We begin with the news that three weeks ago, Republican Richard Burr of North Carolina, Chair of the Senate Intelligence Committee, and therefore privy to classified intelligence reports about the novel coronavirus, warned a small group of wealthy and well-connected constituents that the disease was much more serious than public reports suggested.
The same day that Trump told the nation, “It’s going to disappear. One day, like a miracle. It will disappear,” Burr told members of an exclusive club that the novel coronavirus was fast-moving, like the 1918 pandemic, and could lead to school closings and military mobilization to combat it. Thirteen days before the State Department warned against European travel, Burr suggested business leaders should not send their employees to Europe.
Interestingly, this story broke because someone leaked a secret recording of the speech– just who is unclear. It does, though, raise the possibility that even one of Burr’s wealthy constituents is unhappy with the disinformation coming from Republican leadership.
The story that the chair of the Senate Intelligence Committee was saying one thing in private to businessmen and another thing in public to the rest of us was bad enough, but then it got worse. Thursday evening, ProPublica noted that Burr sold off more than $1.5 million in stock during this period, an amount that made up almost all of his assets. The sales were a set of 33 transactions that were the most stock he had sold in a single day in 14 months. So while he was privy to daily security briefings on how bad things were going to get, he reassured the public and sold his own stock. A week later, the market began its historical slide, losing about 30% of its value since he sold. When NPR asked his spokesperson to comment on the stock sale, Caitlin Carroll responded “lol.” She later said that was in response to the story itself and was intended to be off the record.
But then it got weirder. It turns out that Burr was not the only one. Apparently Senator Kelly Loeffler (R-GA) also dropped seven figures worth of stock the day that she, as a member of the Senate Health Committee, heard a private briefing on the coronavirus from administration officials including the CDC director and Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases. She then turned around and bought stock in Citrix, a technology company that makes GoToMeeting software for telecommuting, and another technology company, Oracle. She, too, continued to downplay the coronavirus, claiming “Democrats have dangerously and intentionally misled the American people on #Coronavirus readiness. Here’s the truth: [Trump] & his administration are doing a great job working to keep Americans healthy and safe.”
When asked about her stock transactions, Loeffler tweeted: “This is a ridiculous and baseless attack. I do not make investment decisions for my portfolio. Investment decisions are made by multiple third-party advisors without my or my husband’s knowledge or involvement.” In fact, her initial disclosure of the stock sales said they were her husband’s stocks; she later revised it to say they were jointly owned. Loeffler is married to the chairman and CEO of the New York Stock Exchange. Her worth is estimated at $500 million. She was not elected to her seat but was appointed by Georgia Governor Brian Kemp to the seat of retiring Senator Johnny Isakson, likely in hopes of attracting more suburban women to the Republican standard in 2020. Loeffler has pledged $20 million of her own money to hold her seat in November.
On his show on the Fox News Channel tonight, personality Tucker Carlson said that Burr had betrayed the country and must resign to await prosecution for insider trading. But Renato Mariotti, a former federal prosecutor and legal analyst for CNN, explained that it would be really hard for prosecutors to prove insider trading in his case. He noted first of all the insider trading by members of Congress was legal until the STOCK Act of 2012, and that Burr was one of the only three senators who voted against it, arguing that insider trading laws already applied to Congress. STOCK stands for “Stop Trading on Congressional Knowledge.”
Mariotti explained how a prosecutor would have to prove that Burr had a specific piece of knowledge that the public did not and that that information would drop stock prices. Burr could simply say there was a lot of information about the coronavirus out there, and that he could not have predicted what would happen to the stock market because of it. There is no doubt the SEC (the U.S. Securities and Exchange Commission), which oversees the stock market, should look into it, Mariotti says, but it’s premature to jump to the conclusion that Burr can be charged with insider trading.
This matters, though, because sure looks bad, and it brings to mind what happened in the U.S. after the stock market crash of 1929 and the ensuing Depression. During the heady days of the 1920s, people hadn’t paid a lot of attention to how leaders were making money. When they started to pay attention after the Crash, they discovered that the leaders who were preaching to them about austerity had been cheating. When the Senate held hearings about how to resolve the crisis, the former president of the Stock Exchange, a man named Richard Whitney, told senators the only way to fix the problem was to cut government salaries and veterans’ benefits. (When senators asked him why he couldn’t take a pay cut himself, he told them he made “very little,” only $60,000 a year, which was six times what a senator made.) Six years later, Americans learned that Whitney had been stealing assets and investing the money in failing companies. He went to prison for embezzlement.
Whitney’s story, and others like it, destroyed the reputation of the American businessman, the figure who had come to symbolize the genius behind what had seemed to be the prosperity of the 1920s. From being lionized as the nation’s leaders, they became symbols of what had gone wrong with America. In October 1936, after four years of New Deal programs, Franklin Delano Roosevelt illustrated this change. He noted: “They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.”
A similar redefinition seems quite possible now. On Twitter, David Frum noted that “we need to see the stock trades of President Trump and his family in the month of February,” to which writer Greg Olear responded: “And January.”
Today in coronavirus news, California Governor Gavin Newsom ordered the state’s 40 million residents to stay at home except for essential trips for supplies; the Trump administration asked state labor officials to be vague about how many unemployment claims are coming in; the State Department has urged Americans abroad either to come home now or plan to stay where they are; and while Italy’s deaths continue to climb, China today reported that it has had no new local cases in the past 48 hours (although 39 people had brought the disease in from overseas).
The U.S. now has more than 10,000 confirmed coronavirus infections and has suffered 140 deaths. The surge in cases is likely a result of increased testing.
Heather Cox Richardson is Professor of History at Boston College. This was originally published in her Substack newsletter on January 17, 2020. Subscribe for free here.