Ryan Made Series of Bank Trades in 2008 During Financial Crisis
Like everyone else but two members of the House, Paul Ryan voted for the STOCK Act, a watered-down version of a bill that would ban insider trading among members of Congress. Before he did that, however, Ryan spent 2008 wheeling and dealing his bank stock portfolio to match his knowledge gained as a member of Congress during the financial crisis.
Republican Vice Presidential Pick Paul Ryan sold shares in a number of financial companies including Citigroup, General Electric, Wachovia, and JP Morgan Chase on the same day as then-Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke held a closed meeting with congressional leaders during the financial crisis.
At issue are the sale of troubled banks like Wachovia and Citi, as well as General Electric’s struggling capital unit, dated on September 18, 2008 — the same day as the meeting with Bernanke and Paulson according to the Associated Press […]
The sales total as much as $60,000 — although they could be considerably less. The House disclosure forms do not require specific values from members.
OpenSecrets.org estimates Ryan has a net worth between $927,100 to $3,207,000.
Ryan’s disclosure also shows the purchase of shares in Goldman Sachs, which was considered a relatively safer bank at the time.
This information was first uncovered by the Richmonder. The September 18 meeting was held at night, and you would assume that these trades occurred during the day. But Ryan was trading a lot of individual bank stocks throughout 2008, when the financial crisis reached its peak. I think Brad DeLong gets this right:
The impression I get from these 27 transactions in individual bank stocks in 12 months, 17 of which involve not net injections or withdrawals but rather switches between banks, is of a guy who simply does not know what he is doing […]
At the level at which part-timer Paul Ryan plays this game–Oh! Goldman is undervalued relative to Citigroup on January 22! Oh! Citigroup is undervalued relative to Goldman on February 22! Oh! Goldman is undervalued relative to Citigroup on June 16! Oh! Goldman is undervalued relative to Citigroup on September 18! Oh! Goldman is overvalued relative to Citigroup on October 20!–he can no more win than Reagan-era ex-Secretary William Bennett could win as he dropped $7 million over the years in Las Vegas. An intelligent man takes the advice of the computer in the movie “Wargames”: “A very interesting game. The only way to win is not to play.”
I don’t want to hire as my vice president and federal budget czar somebody who uses Congressional inside information to profit by switching his portfolio back and forth between Citigroup and Goldman five times a year: I want somebody with better ethics […]
I don’t want to hire as my vice president and federal budget czar somebody who investing very part-time with no analytical support and without inside information switches his portfolio back and forth between Citigroup and Goldman five times a year: I want somebody with a better brain.
I think we can assume that the Citi-to-Goldman shifts and the other shifts we see in Ryan’s portfolio are, as DeLong suggests, an attempt to profit off inside information. He hears something about one bank going up or down and moves his money around. Rumors were flying at that time, and especially in Washington.
But people like this always seem to fail upwards. That net worth comes despite a career in public service, including an early career with low-wage staffer jobs that necessitated moonlighting as a personal trainer. Ryan always had a safety net, unlike what he wants to give to the country, in the form of a wealthy family with a major local construction business in Janesville, Wisconsin. Also, his wife comes from an oil fortune. Based on these haphazard trades, it’s a good thing there was a well of money to draw from.
UPDATE: Ryan’s alibi is that these were mechanized trades based on a holding in the Russell 1000 index. Based on the available information, I would say that it’s really stupid to hold a Russell 1000 index because it seems almost impossible to make any money off it. But it satisfies the question of insider trading for me, at least.
… this is also true. If it were an index fund you would see the trades on the index fund. You wouldn’t see individual trades within the index fund. In addition, “There are many too few transactions listed on the financial disclosure form for Ryan to have been rolling his own Russell 1000 tracker.”
I don’t know now that this had to be updated. I already refuted the allegation about the September 18 trade being tied to that meeting. The record shows a series of haphazard trades. They can’t be inside a fund. Maybe Ryan isn’t doing this himself; that’s his claim. Whoever is doing it is a really bad financial consultant, and the fact that this is so heavy on bank stocks at a troubled time for banks should raise some eyebrows.