclosure system, which cannot be electronically searched. The Stock Act requires electronic filing of disclosure forms.
Differences between the measures will be taken up in a conference committee.
The Office of Congressional Ethics was created in March 2009 in response to public criticism that the House Ethics Committee was failing to properly police its members.
The OCE conducts independent investigations into allegations of misconduct against members, officers and staff. However, its powers are limited. It cannot compel a member to cooperate with an investigation, and it does not have subpoena powers.
Once the office completes its investigations, the results are forwarded to the ethics committee. That committee has the final say on whether a violation has taken place and what sanctions, if any, should be imposed.
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Staff writers David S. Fallis, Paul Kane and Kimberly Kindy and staff researcher Lucy Shackelford contributed to this report.