Federal Reserve audit forfeits franchise for securities fraud and embezzlement of $16 trillion

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Fed until dissolved by Act of Congress or until forfeiture of franchise for violation of law.

An audit of the Federal Reserve has revealed that the privately owned Federal Reserve secretly doled out more than $16 trillion in zero interest loans to some of the largest financial institutions and corporations in the United States and throughout the world. The non-partisan, investigative arm of Congress also determined that the Federal Reserve acted illegally. In fact, according to the report, the Federal Reserve knew their financial transactions were illegal and provided conflict of interest waivers to its employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans. The report is evidence that reveals major securities fraud in the embezzlement of $16 trillion by the Federal Reserve. Securities fraud and embezzlement are both felony criminal offenses. Any criminal offense committed by the Federal Reserve forfeits the Federal Reserve franchise – U.S. Code TITLE 12 CHAPTER 3 SUBCHAPTER IX § 341.

Second Embezzlement is the act of dishonestly appropriating or secreting assets by one or more individuals to whom such assets have been entrusted. Embezzlement is performed in a manner that is premeditated, systematic and/or methodical, with the explicit intent to conceal the activities from other individuals, usually because it is being done without their knowledge or consent. U.S. Code TITLE 18 > PART I > CHAPTER 31 – EMBEZZLEMENT AND THEFT § 644. Banker receiving unauthorized deposit of public money.

Whoever, not being an authorized depositary of public moneys, knowingly receives from any disbursing officer, or collector of internal revenue, or other agent of the United States, any public money on deposit, or by way of loan or accommodation, with or without interest, or otherwise than in payment of a debt against the United States, or uses, transfers, converts, appropriates, or applies any portion of the public money for any purpose not prescribed by law is guilty of embezzlement and shall be fined under this title or not more than the amount so embezzled, whichever is greater, or imprisoned not more than ten years, or both; but if the amount embezzled does not exceed $1,000, he shall be fined not more than $1,000 or imprisoned not more than one year, or both.

$16 trillion is 10 times more than what the U.S. Congress authorized and Bush ($700 billion) and Obama ( $787 billion) signed off on. The Federal Reserve was only authorized by Congress to disburse $1.487 trillion in federal tax dollars in bailouts. The Federal Reserve embezzled another $14.5 trillion.

The Congressional report determined that the Fed secretly hide most of the embezzled money into their own banks. The rest the Fed unilaterally transfered trillions of dollars to foreign banks and corporations from South Korea to Scotland. Foreign banks and corporations which the Federal Reserve bankers had a personal financial interest or stake in.

The report reveals that the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in federal money from the Fed – conflict of interest. Moreover, JP Morgan Chase served as one of the clearing banks (money laundering banks) for the Fed’s emergency loans programs (aka – embezzlement schemes).

In another disturbing finding, the Government Accountability Office said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given federal funds. One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it would have exposed the Fed’s conflict of interest and major securities fraud in the embezzlement of $16 trillion.
The investigation also revealed that the Fed outsourced most of its embezzling to private contractors, many of which were rewarded with extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their $16 trillion embezzlement scheme to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. For their part the same firms also received trillions of dollars in Fed loans at near-zero interest rates. Morgan Stanley helped the Federal Reserve banker launder embezzled $trillions into AIG.

A more detailed Government Accountability Office investigation into corruption charges, securities fraud, embezzlement, money-laundering and conflicts of interest at the Fed was due on Oct. 18. The Sanders Report on the GAO Audit on Major Conflicts of Interest at the Federal Reserve

Did you know that the $14.5 trillion the Federal Reserve embezzled (US Congress only authorized $1.487 trillion) could pay the entire U.S. national debt – $14.346 trillion. To avert default the U.S. government need only to seize the assets of the Federal Reserve banks (the big six U.S. banks collectively hold about $9.399 trillion in assets) and get back the $trillions that the Federal Reserve illegally embezzled and money laundered to their foreign banks and corporations.

