Could COVID Insider Trading Scandals Cost Republicans the Senate?

Loeffler with Der Trumpenführer.

Martha Stewart went to prison for insider trading - using non-public information - in the sale of $230,000 of stock, an amount that pales in comparison to the amounts of stock sold by Republicans in the U.S. Senate after an special intelligence briefing on the coming pandemic and just before the stock market collapsed.  Using this privileged information, these senators avoid millions of dollars of losses while the rest of the public and retirement funds were slammed as the market cratered. Now, these individuals are under FBI and Security and Exchange Commission ("SEC") investigation for these "insider" deals.  Vanity Fair looks at the possible repercussions for Republicans.  Here are excerpts:

On Thursday, Senator Kelly Loeffler provided information to federal law enforcement about controversial stock trades she made just before the coronavirus-induced market crash. As Politico reported, the Georgia Republican turned over documents to the Justice Department, the Securities and Exchange Commission, and the Senate Ethics Committee. According to a statement released by her spokesperson on Thursday, the documents showed that she and her husband, New York Stock Exchange chairman Jeffrey Sprecher, “acted entirely appropriately and observed both the letter and the spirit of the law”—something Loeffler has maintained throughout, even as accusations of insider trading have swirled.

Loeffler’s decision to turn over documents came as another of her Republican Senate colleagues faces similar questions. On Thursday, North Carolina Senator Richard Burr announced he would step down from his position as Senate Intelligence Committee Chairman. Burr is being investigated for up to $1.72 million in stock sales he conducted just before coronavirus caused the market to plunge in February. The FBI has reportedly served a warrant for Burr’s cell phone, part of the Justice Department’s inquiry into whether he violated a law prohibiting members of Congress from acting on intelligence they’ve gleaned from their official work. Burr, like Loeffler, denies any wrongdoing.

As the Burr and Loeffler probes escalate, the Senate is facing fundamental questions around whether some of the most powerful lawmakers in the country should buy and sell stock at all. As my colleague Abigail Tracy reported last month, “the perception that anyone in Congress profited off of the coronavirus crisis is a blow to the institution.” In recent weeks, a bill that would prohibit members of Congress from owning individual stocks has gained traction, though Tracy notes that passing such a ban at the moment is unlikely.

The twin controversies have also inspired concern from senior Republicans about their ability to retain control of the Senate. The Washington Examiner’s David Drucker reported on Friday that the GOP is worried about its prospects, fearing that the investigation into Burr’s financial transactions could prompt his resignation before September 4. In that case, Drucker says, “a November special election would be triggered to fill the remainder of his term, multiplying the challenges Republicans face as they scramble to protect their 53-seat majority.” According to a Republican insider, “people still don’t know exactly what transpired, which is why the current review is important. But North Carolina already features what will be a very expensive Senate race, and another one would be quite challenging for Republicans.”

Are There Three Republicans Who Put Country Ahead of Party?

U.S. Senate

The last post looked at the impeding constitutional crisis that Donald Trump is likely to trigger if he tries to fire Special Prosecutor, Robert Mueller, who it seems increasingly is focusing in on the root cause of the Trump campaign's willingness to collude with Russia: illegal financial transactions with Russians and likely money laundering. Trump and his family are all most likely involved as is Jared Kushner and a number of Trump cronies. As conservative columnist Jennifer Rubin notes in a column, "Why would he [Trump] do those things unless there was something really, really bad to find?"  You simply do not slander and undermine a special prosecutor and consider pardon powers if there is nothing to be found. In this situation, it will take three Republican senators to join with Democrat senators to stop Trump's demolition of the rule of law.  A piece in The Atlantic ponders whether and who those senators could be.  Will they put the nation ahead of their political party.  Here are article excerpts:

By midnight on July 20, 2017, it seemed increasingly likely that Donald Trump will fire the special counsel, Robert Mueller.

Mueller embodies what is admirable in U.S. public service: a wounded and decorated Marine Corps veteran of Vietnam, longtime prosecutor and U.S. Attorney under both Republican and Democratic presidents, 12-year director of the FBI under both George W. Bush and Barack Obama, unconnected to scandal or partisan suspicions at any point.

Donald Trump embodies the reverse.

Yet for now Trump has the legal power, directly or indirectly, to dismiss Mueller, if the investigation gets too close to Trump’s obviously sensitive financial concerns. And Trump himself, unaware of history and oblivious to rules, norms, and constraints, has given every indication that this will be his next step.

What happens then? Brian Beutler, of the New Republic, has just put up a bleak scenario, arguing that there really are no guardrails—or, as we observed in Mitch McConnell’s unprecedented stonewalling of a Supreme Court nomination, that the constitutional system’s real protections have been norms rather than formal rules. Someone unconcerned by those norms—McConnell last year, Trump now—can in fact blast right through them. “At the moment there are no reliable sources of accountability,” Beutler writes. “None.”

There are 52 Americans who have it within their power to prove that dark assessment wrong. Really, it would take a subset of just three of those 52. With the 52-48 current party lineup in the U.S. Senate, a switch of three votes of conscience is all it would take to have this branch of government fulfill its checks-and-balances function.

With three votes, a Senate majority could issue subpoenas and compel sworn testimony from Administration officials. It could empower its own thorough investigation, even re-hiring Robert Mueller to lead it. It could compel Donald Trump to release the tax returns about which he is so evidently nervous. It could act as if America in fact possessed a system of rule-of-law, rather than whim-of-one-man.

Ben Sasse could be one of those three, if he were willing to back up his lectures and essays about ethical public life. Lindsey Graham could, since he and John McCain have kept making the case about Trump’s recklessness. Chuck Grassley, who would be 89 years old the next time he’d have to face the voters. Dean Heller, who is in trouble anyway in a state Hillary Clinton carried, and whom Trump demeans and insults. Rob Portman, who has served in “normal” Republican administrations and could ally himself with his state’s governor, John Kasich, as forces for a principled future GOP. Jeff Flake, who in speeches has positioned himself with appeals to a more moderate politics, and who could take up the Maverick mantle of his colleague John McCain. Of course, McCain himself. Lisa Murkowski, who originally won without Republican Party support. Susan Collins, who drew a line at the rushed health-care bill. Richard Burr, who has made more-or-less common cause with his Democratic colleague Mark Warner on the Senate intelligence committee. Ron Johnson, who has just won re-election  and appears to be mad at Trump. Rand Paul, also just elected, if he believed his radical limited-government pitch. Ted Cruz, if he had the courage of his anti-Trump stand at last year’s GOP convention. Even—let’s imagine here—the likes of Tom Cotton, if he were willing to roll the dice and elevate himself as a national figure, for the post-Trump leadership contest against the likes of Sasse, Cruz, and the rest. There are half a dozen other conceivable candidates.

It would take only three. Some—Grassley? Heller? McCain if he is able to vote?—might think: What do they have to lose? They might as well wind up with dignity. Others—Paul, Burr, Johnson, Murkowski—are so far away from re-election that a lot will happen in the meantime. And all of them are senators, part of a body self-consciously proud of its independence, its individual judgment, its role in defending the long-term principles of governance.

A country of 300-plus million people, with the world’s largest economy and most powerful military, should not rely for its orderly stability on the decisions-of-conscience of just three people. But the United States may soon be in that situation. These names will go down in history, depending on the choices they make.  

Sadly, the morality of Republican senators is not what it was back in the Watergate era. Be very afraid.