THE WONK WHO SLAYS WASHINGTON CONGRESS IS GETTING RICH OFF WALL STREET AND PETER ScHWEIZER WON’T STOP UNTIL EVERYONE KNOWS IT. BY PETER J. BOYER PHOTOGRAPH BY ANDREW TINGLE ILLUSTRATION BY EDEL RODRIGUEZ POLITICS MONEY N THE SPRING of 2010, a bespectacled, middle- that anticipated the effect of government policy. THE GET-RICH CONGRESS aged policy wonk named Peter Schweizer fired “Senator Kerry does not buy, sell, or trade stocks,” says Jodi EVERY MEMBER OF THE HOUSE AND SENATE CAN TRADE STOCKS up his laptop and began a months-long odys- Seth, Kerry’s spokeswoman. She notes that Kerry’s holdings AND MAKE LAND DEALS WHILE CONSIDERING MAJOR BILLS. sey into a forbidding maze of public databases, are in family trusts and managed by independent trustees OUR GUIDE TO EIGHT WHO MIXED BUSINESS WITH GOVERNING. hunting for the financial secrets of Washing- with whom he does not communicate. Further, Seth says, ton’s most powerful politicians. Schweizer Kerry is not a beneficiary of Teresa Heinz Kerry’s trusts, I had been struck by the fact that members of which were established before they were married. In any Congress are free to buy and sell stocks in companies whose case, Seth adds, Kerry was running for president when the fate can be profoundly influenced, or even determined, by Medicare bill was passed, and he missed much of the debate. Washington policy, and he wondered, do these ultimate in- “It’s not that I think John Kerry is calling up his broker, on siders act on what they know? Yes, Schweizer found, they health care, and saying, ‘Buy this company, sell that com- certainly seem to. Schweizer’s research revealed that some pany,’ ” Schweizer says. “The issue is one of a double standard.” of Congress’s most prominent members are in a position to He notes that if the executive of a health-care company were REP. NANCY PELOSI SEN. MAX BAUCUS SEN. JOHN KErrY REP. JARED POLIS routinely engage in what amounts to a legal form of insid- in discussions with the White House over pending legislation When Visa went public in Baucus played a central John and Teresa Heinz Kerry Polis sat on two commit- er trading, profiting from investment activity that, he says, that would affect his industry, and then made a series of un- March 2008, then–Speaker role in forging the health- made numerous trades in tees central to the crafting “would send the rest of us to prison.” usual stock transactions related to the industry, the SEC might of the House Pelosi and care-reform bill. As he was health-care stocks, buying and language of Obama’s her husband bought some negotiating with pharmaceu- almost $750,000 in Teva health-care bill. At the same Schweizer, who is 47, lives in Tallahassee with his wife and well open an insider-trading investigation. “The only group in of their shares at the tical companies and putting Pharmaceuticals in Novem- time, he invested millions of children (“New York or D.C. would be too distracting—I’d America that we exempt is politicians, who are probably the opening IPO price—access his imprint on the legislation, ber 2009 alone, while Kerry dollars in stocks and funds never get any writing done”) and commutes regularly to last people about whom we should be saying, ‘Oh, we’ll take that would be virtually Baucus was also buying and actively pushed Obamacare related to health care and Stanford, where he is the William J. Casey research fellow at their word for it,’ ” he says. “That’s what’s so amazing to me.” impossible for the average selling health-care stocks. as a member of the health- pharmaceuticals. the Hoover Institution. His circle of friends includes some The Kerry trustees’ impeccable timing in drug company individual investor. care subcommittee. bare-knuckle combatants in the partisan frays (such as con- trades was evident again in 2007, when the federal govern- servative media impresario Andrew Breitbart), but Schweizer ment was weighing whether to discontinue Medicare reim- himself comes across more as a bookish researcher than the bursement for certain anemia drugs used by cancer patients. IMAGES right-wing hit man liberal critics see. Indeed, he sounds When the government announced that it would limit reim- somewhat surprised, if gratified, to have attracted attention bursements, shares in Amgen, one of the drugmakers at issue, GETTY — with his findings. “To me, it’s troubling that a fellow at Stan- dropped 15 percent. Kerry’s wife happened to be an Amgen ford who lives in Florida had to dig this up.” stockholder but avoided losses; her shares, valued at between SOMODEVILLA It was in his Tallahassee office that Schweizer began what he $500,000 and $1 million, were unloaded more than a week CHIP REP. SPENCER BACHUS REP. JOHN BOEHNER REP. SHELLEY CAPITO REP. DEnnIS HASTERT thought was a