The U.S. government can recover $trillions from the Federal Reserve and their banks through asset forfeiture. Asset forfeiture is confiscation, by the State, of assets which are either (a) the alleged proceeds of crime or (b) the alleged instrumentalities of crime, and more recently, alleged terrorism. Proceeds of crime means any economic advantage derived from or obtained directly or indirectly from a criminal offense or criminal offenses. Crimes committed by the Federal Reserve banks against the United States and its people include; conflict of interest, securities fraud, embezzlement, fraud, money laundering, hoarding, profiteering, larceny, racketeering . . .

In 1982, a criminal forfeiture provision was enacted as part of the Racketeering Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961, which provided for the forfeiture of all property over which the RICO organization exercised an influence.

The Money Laundering Control Act of 1986 added new felony provisions at 18 U.S.C. § 1956 for the laundering of the proceeds of certain defined “specified unlawful activity,” as well as prohibiting structuring transactions under 31 U.S.C. § 5324 (with the intent to evade certain reporting requirements). The law also added civil and criminal forfeiture provisions at 18 U.S.C. §§ 981 and 982 for confiscating the property involved in money laundering.

According to the Legislative Guide to the United Nations Convention against Transnational Organized Crime and the Protocols Thereto, “Criminalizing the conduct from which substantial illicit profits are made does not adequately punish or deter organized criminal groups. Even if arrested and convicted, some of these offenders will be able to enjoy their illegal gains for their personal use and for maintaining the operations of their criminal enterprises. Despite some sanctions, the perception would still remain that crime pays. . . . Practical measures to keep offenders from profiting from their crimes are necessary. One of the most important ways to do this is to ensure that States have strong confiscation regimes”

Top 10 Banks in the United States

Institution Headquarters Assets
1. Bank of America Corp. Charlotte, N.C. $2,340,667,014,000
2. J. P. Morgan Chase & Company New York, N.Y. 2,135,796,000,000
3. Citigroup New York, N.Y 2,002,213,000,000
4. Wells Fargo & Company San Francisco, C.A. 1,223,630,000,000
5. Goldman Sachs Group, Inc. New York, N.Y. 880,677,000,000
6. Morgan Stanley New York, N.Y. 819,719,000,000
7. Metlife, Inc. New York, N.Y. 565,566,452,000
8. Barclays Group US, Inc. Wilmington, Del. 427,837,000,000
9. Taunus Corporation New York, N.Y. 364,079,000,000
10. HSBC North America Inc. New York, N.Y 345,382,871,000

As of Mar. 31, 2010.

Source: Federal Reserve System, National Information Center.
According to United States Code, TITLE 12 CHAPTER 3 SUBCHAPTER IX § 341. Second. states that the U.S. Federal Reserve Banks are to be dissolved today by “forfeiture of franchise for violation of law.” Securities fraud and embezzlement by the Federal Reserve Bank is cause for immediate forfeiture and imprisonment of the Federal Reserve and its bankers.

List of banks involved in the $16 trillion + securities fraud and embezzlement

The Federal Reserve Bank of New York provides an up to date list of “Primary Dealers” obligated to implement the Federal Reserve fraud and embezzlement scheme. http://www.newyorkfed.org/markets/pridealers_current.html

“Primary dealers serve as trading counterparties of the New York Fed in its implementation of (Fed) monetary policy. This role includes the obligations to: (i) participate consistently in open market operations to carry out U.S. monetary policy pursuant to the direction of the Federal Open Market Committee (FOMC); and (ii) provide the New York Fed‘s trading desk with market information and analysis (non-public stock market information – aka insider trading) helpful in the formulation and implementation of monetary policy (so that the Fed can profit from this insider information). Primary dealers are also required to participate in all auctions of U.S. government debt (acquiring wealth generated from the transactions of the illicit funds – aka money laundering for the Fed) and to make reasonable markets for the New York Fed when it transacts on behalf of its foreign official account-holders. (the New York Fed is stating who they are working for – on behalf of its foreign official account- holders)”

List of Primary Dealers (Fed’s money laundering banks. Listed in alphabetical order only.)

