Durbin cashed out on inside information: Sun-Times

[Regis Philbin]

http://hotair.com/archives/2009/06/13/durbin-cashed-out-on-inside-information-sun-times/

Durbin cashed out on inside information: Sun-Times

June 13, 2009 by Ed Morrissey

Dick Durbin managed to do all right during the stock collapse. The senior Senator from Illinois and the Democrats’ number-two man in the upper chamber bailed out of the mutual funds that would shortly take a beating, moving his investments into Democratic contributor Warren Buffett’s fund, Berkshire Hathaway, just before the storm hit on Wall Street.

The Chicago Sun-Times and Bloomberg report today that the timing was no coincidence:

As U.S. stock markets plummeted last September, the Senate’s No. 2 Democrat, Dick Durbin, sold more than $115,000 worth of stocks and mutual-fund shares and used much of the money to invest in Warren Buffett’s Berkshire Hathaway Inc.

The Illinois senator’s 2008 financial disclosure statement shows he sold mutual-fund shares worth $42,696 on Sept. 19, the day after then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke urged congressional leaders in a closed meeting to craft legislation to help financially troubled banks. The same day, he bought $43,562 worth of Berkshire Hathaway’s Class B stock, the disclosure shows.

Altogether, Durbin sold investments worth $116,000 in September. By Oct. 2, he had invested $98,046 in Omaha, Neb.-based Berkshire Hathaway, the form shows.
The Standard & Poor’s 500 index plunged 4.7 percent last Sept. 15 after the bankruptcy of Lehman Brothers Holdings Inc. and Bank of America Corp.’s government-engineered takeover of Merrill Lynch & Co. By the end of October, the index had fallen 22.6 percent.

[Richard Tafoya]

The only question is why he was silly enough to ride the market down as long as he did. Or why he jumped into any stock. Berkshire Hathaway is no safe haven - the stock plunged about 50% after September and is just now beginning to recover.

In fact, both the Dow and NASDAQ are doing better at recovering than Buffett.

Let's look at the public information available up to that point that should have pushed any sane investor to cash out.

I guess anyone who read or watched or listened to any news and got out of the market as the economy went into free-fall is guilty of insider trading?

http://en.wikipedia.org/wiki/Subprime_crisis_impact_timeline
-- June 19: Ex-Bear Stearns fund managers arrested by the FBI for their allegedly fraudulent role in the subprime mortgage collapse. The managers purportedly misrepresented the fiscal health of their funds to investors publicly while privately withdrawing their own money.[131]

-- July 11 Indymac Bank, a subsidiary of Independent National Mortgage Corporation (Indymac), is placed into the receivership of the FDIC by the Office of Thrift Supervision. It was the fourth-largest bank failure in United States history,[132] and the second-largest failure of a regulated thrift.[133][134]. Before its failure, IndyMac Bank was the largest savings and loan association in the Los Angeles area and the seventh-largest mortgage originator in the United States.[135]

-- July 17: Major banks and financial institutions had borrowed and invested heavily in mortgage backed securities and reported losses of approximately $435 billion as of 17 July 2008.[136]

-- July 30: President Bush signs into law the Housing and Economic Recovery Act of 2008, which authorizes the Federal Housing Administration to guarantee up to $300 billion in new 30-year fixed rate mortgages for subprime borrowers if lenders write-down principal loan balances to 90 percent of current appraisal value.

-- September 7: Federal takeover of Fannie Mae and Freddie Mac, which at that point owned or guaranteed about half of the U.S.'s $12 trillion mortgage market, effectively nationalizing them. This causes panic because almost every home mortgage lender and Wall Street bank relied on them to facilitate the mortgage market and investors worldwide owned $5.2 trillion of debt securities backed by them.[137][138]

-- September 14: Merrill Lynch is sold to Bank of America amidst fears of a liquidity crisis and Lehman Brothers collapse[139]

-- September 15: Lehman Brothers files for bankruptcy protection[140]

-- September 16: Moody's and Standard and Poor's downgrade ratings on AIG's credit on concerns over continuing losses to mortgage-backed securities, sending the company into fears of insolvency.[141][142]

-- September 17: The US Federal Reserve lends $85 billion to American International Group (AIG) to avoid bankruptcy.

[oxymoron]

Berkshire-Hathaway got creamed like everyone else. Don't these senators have trusts like the President? They shouldn't be able to make stock trades.