New York Democratic Senator Kirsten Gillibrand has been an outspoken supporter of banning insider trading in Congress, but she and her husband profited by betting against the housing and real estate market during the 2008 financial crisis.
In November, Gillibrand introduced the Stop Trading on Congressional Knowledge (STOCK) Act to the Senate after a 60 Minutes special exposed the widespread practice of insider trading in Congress.
The bill, which languished for years in Congress, would ban lawmakers from trading stocks using non-public information gleaned during their legislative work.
After the 60 Minutes exposé, Gillibrand became one of the bill’s top proponents.
"We are entrusted with a profound responsibility by the American people to look out for their best interests, and nothing else, certainly not our own financial interests," Gillibrand said in a release after the STOCK Act passed the Senate last week. "Today, we took the first step toward restoring the trust that’s been lost in Washington by ensuring that members of Congress play by the exact same rules as everyday Americans."
Yet Gillibrand and her husband have attracted attention in the past for suspiciously prescient stock bets.
A Wall Street Journal report on congressional trading during the 2008 financial crisis found Gillibrand’s husband had "shorted" housing stocks—meaning he bet that prices on home builder stocks would fall—at least 34 times before the housing market imploded.
Gillibrand’s husband made more than 250 transactions in 2008, when his wife was in the House, and almost all of them were put options on homebuilder stocks such as Beazer Homes USA Inc., Hovnanian Enterprises Inc., Meritage Homes Corp., and Ryland Group Inc.
The Gillibrand’s also shorted the property market. Gillibrand’s husband bought options of ProShares UltraShort Real Estate; these options earned $2 for each $1 fall in real-estate stocks.
In a Jan. 31 press release, the New York Republican Party accused Gillibrand of hypocrisy.
"Senator Gillibrand and her husband profited handsomely off the collapse of the U.S. housing market, and she never adequately explained where they got the special insight to make those profitable bets," said New York GOP Chairman Ed Cox. "Not a lot of ordinary Americans knew to bet against the housing markets; Ms. Gillibrand needs to finally answer whether what she learned in Congress about the imminent collapse of the market had anything to do with her husband shorting housing stocks. In purporting to be a champion of insider trading reform—in a fundraising appeal no less—Ms. Gillibrand may be being too cute by half."
Gillibrand shot back, pointing to her strong track record on transparency.
"Ed Cox is grasping at straws to recycle an old baseless political attack on a member of the Senator’s family that was as specious then as it is now," said Gillibrand spokesperson Glen Caplin said in a statement. "The fact is, Senator Gillibrand has been a leader on transparency and accountability in Congress as the first member ever to voluntarily post her official daily schedule, all earmark requests and her personal financial disclosure statement on her website."
The Gillibrand family's net worth is between $631,000 and $1.365 million, according to the Senator’s disclosure statements.