“The US Banking Crisis and Suspected Insider Trading Among Congressmen”

Bank of America’s continuous “thunderstorms” have caused widespread concern in the market. Mohamed El-Erian, chief economic advisor of Allianz Group in Germany, believes that the current US banking industry is in a stage where “cancer cells” in its body continue to spread. The crisis may worsen further.

Mohamed El-Erian, chief economic adviser at Allianz Group in Germany: The first phase we went through was due to the mishandling of the Fed’s rate hike cycle, sudden and aggressive rate hikes from doing nothing, and poor financial regulation and bank mismanagement , leading to the collapse of four banks. Now we’re in phase 2, the banking crisis is contagious, and people are getting very disturbed now, especially after seeing how much the official response has failed with First Republic’s share price plummeting 97% this year . So, in this second stage, banks that weren’t badly managed themselves suddenly became vulnerable. The third stage is widespread financial contagion, which I hope will not happen, but the credit crunch is rising significantly. Although the big banks are not involved in this crisis at present, the “cancer cells” in the banking industry have begun to spread, and we must pay close attention to them.

U.S. media: Congressional “stock god” emerges amid turmoil in bank stock prices

Since March, the U.S. banking crisis has continued to simmer, and regional bank stocks have been shorted and plummeted, and many investors have suffered heavy losses. However, according to U.S. media reports, members of the U.S. Congress frequently appear as “stock gods” who accurately sell related stocks when banks are closed one after another and get out in time.

According to a Fox News report on the 5th, U.S. Representative Daniel Goldman sold his shares in Pacific Western Bank on March 6. A few days later, the bank was affected by the sudden closure of Silicon Valley Bank, and the stock price began to fall all the way, from over $27 per share when Goldman sold it to less than $6 per share on the 5th of this month. Goldman also sold First Republic shares on March 15.

Coincidentally, Louise Frankel, another congressman and member of the House Appropriations Committee, also sold shares of First Republic Bank on March 16 and bought shares of JPMorgan Chase Bank on March 22. First Republic Bank was taken over by the government on the 1st of this month. Its stock price has plummeted from about $34 per share on March 16 to $0.35 on the 5th of this month. Its depositors and “almost all” assets are taken over by JPMorgan Chase Bank .

In addition, according to reports, Josh Gottheimer, a member of the Financial Institutions Committee of the House of Representatives, and John Curtis, a member of the Federal Representative, also “accurately” sold their stocks when the Bank of America was closed recently.

U.S. media say a large number of members of the U.S. Congress are suspected of insider trading

Public opinion pointed out that members of the US Congress have the conditions to use their powers to profit from insider transactions, for example, they can influence the introduction of policies designed to encourage or discourage specific companies and industries. And many members of Congress have ROIs that are well above the market average ROI. According to an investigation by the New York Times last year, from 2019 to 2021, at least 97 members of the U.S. Congress were suspected of insider trading, accounting for about one-fifth of the total number of members of Congress. Among them, the then Speaker of the House of Representatives Nancy Pelosi and her husband, known as the “Capitol Hill Stock God”, have an investment return rate of 56% in 2020, which dwarfs the 26% performance of well-known investor Warren Buffett in the same period.

When is it time for congressmen to trade in stocks and American politicians use their power for personal gain

In recent years, even though the American public has generally supported the prohibition of stock trading by congressmen and called on Congress to legislate to prevent this phenomenon, most congressmen from both parties in the United States have stood up to express their opposition. Experts believe that this reflects the high degree of consistency between politicians of the two parties in the United States in terms of “guarding and stealing” and using power for personal gain.