Running with headlines like Durbin cashed out during big stock collapse newspapers and bloggers are claiming that Senator Dubin traded on inside information when he sold $115,000 worth of stock in late September, 2008.
Durbin didn't sell $115,000 in stock on the 19th, he sold $43,000 of unidentified mutual fund shares, and bought $43,000 in Berkshire Hataway. He didn't "cash out" or "sell out" or "dump", he sold one group of stocks and bought another. Later in the month he sold other investments and bought more Berkshire Hathaway.
So, no selling based on any information, it is a net wash. And please keep in mind that Lehman went bankrupt and the markets tanked on September 15, 2008, well before the meeting and the sales.
Oh, and one more point. The information that Bernanke told Congress was made public on the 19th, the day of Durbin's sales. It is impossible to trade on inside information, even assuming that this is inside information, when that information is public.
So, no selling on inside information. But what is the supposed inside information? Bernanke told Congress to enact legislation to help the banks. That is hardly inside information, by any definition of the term, but now we need to believe that saying that the banks are in trouble would cause the senator to sell stock? Did you need Mr. Bernanke to tell you that the banks were in trouble after Lehman went out of business and its stock went to 13 cents?
So, it is not inside information and he didn't "dump" his stock, he sold mutual funds and bought Berkshire Hathaway.
Not much of a story there.
UPDATE: While the comments to this post have been positive, some have been claiming that Bernanke's requests to help the banks were not public on the 19th. I don't think it matters, because I think that by September 19 it was common knowledge that the banks were in trouble and that the feds would have to do something. Bear Stearns was out of business, Lehman filed for bankrupcty, and AIG received a 85 billion dollar loan before the 19th. However, Bernanke made the information public on the morning of the 19th, at a press conference, where President Bush, Paulson and Bernanke urged Congress to take action to assist the banks, and announced references to what became TARP. Similar comments were made by the three on September 18, and were widely reported in all of the major news outlets.
Some examples:
Washington Post, Bloomberg, Politico, FOXNews, USNews
Durbin didn't sell $115,000 in stock on the 19th, he sold $43,000 of unidentified mutual fund shares, and bought $43,000 in Berkshire Hataway. He didn't "cash out" or "sell out" or "dump", he sold one group of stocks and bought another. Later in the month he sold other investments and bought more Berkshire Hathaway.
So, no selling based on any information, it is a net wash. And please keep in mind that Lehman went bankrupt and the markets tanked on September 15, 2008, well before the meeting and the sales.
Oh, and one more point. The information that Bernanke told Congress was made public on the 19th, the day of Durbin's sales. It is impossible to trade on inside information, even assuming that this is inside information, when that information is public.
So, no selling on inside information. But what is the supposed inside information? Bernanke told Congress to enact legislation to help the banks. That is hardly inside information, by any definition of the term, but now we need to believe that saying that the banks are in trouble would cause the senator to sell stock? Did you need Mr. Bernanke to tell you that the banks were in trouble after Lehman went out of business and its stock went to 13 cents?
So, it is not inside information and he didn't "dump" his stock, he sold mutual funds and bought Berkshire Hathaway.
Not much of a story there.
UPDATE: While the comments to this post have been positive, some have been claiming that Bernanke's requests to help the banks were not public on the 19th. I don't think it matters, because I think that by September 19 it was common knowledge that the banks were in trouble and that the feds would have to do something. Bear Stearns was out of business, Lehman filed for bankrupcty, and AIG received a 85 billion dollar loan before the 19th. However, Bernanke made the information public on the morning of the 19th, at a press conference, where President Bush, Paulson and Bernanke urged Congress to take action to assist the banks, and announced references to what became TARP. Similar comments were made by the three on September 18, and were widely reported in all of the major news outlets.
Some examples:
Washington Post, Bloomberg, Politico, FOXNews, USNews
