5 ms·

The data are old, but from 1993 to 1998, US senators outperformed the market by up to 12.3% [0] [0] https://insidertrading.procon.org/view.answers.php?question

by cochne 6y ago

The data are old, but from 1993 to 1998, US senators outperformed the market by up to 12.3% [0] [0] https://insidertrading.procon.org/view.answers.php?questionID=001034 https://insidertrading.procon.org/view.answers.php?questionI...

booleandilemma 6y ago
Who knew our officials were such savvy traders? We must be electing the right people.
- wpietri 6y ago
  Personally, my suggestion is that federal elected officials be required to put all their assets into a blind trust managed by some common third party (e.g., the CBO or a non-for-profit money manager). If public service is truly important to them, that shouldn't be a big barrier. We don't need people with a conflict of interest leading the nation.
  - curiousllama 6y ago
    How would you deal with illiquid assets? I can't imagine a republican taking the business they spent their whole life building and putting it into a trust managed by government bureaucrats.
    - pjc50 6y ago
      If they don't want to do that, they could always not become a politician? Maybe leave some space for people who aren't business owners, who are spectacularly over-represented?
      - wpietri 6y ago
        Exactly. With 325 million people, we shouldn't have a problem finding 542 elected officials who are willing to put their full-time focus on the job.
    - deleted 6y ago
      [deleted]
    - TuringNYC 6y ago
      On the contrary! In some cases, individuals strive for elected/appointed office because there are clauses which allow for penalty-free exits from locked-up equity. I realize this doesnt help for illiquid assets, but it does help for assets where you are locked into vesting schedules.
    - wpietri 6y ago
      I'm not seeing the bad part here. Every day there are people who sell off their business and go do something else. If an owner isn't ready for that, well, they can keep running the business. I also think it's fine if the trust doesn't really manage the business, but instead just sells it off and puts the money in stock and bond index funds. And I think it's not just Republicans who would have to do some hard thinking here. Bloomberg is a Democrat, for example. Does he want to be president, or does he want to run Bloomberg? Both of those seem like plenty for one person to do. I think it's reasonable to say that if he wants to be our leading public servant for a number of years, he should sell off his business to people who have time to focus on it.
  - cat199 6y ago
    > common third party so you're proposing one unelected entity which basically has full control of all personal assets of the legislature? seems like a pretty big potential for vulnerability
    - wpietri 6y ago
      You realize that one unelected entity has control over all the retirement assets of 40% of America, right? I think if we can handle the Social Security Administration existing, we can handle somebody running a small fund for less than 600 people.
      - s1artibartfast 6y ago
        You know that the SSA does not manage any market invested assets, right? When Social security taxes exceed payout (which they haven't since 2009), the income is used to finance deficit spending and the SSA is given a special federal bond.
        wpietri 6y ago
        Sure. But there's an enormous amount of money flowing there, far more than in a tiny investment fund, so it's still a potential vulnerability. The US Treasury and the US Federal Reserve do manage actual assets, and again at enormous scale.
  - sadadar 6y ago
    Most of them do this. Like in the recent bashing of a bunch of senators for market insider trading a few of them had their money in blind trusts invalidating the criticism. One of them was Feinstein.
dsparkman 6y ago
In that time period is was perfectly legal for members of Congress to engage in insider trading.
- cochne 6y ago
  You are right, the STOCK act to prevent insider trading was passed in 2012. Since then, it seems studies have shown the advantage has disappeared [0] [0] https://www.nber.org/papers/w26975?utm_campaign=ntwh&utm_medium=email&utm_source=ntwg24&mod=article_inline https://www.nber.org/papers/w26975?utm_campaign=ntwh&utm_med...
sesuximo 6y ago
That's a suspicious timeline. 98 was the Russian financial crisis. Do you get the same number if you include the crisis?

by cochne 6y ago

booleandilemma 6y ago

Who knew our officials were such savvy traders? We must be electing the right people.

wpietri 6y ago
Personally, my suggestion is that federal elected officials be required to put all their assets into a blind trust managed by some common third party (e.g., the CBO or a non-for-profit money manager). If public service is truly important to them, that shouldn't be a big barrier. We don't need people with a conflict of interest leading the nation.
- curiousllama 6y ago
  How would you deal with illiquid assets? I can't imagine a republican taking the business they spent their whole life building and putting it into a trust managed by government bureaucrats.
  - pjc50 6y ago
    If they don't want to do that, they could always not become a politician? Maybe leave some space for people who aren't business owners, who are spectacularly over-represented?
    - wpietri 6y ago
      Exactly. With 325 million people, we shouldn't have a problem finding 542 elected officials who are willing to put their full-time focus on the job.
  - deleted 6y ago
    [deleted]
  - TuringNYC 6y ago
    On the contrary! In some cases, individuals strive for elected/appointed office because there are clauses which allow for penalty-free exits from locked-up equity. I realize this doesnt help for illiquid assets, but it does help for assets where you are locked into vesting schedules.
  - wpietri 6y ago
    I'm not seeing the bad part here. Every day there are people who sell off their business and go do something else. If an owner isn't ready for that, well, they can keep running the business. I also think it's fine if the trust doesn't really manage the business, but instead just sells it off and puts the money in stock and bond index funds. And I think it's not just Republicans who would have to do some hard thinking here. Bloomberg is a Democrat, for example. Does he want to be president, or does he want to run Bloomberg? Both of those seem like plenty for one person to do. I think it's reasonable to say that if he wants to be our leading public servant for a number of years, he should sell off his business to people who have time to focus on it.
- cat199 6y ago
  > common third party so you're proposing one unelected entity which basically has full control of all personal assets of the legislature? seems like a pretty big potential for vulnerability
  - wpietri 6y ago
    You realize that one unelected entity has control over all the retirement assets of 40% of America, right? I think if we can handle the Social Security Administration existing, we can handle somebody running a small fund for less than 600 people.
    - s1artibartfast 6y ago
      You know that the SSA does not manage any market invested assets, right? When Social security taxes exceed payout (which they haven't since 2009), the income is used to finance deficit spending and the SSA is given a special federal bond.
      - wpietri 6y ago
        Sure. But there's an enormous amount of money flowing there, far more than in a tiny investment fund, so it's still a potential vulnerability. The US Treasury and the US Federal Reserve do manage actual assets, and again at enormous scale.
- sadadar 6y ago
  Most of them do this. Like in the recent bashing of a bunch of senators for market insider trading a few of them had their money in blind trusts invalidating the criticism. One of them was Feinstein.

dsparkman 6y ago

In that time period is was perfectly legal for members of Congress to engage in insider trading.

cochne 6y ago
You are right, the STOCK act to prevent insider trading was passed in 2012. Since then, it seems studies have shown the advantage has disappeared [0] [0] https://www.nber.org/papers/w26975?utm_campaign=ntwh&utm_medium=email&utm_source=ntwg24&mod=article_inline https://www.nber.org/papers/w26975?utm_campaign=ntwh&utm_med...

sesuximo 6y ago

That's a suspicious timeline. 98 was the Russian financial crisis. Do you get the same number if you include the crisis?