Bank of Nova Scotia, New York Agency (the third largest bank in Canada. Opened New York Agency in 1907)
BMO Capital Markets Corp. (the fourth largest Canadian bank)
BNP Paribas Securities Corp. (Paris, France)
Barclays Capital Inc. (London, United Kingdom)
Cantor Fitzgerald & Co. (United States)
Citigroup Global Markets Inc. (CIA drug money laundering bank, United States)
Credit Suisse Securities (USA) LLC (Zurich, Switzerland)
Daiwa Capital Markets America Inc. (Tokyo, Japan)
Deutsche Bank Securities Inc. (Frankfurt, Germany.)
Goldman, Sachs & Co. (United States)
HSBC Securities (USA) Inc. (founded in Hong Kong, headquarters London, United Kingdom)
Jefferies & Company, Inc. (United States)
J.P. Morgan Securities LLC (United States)
Merrill Lynch, Pierce, Fenner & Smith Incorporated (United States)
Mizuho Securities USA Inc. (Tokyo, Japan)
Morgan Stanley & Co. LLC (United States)
Nomura Securities International, Inc. (Tokyo, Japan)
RBC Capital Markets, LLC (a Canadian investment bank, part of Royal Bank of Canada)
RBS Securities Inc. (Royal Bank of Scotland Group)
SG Americas Securities, LLC (United States)
UBS Securities LLC. (Zürich & Basel, Switzerland. Rothschild controlled. The Rothschild family hold the popes purse strings from this bank – the keys of the Vatican is a predominate part of their logo.)

All of the above named banks (includes both U.S. and foreign banks) money launder the over $16 trillion (U.S) that the Federal Reserve embezzled. These banks money launder the Fed embezzled U.S. Tax Dollars in three steps:

1) the illicit funds are introduced into the financial system by “placement”,

2) the “Primary Dealers” carrying out complex financial transactions in order to camouflage the illicit funds (“layering”), and

3) they acquire wealth generated from the transactions (loans, mortgages, stock market trading) of the illicit funds (“integration”).

All listed banks are controlled by the European Central Bank (Rothschild family) which controls it all for the Vatican, which is headed by the Nazi German Pope. All are working to enslave the World under a New World Order, aka Fourth Reich, aka Fourth unHoly Roman Empire.

Source

#FED endgame is near.. Bye bye dollar

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President Obama just finished a meeting with China’s President Hu in Hawaii. One of the main subjects: Revaluing the Chinese currency higher, and the value of the dollar lower.

It’s all part of Washington’s plan to try and inflate away our country’s debts by devaluing the dollar.

The numbskulls in Washington also think that a dollar that’s worth less than it already is will somehow bring back jobs to the United States.

They also believe it will miraculously lift the U.S. economy out of the doldrums. But in fact, it’s not the value of any currency for that matter that is behind the financial crisis; it’s Washington’s refusal to admit that it’s their spending and addiction to debt that is the problem.

Meanwhile China continues to prepare to make its currency a world-class medium of exchange. In addition to building its gold reserves, Beijing is expanding trade with the yuan throughout Asia and just last week concluded a major yuan-based trading agreement with the Russians.

Plus, yuan denominated bonds are now being issued in Hong Kong and Singapore. And I have no doubt in my mind that Beijing is also going to take a large position in Europe to help it with its currency and debt crisis, giving China a large stake and say in European affairs.

I repeat my warnings of late: While almost everyone’s eyes are on Europe’s crisis (and the Super Committee budget debates in Washington) — the biggest threat of all is being ignored: The rise of the yuan and inevitable fall of the dollar!

To understand how important it is ... how IMMINENT it is ... and what you can do to PROTECT and GROW your wealth in spite of it all, you’ll want to see my new urgent video on the looming dollar disaster.

It includes a discussion of the strategies I’ve designed to go after gains of 832% and it fills you in on the SIX FREE EMERGENCY PROFIT GUIDES I’ve prepared for you.

To view the video NOW, just turn on your computer speakers and click this link.

