The venerable TV investigative journalism program 60 Minutes recently blew the lid off a story we've been tracking for months. And you absolutely won't believe it when you hear about it.
Congress can trade on insider information -- and it's 100% legal.
Here's an excerpt from the 60 Minutes Report:
"In mid September 2008, with the Dow Jones Industrial Average still above 10,000, Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke were holding closed-door briefings with congressional leaders, and privately warning them that a global financial meltdown could occur within a few days. One of those attending was Alabama Representative Spencer Bachus, then the ranking Republican member on the House Financial Services Committee and now its chairman.
"While Congressman Bachus was publicly trying to keep the economy from cratering, he was privately betting that it would, buying option funds that would go up in value if the market went down. He would make a variety of trades and profited at a time when most Americans were losing their shirts."
And this isn't the only case. There's plenty of documentation of this kind of behavior going on -- on both sides of the aisle -- for years.
It's enough to make you sick. No wonder nearly half of the members of Congress are millionaires and their investments outperform the average investor's by an extra 6.8% each year. That's no small potatoes, either. It can add up to thousands -- even millions of dollars over time.
Something has to be done. Luckily, thanks to widespread attention finally being given to this issue, there's a chance legislation seeking to make insider trading rules apply to Congress (legislation which was long before left for dead) may actually pass.
But I wouldn't hold my breath. (For more of our thoughts on the topic read this.)
Meanwhile, I figure if you can't beat Congress, then you might as well join them.
That's why I've decided to share an interesting piece of research with readers: the most popular high-yield stock owned by members of Congress.
The stock I'm talking about is AT&T (NYSE: T). At last count, 57 members of Congress -- 20 Democrats and 37 Republicans -- owned stock in the company. That makes it the most popular income stock owned by our representatives on Capitol Hill.
And in this case, they might be on to something.