It’s hard to find an American politician who has been a more vocal opponent of online poker than Representative Spencer Bachus of Alabama. The 10-term congressman is the top-ranking Republican on the House Financial Services Committee, and it was in that capacity that he had a say in committee chairman Barney Frank’s 2008 hearings on repealing the 2006 Unlawful Internet Gambling Enforcement Act. Bachus, a co-sponsor of the UIGEA in the House of Representatives, took full advantage of his position as the ranking minority member on the committee to make ridiculous claims about online gambling at every opportunity: that it was the “crack cocaine” of gambling, that it had “an entire generation” of teenagers addicted, and that one-third of all college students who gambled online attempted suicide.
Bachus’ demagoguery was loud enough to defend UIGEA from revision or repeal and stupid enough to earn him the scorn of online poker players throughout the country for deliberately spreading misinformation about their favorite game for his own political advantage, but to the average American outside of Alabama’s 6th District there was little reason to even know that this zealot existed before this past weekend. That’s when 60 Minutes reported on a new book about insider trading by members of Congress and Bachus’ name figured heavily into the story. On Sunday morning, Bachus was invisible to most Americans; by that night, he was instantly reviled by people all over the political spectrum for his extreme lack of judgment.
The allegations against Bachus aren’t the sort that are likely to roll off his back with unemployment nearing double digits and people all across the country protesting America’s growing income inequality. The book, Throw Them All Out by Hoover Institute fellow Peter Schweizer, says Bachus used his position on the Finance committee for personal gain thanks to a loophole in the law that says insider trading by Congressmen is perfectly legal. Armed only with the facts, Schweizer lays out a pattern of conduct by Bachus that explains why the Congressman doesn’t think average Americans are capable of making financial decisions for themselves.
In the middle of September 2008, Bachus was the ranking Republican on the House Financial Services Committee. That committee assignment earned him a seat in a closed-door meeting with Secretary of the Treasury Henry Paulson and Federal Reserve Chairman Ben Bernanke, where the two warned Bachus and other congressional leaders that the United States was just days away from the onset of the biggest financial crisis since the Great Depression. One day later, knowing about both the forthcoming financial meltdown and how the government would approach dealing with the crisis, Spencer Bachus had a choice to make: do the right thing, or take advantage of the fact that, under the law, a Congressman can’t be prosecuted for insider trading.
Following something approaching the bare minimum of good behavior required of him by the law and the House Rules, the Congressman bet on the direction of the stock market instead of trading directly in stocks overseen by his congressional committee. But Schweizer’s book says that Bachus made “no less than forty” of these short-term options trades between July and November of 2008, banking up to $50,000 thanks to the sort of particularly good timing that would get the average investor (or, say, Martha Stewart) thrown in jail for at least a few years. And in 2009, when financial reforms were put in place, Bachus profited for tens of thousands of dollars more.
A spokesman for the congressman told 60 Minutes that Bachus “makes sure to comply with the law and House Ethics rules, and his financial transactions are publicly disclosed,” and that he “does not trade in financial sector companies over which the Financial Services Committee has jurisdiction.” That’s a pretty specific set of statements reading more like a defense strategy than the components of a personal ethical code of conduct. Since he can’t face any criminal penalties thanks to his privileged status as an elected legislator, there’s no need for Bachus to construct such an evasive explanation of his activities. And yet here he is, telling us how he hasn’t done anything wrong.
The argument Spencer Bachus is fond of making is that legalizing online gambling is dangerous because people aren’t capable of controlling themselves. Now it’s pretty easy to see why the congressman feels the way he does. While he was in a position of power and privilege and could be restrained only by his own ethics, he opted to make short-term bets on the direction the American financial markets would take. In poker terms, he was on the button and he dealt from the bottom of the deck. He was given a golden opportunity to cheat and get away with it, and he couldn’t help himself…no less than 40 times. How could Spencer Bachus ever trust anybody else to be responsible when he can’t trust himself?