HowTo: (Legally) Attack the Banks - An actionable #plan for #ows #OccupyWallStreet #99Percent

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I sent this post to a few of my good activist friends with the hope that something can be done to salvage the Occupy movement before it is trivialized by politicians, police and the main stream media.

Why do I feel like it needs to be salvaged?

I'll tell ya..

I've begun to wonder if the Occupy movement is even real.. Maybe it's a CIA special ops operation?

"Oh look! How cute! We have our own "Tahrir square" Isn't that special!"

Who TF are you occupiers?

A bunch of 1960's hippie wannabes?

You want to put some f'ing tents in a public park, smoke pot and eat beanie wienies?

Like that's going to bring down Wall Street?

This ain't Egypt folks.. it's the United States of America.

Your little camp outs are drawing the homeless in for free food. And a certain percentage of the homeless, coincidentally, happen to be mentally ill drug addicts, rapists and murderers..

The "focus" of the "movement" is becoming the riffraff you draw to yourselves!

So here's an actionable plan for you..

Get OUT of the f'ing parks and INTO the banks, insurance companies, auto dealers and payday loan companies!

This is America, we have FREEDOM here!

Rather than park 800 idiots in a public park to be harassed by police take it to the f'ing streets!

As Americans we have every legal right to enter a bank lobby in a peaceful, orderly manner. We have every legal right to ask questions of a public corporation.

So do that!

Take hundreds of your asses into a bank lobby, each of you armed with a legitimate question for the employees of the bank.

I like "Why / how do you expect people to pay a 17% interest rate for one of your crappy credit cards while you are able to borrow money yourselves practically for free?!"

But ANY legitimate question will work..

What time do you open?
What are your hours?
What products do you offer?
What's your phone number?
How many branches do you have?
What are those branch locations?

Hopefully you get the idea..

You can SHUT DOWN businesses with your numbers alone IF you put those numbers in the right SPOTS!

When / if you jam pack a bank lobby with people who desire to ask a legitimate question of the bankers it will be nearly impossible for non-participating bank customers to do their business.. If they can't do their business with a too big to fail maybe they'll move their account..

All you / we need is bodies.. Enough bodies to fill as many TBTF bank lobbies as possible. As many insurance offices as possible. As many car dealerships as possible. As many payday loan companies as possible.

Be at the door waiting to get in when they open. When it's closing time leave peacefully, return to your family or whatever you normally do. But the the next morning be there again, bright and early, ready to spend the entire day in these greedy corrupt to the core businesses. Every day, day in and day out.

SHUT them DOWN! But be polite about it ;)

If you can't go personally CALL them with your questions!

Set up phone banks to call them with questions! Thousands and thousands of questions! Denial of service attacks on computer networks are illegal.. Calling public corporations on the phone, by the thousands, is not! Though the result can be exactly the same.

The ONLY way "they" can stop this sort of civil disobedience would be to pass a law to make it illegal for American citizens to enter or call a public corporation with legitimate questions!

*I* don't see that happening! Do you?

Please.. use your freedom wisely and we can accomplish great things..

Here is the definition of Civil Disobedience

Greg

The Revolution has begun! Don't be left behind wondering what happened! #ows #OccupyWallStreet #99Percent

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Check this video people!

It is about US! We ARE the people!

In the United States there are 535 politicians that decide what is best, or what is and isn't allowed for ALL of us.. That's bullshit! And it's time it stopped!

Click to watch video

The Biggest Bubble in History?

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Confidence? In what?! They have all been exposed now so they need to get TF over it & disappear! Government, central bank, banks & corporations
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By Global Macro Monitor

We are baffled by the analysis of the analyst community, some, of which, are not so analytical. They say that Europe’s fundamental problem is that it has a central bank which is unwilling to monetize sizeable debt maturities which bondholders are unwilling to refinance . They look to the Federal Reserve as a model and as proof that the U.S. does not and will not have a sovereign funding crisis.

Maybe that’s why the U.S. Congressional “Super Committee” is having trouble reaching an agreement on a fiscal program. Talk about the Fed creating moral hazard!

