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Dems Pushing Ethics Probe for Trump Pick Also Traded in Covered Securities

Top Senate Dem held Fannie and Freddie bonds while pushing for federal takeover

Tom Price
Tom Price / AP
January 10, 2017

Congressional Democrats pushing for an ethics probe into a Trump cabinet nominee's stock trades have their own histories of investing in sectors of the economy they oversee, public records show.

Senate Minority Leader Chuck Schumer (D., N.Y.) last week called for an investigation into stock trades by Rep. Tom Price (R., Ga.), who President-elect Donald Trump has tapped to lead the Department of Health and Human Services.

Schumer and Senate Democrats are focusing on Price's stock portfolio and trading history, which has included holdings in a number of health and insurance companies.

"We don't know if he broke the law, but there are certainly enough serious questions to warrant an investigation before any hearing is held on Congressman Price to become secretary of HHS," Schumer said at a press conference last week.

Senate Democrats' strategy on the Price nomination is part of a larger focus on alleged conflicts of interest among Trump cabinet nominees. However, unlike a number of those nominees Price's personal financial information is publicly available due to reporting requirements for members of Congress.

At issue are 40 trades in health industry companies worth more than $300,000. Schumer and Sens. Patty Murray (D., Wash.) and Ron Wyden (D., Ore.), the ranking Democrats on the Health and Finance Committees, respectively, want to put Price's nomination on hold pending an investigation into those trades and whether they coincided with legislation written or supported by Price.

That strategy could open up Senate Democrats to criticism, as Schumer, Wyden, and Democratic members of the Finance and Health Committees, which will both hold confirmation hearings for Price next week, have also traded in industries they oversee.

Schumer himself owned securities that likely benefitted from policies he advanced in his official capacity.

A former member of the Finance and Banking Committees, and the top Senate recipient of Wall Street money in 2009, Schumer was a leading voice for the federal takeover of mortgage insurers Fannie Mae and Freddie Mac in 2008. At the time, he owned thousands of dollars in bonds from both of the troubled government-sponsored enterprises.

The federal takeover "will maximize confidence in Fannie and Freddie while minimizing potential costs to U.S. taxpayers," Schumer said at the time.

"While Fannie and Freddie still have solid fundamentals, it will be reassuring to investors, bondholders and mortgage-holders that the federal government will be behind these agencies should it be needed," he added.

Schumer had purchased Fannie and Freddie bonds in late 2002. By the following year, he was arguing against more stringent regulation of the enterprises, suggesting in an Oct. 2003 hearing that "recent safety and soundness concerns" were rooted in "ideological" opposition to the government's role in insuring home loans.

Schumer held those bonds until late 2008, personal financial disclosures show, when he redeemed between $15,000 and $50,000 from Fannie Mae just a few months after the Treasury Department placed Fannie and Freddie into conservatorship.

The following year, he redeemed between $31,000 and $115,000 in Freddie Mac bonds.

Schumer spokesman Matt House explained that both entities had called in those bonds, and that Schumer himself had not chosen to redeem them. However, he did not dispute that Schumer supported the government's takeover of Fannie and Freddie while holding bonds issued by both, or that that takeover likely improved the value of those bonds.

House denied that the situation was at all comparable to Price's.
"This is entirely different from trading stocks while working on legislation," he wrote in an email. Schumer "wasn’t buying stocks at the same time he was pushing bills, period. That’s what Price was doing."

However, a number of Democrats on the two committees that will handle Price's nomination currently hold or have recently traded in health industry companies such as those that have earned Price their ethics scrutiny.

In 2013, Wyden's wife sold up to $115,000 of stock in pharmacy chain CVS, health insurer WellPoint (now Anthem), and pharmaceutical company Celgene, according to personal financial disclosures. Wyden's office did not respond to questions about the trades.

Health committee member Sen. Sheldon Whitehouse (D., R.I.) also owns Anthem and Celgene stock, and has additional holdings in insurers Aetna and United Healthcare and drug and biotech companies Amgen, Biogen, Bristol Myers Squib, Gilead, Johnson & Johnson, and Merck.

On the Finance Committee, Delaware Democrat Sen. Tom Carper's wife has, since 2015, traded tens of thousands of dollars in stock in companies including medical device manufacturer Medtronic and pharmaceutical firms Johnson & Johnson, Bristol Myers Squib, and PDL Biopharma.

Trump's transition team pointed to those senators' health industry holdings, which were first reported by the Daily Caller, to write off their Price opposition as hypocrisy.

As for Price's investments, allies say it is to be expected that the congressman, who is also a practicing physician, would invest in a sector with which he is familiar.

"It makes sense that someone who would dedicate his entire life to his field of study and practice would also be invested in its growth and innovation," said Ellen Carmichael, a Republican consultant and former Price aide.

"The only reason we even know about these investments is because Dr. Price complied fully with all federal laws and Congressional rules governing the investments and disclosures of lawmakers," Carmichael added in an email.