What Rep. Bachus Was Saying While Profiting From The Financial Crisis
60 Minutes reported last night that Rep. Spencer Bachus (R-AL) made hundreds of trades clearing tens of thousands of dollars in profit by shorting the market in the fall of 2008, thanks in part to information he had from congressional briefings. The transactions were all legal, but he bet against the market — sometimes in very specific ways — based on information he got by virtue of his position as the top Republican on the House Financial Services Committee.
Here's how Bachus ended his opening statement at that committee's hearing on the proposed Treasury Department bailout of Wall Street on September 24, 2008, a day after selling some short holdings for nearly double what he paid for them five days earlier:
I am not worried about the Wall Street bankers who made millions creating this mess, but I feel a great obligation to the millions of Americans who did nothing to create this problem but might be its innocent victims.
If we decide there is such an event, then will a $700 billion purchase of these assets provide the temporary relief the markets need to right themselves? If we provide this relief, whether it works or not, let everyone be assured this Committee will be exercising its oversight and investigation responsibilities as we go forward to see to it this can never happen again.
My purpose today will be to listen and try to find answers to these questions. The witnesses have been through a lengthy and extensive hearing process this week and in the past few weeks. I appreciate them being here to help us find the answers we need.
Bachus was publicly criticizing "the Wall Street bankers who made millions creating this mess" as he himself made mere thousands by leveraging his inside information. But he was also promising to help keep a tight leash on the financial industry "to see to it this can never happen again."
Fast-forward just over two years to December 8, 2010. Bachus had just been elected chairman of the House Financial Services Committee for the 2011-12 session and commented again on the relationship he'd like to see between that body and the financial institutions he helped bail out in 2008:
"In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks," he said.
Republicans have taken much-deserved flak for putting a man who believes regulators should "serve the banks" in the top House financial oversight position so soon after the financial industry destroyed the economy. The fact that he was able to cash in on the crash those banks caused while talking a good game in public only raises more questions about putting him in charge of congressional oversight of Wall Street.