If a sovereign crisis is the result of an intransigent central bank that refuses to print money to refinance maturing bonds that the government can’t afford or is unwilling to pay, why in the world did the Russian government default on its local treasury securities in 1998?

Remember that crisis? It eventually led to the collapse of Long Term Capital Management and what President Clinton called the greatest economic crisis since the Great Depression. He was only about ten years early.

Why didn’t the Russian government simply monetize the existing treasury securities, known as GKOs? Couldn’t they hold rates down to say 10 percent instead of letting them soar to 200 percent?

We don’t know for sure and are too lazy to research it (impossible to prove a counterfactual!) but maybe it was because they didn’t want to inflict hyperinflation upon the Russian people. What would Russia be like today if they had monetized? Ironically, Russia chose to default on its local currency debt, much of it held by foreigners, including David Tepper, and decided to pay their hard currency Euro bonds. Go figure.

We’ll also never forget being in the Bulgarian central bank in 1996 just before some very large maturities of treasury bills were coming due. The market had lost confidence in the government and a high ranking central bank official looked us straight in the eye and said “we will not let the government default.”

We knew instantly a massive amount of liquidity was about to hit the local markets, the demand for the currency was going to collapse, and the country was headed for hyperinflation. Rioting broke out, the government fell, and the country eventually implemented a currency board, not too dissimilar from that of the Euro, in order to enforce fiscal discipline upon the government.

Here at the Global Macro Monitor we believe it is one thing to monetize the small debt maturities of Greece and, say, Portugal, but Italy, the third largest debtor in the world, is in a totally different league. Surprisingly, the markets don’t seem to make the distinction, but, no doubt, German policymakers do.

It doesn’t help that many of Italy’s bondholders are some of Europe’s largest banks who have been recently rewarded by the markets for reducing their sovereign bond holdings. Some of the French banks, for example, saw their stock prices soar after they announced sizeable reductions in their European sovereign exposure in the latest earnings releases. There is no question, at least in our mind, they’ll continue to be under pressure to sell down their sovereign exposure.

But to whom we ask? The ECB? More importantly will the ECB’s “bid of last resort” at a subsidized bond price for the seller result in Italy’s return to full market access at sustainable interest rates? This is the question Mario Draghi must be asking himself every minute of every day. The answer will largely depend on Mario Monti’s political ability to motivate Italians to swallow the necessary austerity measures to win back market confidence, which could take some time.

We’re not sure of the economic and political consequences of the monetization of Italy’s debt, but unlike many, we are sure there will be unintended consequences, both economic and political.

We just may be in the midst of the biggest bubble in history. The complacency that the accumulation of all the ills of the many and massive bubbles that have ripped through the global economy in the past twenty years can simply be resolved by quantitative easing, monetization, printing money or whatever you wish to call it is simply stunning to us.

The loss of confidence, to paraphrase Rudiger Dornbusch, takes longer to happen than you think it should and happens faster than you thought it could. Governments can finance themselves until they can’t. Risk free is risk free until it isn’t

Click here for source

Government Rubber Stamps Bank Accounting Fraud

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By now everyone is aware that following tremendous pressure by the banker lobby, which knows too well the Ponzi jig will be immediately up if Quantitative Easing’s TBTF Madoffs are forced to disclose the true value of their worthless assets (yes, true value comes from asset cash flow generation, not from diluting money), the FASB decided to stop its push for a return to MTM. From the WSJ: “Accounting rule makers, bowing to an intense lobbying campaign, took a key step Tuesday to reverse a controversial proposal that would have required banks to use market prices rather than cost in order to value the loans they hold on their balance sheets.”

Transparency? What moron would propose that in an economy that is so obviously healthy and surging. After all, the only way to validate a surging stock market, er, economic recovery, is through bullshit numbers pulled out of the ass. That way they can pretend to tell us the truth, we can pretend to believe them, and everyone will frontrun the Fed who pretends not to be buying stocks. And it would have been great if it ended there. Alas no. Following the announcement, none other than Bill Isaac, current Chairman of LECG, but far more importantly, former Chairman of the FDIC under Ronald Reagan decided to send out a gloating email to his entire address book explaining what a moral victory it is to kill the MTM monster that is the sole reason for the near collapse of capitalism in 2008, and how truly wonderful it is for everyone to live in perpetual lack of knowledge of what the true value of any company’s assets really is. Unfortunately, this just goes to show what the existing, extremely bribed, leaders of the nation’s most vital organizations really think.

