At a meeting with Congressional leaders on September 18, 2008, then Treasury Secretary Hank Paulson and Federal Reserve Chair Ben Bernanke famously broke the news to leaders of Congress that they would have to approve a giant bank bailout to avert a meltdown of the financial system. Since last weekend, reports have circulated that Congressman Paul Ryan sold stocks of major banks that day and bought shares in Goldman Sachs. The Romney campaign has denied this, claiming that the stock sales reflected index trades, that the meeting took place after markets closed, and that anyway Ryan didn’t directly control the portfolio. Many commentators appear to have been fooled by these claims and jumped to the conclusion that the story must be false.
AlterNet reporter Lynn Parramore has closely examined these issues and finds that none of them are compelling.
In particular, she quotes nationally known money-in-politics expert Thomas Ferguson, who looked closely at the disclosure reports: “Ryan did own some index based securities, but they stand out in the summaries. They are different from the many trades Ryan was making in individual stocks. It is perfectly obvious that he sold shares in Wachovia, Citigroup, and J. P. Morgan on September 18 and he bought shares in Paulson’s old firm, Goldman Sachs, on the same day. If these were index trades, what’s on the form is nonsense.”
Parramore’s article reports that word of the meeting circulated to the leaders well before markets closed at 4 p.m.; “If you knew that Hank Paulson and Ben Bernanke were coming to brief you as stock markets fell around the world, that’s really all you needed to know to do the trades in Ryan’s portfolio.” The article draws on her earlier research into Congressional stock trading:
Parramore comments: “As to the claim that Ryan was not legally in control of his investments, let’s just say that this idea gives the notion of the ‘Invisible Hand’ new meaning.”
LYNN PARRAMORE, lynn at alternet.org
Parramore is contributing editor at AlterNet.
THOMAS FERGUSON, thomas.ferguson at umb.edu
Ferguson is professor of political science at the University of Massachusetts, Boston, senior fellow of the Roosevelt Institute, and contributing editor at AlterNet.