promising research project: combing through before the government’s announcement. , congressional financial-disclosure records dating back to Schweizer, an unabashed conservative and a foreign-policy After learning in a Sep- On Dec. 10, 2009, then– After a briefing with Paulson When Hastert was Speaker IMAGES 2000 to see what kinds of investments legislators were mak- adviser to Sarah Palin, has written books about Reagan and tember 2008 briefing with House Minority Leader and Bernanke, Capito of the House, he inserted GETTY IMAGES Treasury Secretary Henry Boehner bought tens of sold between $100,000 a $207 million earmark into ing. He quickly learned that Capitol Hill has quite a few mar- the Bushes as well as polemics about the ruinous ways of lib- - AFP Paulson and Fed chairman thousands of dollars of and $250,000 shares of a federal highway bill for — ket players. He narrowed his search to a dozen or so eralism. But this latest book is not an overtly partisan work; as GETTY — Ben Bernanke that the health-care stocks, includ- Citigroup; she and her a parkway near land he members—the leaders of both houses, as well as members of the title, Throw Them All Out, suggests, it should discomfit KAMM financial markets were in ing in health-insurance husband accrued as much owned in rural Illinois. When key committees—and focused on trades that coincided with conservatives and liberals, Democrats and Republicans, alike. deep trouble, Bachus began companies. On Dec. 15, The as $50,000 in capital gains he first went to Congress in SOMODEVILLA NICHOLAS aggressively buying and Washington Post declared from Citigroup transactions 1986, Hastert’s net worth big policy initiatives of the sort that could move markets. Indeed, Schweizer reports that, during the debate over , selling stock options. that the “public option” for made throughout the crisis. was less than $300,000. While examining trades made around the time of the 2003 Obama’s health-care reform package, John Boehner, then CHIP , IMAGES health insurance was dead. When he retired in 2007, it Medicare overhaul, Schweizer experienced what he calls his the House minority leader, was investing “tens of thousands was close to $11 million. IMAGES of dollars” in health-insurance-company stocks, which GETTY “Holy crap!” moment. The legislation, which created a new - GETTY prescription-drug entitlement, promised to be a huge boon to made sizable gains when the proposed public option in the - CALL the pharmaceutical industry—and to savvy investors in the reform deal was killed. (“There are laws and there are rules BLOOMBERG — Capitol. Among those with special insight on the issue was of the House, and they should be followed,” a Boehner ROLL — Massachusetts Sen. John Kerry, chairman of the health sub- spokesperson tells Newsweek. “The speaker does not make after attending two such briefings, Bachus bought options in seemed confident in its effect, now buying options that -ef ROBERTS committee of the Senate’s powerful Finance Committee. Kerry those trades himself. He has a financial adviser in Ohio.”) WILLIAMS an index fund (ProShares UltraShort QQQ) that effectively fectively bet that the market would rise—to mixed results. JOSHUA is one of the wealthiest members of the Senate and heavily in- One of the more dramatic episodes in the book recounts TOM amounted to a bet that the market would fall. That is indeed Bachus was hardly the only member of Congress trading as , , vested in the stock market. As the final version of the drug pro- the trading activity of Republican Rep. Spencer Bachus, of what happened, and, on Sept. 23, Bachus sold his “short” op- the government was coming to grips with the financial crisis. IMAGES IMAGES gram neared approval—one that didn’t include limits on the Alabama, who, as the ranking member of the House Finan- tions, purchased for $7,846, for more than $13,000—nearly After the first briefing from Bernanke and Paulson, brokers GETTY GETTY price of drugs—brokers for Kerry and his wife were busy trad- cial Services Committee, was privy to sensitive high-level - doubling his investment in four days. for Democratic Congressman Jim Moran, of Virginia, and his - ing in Big Pharma. Schweizer found that they completed 111 meetings during the 2008 financial crisis and proceeded to CALL Around the time Congress and the Bush administration wife sold their shares in 90 companies, dodging the losses stock transactions of pharmaceutical companies in 2003, 103 make a series of profitable stock-option trades. ROLL worked out a TARP bailout, Bachus made another options that others who stayed in the market would soon face. Re- QUARTERLY — of which were buys. Bachus was known in the House as a guy who liked to play buy and again nearly doubled his money.