Paul Ryan Sold Shares on Same Day as Private Briefing of
Banking Crisis 

Vice-presidential candidate denies he profited from a 2008
meeting with Fed chairman in which officials outlined fears
for financial crisis

Dominic Rushe in New York
guardian.co.uk
14 Aug 2012 

http://m.guardian.co.uk/world/2012/aug/13/paul-ryan-sold-shares-banking-crisis?cat=world&type=article

Paul Ryan, Mitt Romney's vice-presidential running mate, sold
stock in US banks on the same day he attended a confidential
meeting where top level officials disclosed the sector was
heading for a deep crisis.

The congressman on Monday denied profiting from information
gleaned from the meeting on 18 September 2008 when Federal
Reserve chairman Ben Bernanke, then treasury secretary Hank
Paulson and others outlined their fears for the banking
sector. His office said he had no control over the trades.

Public records show that on the same day as the meeting, Ryan
sold stock in troubled banks including Wachovia and Citigroup
and bought shares in Goldman Sachs, Paulson's old employer
and a bank that had been disclosed to be stronger than many
of its rivals. The sale was not illegal at the time.

Not long after the meeting, Wachovia's already troubled share
price went into free fall. It plunged 39% on the afternoon of
26 September alone as investors worried the bank would
collapse. It was eventually taken over by Wells Fargo for
$15bn, a fraction of its former value.

Citigroup's share price fell soon after the meeting. In
October 2008 Citigroup was among the largest beneficiary of
the troubled asset relief program (Tarp), the taxpayer-
funded bailout of the banking sector.

Ryan was a supporter of the Tarp bailout - a position that
has put him at odds with the right wing of his party despite
his otherwise conservative credentials. Goldman Sachs and
Wells Fargo are now among his largest financial supporters,
according to the Center for Responsive Politics.

The trades were highlighted at the weekend by the Richmonder,
a left-leaning political blog in Virginia.

After the story was picked up by the media on Monday, the
Romney campaign moved to deny it. Talking Points Memo quoted
Larry Gaffney, an independent accountant for the partnership
that handled the trades questioned by commentators, said the
shares were not controlled by Ryan.

"Trades are done automatically based on an algorithm on a
regular basis," said Gaffney, in a statement to TPM that was
provided by the Romney campaign. "In addition, this index was
held at the time within a partnership in which Rep. Ryan had
and continues to have no trading authority."

Until this year members of Congress were allowed to trade on
price-sensitive information gathered at Washington meetings.
Nor is Ryan alone in having done so. CBS's 60 Minutes
criticised Democrat Nancy Pelosi for buying into Visa's
initial public offering as the House discussed credit card
legislation.

After the CBS documentary, pressure mounted for change. In
April, Barack Obama signed legislation that bars members of
Congress and other federal workers from profiting from non-
public information learned on the job. As well as banning
insider trading the Stop Trading on Congressional Knowledge
(Stock) Act requires members of Congress to post details of
transactions exceeding $1,000.

In April the Office of Congressional Ethics cleared Spencer
Bachus, Republican chairman of the House Financial Services
Committee, of allegations of insider dealing. Critics had
charged he had taken advantage of insider information to
trade shares on numerous occasions.

Bachus was present at the meeting that Ryan attended with
Bernanke and Paulson. The next day he traded "short" options,
betting on a decline in share prices in the financial
services sector.

Attendees at the meeting have said Bernanke and Paulson's
warnings were met with stunned silence. "When you listened to
him describe it you gulped," Senator Charles Schumer told the
New York Times.

[This article was updated at 9.30pm ET on 13 August to
reflect a denial of impropriety by on the part of Ryan.]

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