As Fears of Banking Crisis Surged, Members of Congress Sold Bank Stocks

“As the Silicon Valley Bank was closed, even during that period, there were reports that members of Congress were trading bank stocks,” Mr. Brown said. “I mean, imagine that — that members of Congress, we have more inside information,” he said, adding, “members of Congress are able, because of our jobs, to know more about the economy.”

Representative Dan Goldman, a New York Democrat, sold shares of First Republic Bank, the large depositor that was rapidly losing both cash and clients, on March 15, the day before it received an industry bailout of $30 million.

The wife and children of Representative Ro Khanna, Democrat of California, sold First Republic shares that same day. Representative John Curtis, Republican of Utah, sold shares in First Republic from a joint account with his spouse on March 16, the day the industry bailout occurred.

By that time, First Republic shares had already fallen nearly 80 percent from a February peak. The timing of the sales by those three lawmakers or their relatives meant that the sellers averted an additional price swoon that was still to come. First Republic stock is now down nearly 90 percent since the beginning of this year.

A spokesman for Mr. Goldman has said that his portfolio is managed by a third party without his knowledge and that he is setting up a blind trust to avoid any appearance of a conflict of interest. Mr. Khanna has said that his filings relate to trades made by a diversified trust belonging to his wife and young children and that he has no involvement in it. Spokesmen for Mr. Curtis did not respond to requests for comment.

Some members were also buying bank shares during the volatility. On March 17, Representative Nicole Malliotakis, Republican of New York, bought shares of New York Community Bancorp after private discussions with New York State bank regulators. Her transaction was first reported by The Wall Street Journal.

Two days later, New York Community Bancorp bought assets belonging to the failed Signature Bank — a deal that prompted its biggest share rally ever. Around that same time, other lawmakers, including Senator Gary Peters, Democrat of Michigan, and family members of Mr. Khanna, bought shares in larger U.S. banks, like Truist Financial. Mr. Goldman, among other transactions, made a series of purchases of shares in foreign banks, like Lloyds Banking Group and Mizuho Financial Group.

A spokeswoman for Ms. Malliotakis said that her financial adviser had recommended the purchase and that it amounted to less than $5,000 in value. A spokesman for Mr. Peters did not respond to questions about the transaction.

Article source: https://www.nytimes.com/2023/04/19/us/politics/congress-stock-trading-banks.html