Monday, June 29, 2009

Congressional Stock Trading Oddities -Time for Blind Trusts?

The controversy over Senator Durbin's stock transactions has put the spotlight back on stock market transactions by our elected officials. While Senator Durbin appears to have bought and sold stocks after the public announcement of the information he allegedly received, other odd trades are beginning to surface.

There are a number of reports of senators and representatives buying and selling stock at the time of important and significant announcements surrounding the government bailout programs last year. There are certainly problems with the claims of insider trading as I pointed out in my recent post on Senator Durbin's trades, which appear to be perfectly legitimate. The stories ignore the fact that many of these representatives have brokers or money managers who actually pick the positions that are bought or sold, and there are some who are actually in blind trusts.

But in a time when the American public is thoroughly disgusted with the conduct of our elected officials, and with the financial sector, isn't it time to address those perceptions and do something about the ability of elected officials to purchase or sell securities. Or to at least prevent them from doing so in industries that they have the ability to dramatically impact through legislation or other actions?

Blind trusts would appease some of the concerns without an outright prohibition, and is something that should be considered. Then again, it is these senators and representatives who would have to enact such a rule upon themselves. We will undoubtedly see term limits before we see a rule requiring blind trusts.

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