And before we present Isaac’s note, here is some more on how the banker lobby scored one more over the US peasantry, from the WSJ:

The Financial Accounting Standards Board preliminary vote would allow banks to continue valuing many of their loans at amortized cost, an adjusted version of their original cost, as they do now. That backtracks on an FASB proposal last May to expand fair value to bank loans. The reversal is a victory for the banking industry, which says it would have hurt lending and unfairly reduce banks’ book value. Supporters of the FASB fair-value proposal say it would have improved transparency and unmasked potential weakness at banks.

The FASB indicated the overwhelmingly negative reaction to its proposal from companies and investors played a large role in prompting the board to change its mind. The board received more than 2,800 comment letters on its fair-value proposal, most of them opposed to the move.

FASB changed direction on how to value loans because of “strong signals from the board’s constituents,” FASB Chairman Leslie Seidman said during a webcast Tuesday. She also noted that some loans—including those that banks trade actively instead of retaining in order to collect the payments on them—will have to be valued at market prices.

And the reason for why opacity rules:

At some large banks, their loans’ fair value is billions of dollars less than their carrying amount.

That would dramatically reduce their shareholder equity—or assets minus liabilities—if the loans had to be carried at fair value.

Investors have said fair-value information is important to them even if they don’t think it should be the criteria for valuing loans on the balance sheet, FASB members said.

Simply said, if everyone knew the truth, everyone would be insolvent.

And here is William Isaac’s letter, which blames Mark To Market for the near end of capitalism. Conveniently his email is also provided.

Mark-to-market accounting — a failed policy that was terminated by the Roosevelt Administration in 1938 because it was inhibiting bank lending — was revived by the Securities and Exchange Commission and the Financial Accounting Standards Board in the 1990s over strong objections from the Fed, FDIC and Treasury.

The MTM policy senselessly destroyed some $500 billion of capital in our financial system when the markets collapsed in 2008. This destroyed some $4 trillion of bank lending capacity and was a major contributor to the financial panic and ensuing economic collapse.

The FASB, almost inexplicably, proposed last year to EXPAND mark-to-market accounting to cover all bank loans. This would have essentially shut down lending except for short-term lending to businesses with impeccable credit ratings.

See the press release below. The FASB is apparently abandoning its plan to expand mark-to-market accounting. This is an important first step improving US accounting as it relates to financial institutions.

Best regards, Bill

As Bankers Kill Off Mark-To-Market For Good, Former FDIC Chairman Gloats | zero hedge.

Insider #Trading apparently #Legal for #congress ONLY! #ows

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The 1% get richer while we get shafted.. So what else is new?!
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(CBS News) Washington, D.C. is a town that runs on inside information - but should our elected officials be able to use that information to pad their own pockets? As Steve Kroft reports, members of Congress and their aides have regular access to powerful political intelligence, and many have made well-timed stock market trades in the very industries they regulate. For now, the practice is perfectly legal, but some say it's time for the law to change.
The following is a script of "Insiders" which aired on Nov. 13, 2011. Steve Kroft is correspondent, Ira Rosen and Gabrielle Schonder, producers.

The next national election is now less than a year away and congressmen and senators are expending much of their time and their energy raising the millions of dollars in campaign funds they'll need just to hold onto a job that pays $174,000 a year.

Few of them are doing it for the salary and all of them will say they are doing it to serve the public. But there are other benefits: Power, prestige, and the opportunity to become a Washington insider with access to information and connections that no one else has, in an environment of privilege where rules that govern the rest of the country, don't always apply to them.

Questioning Pelosi: Steve Kroft heads to D.C.
When Nancy Pelosi, John Boehner, and other lawmakers wouldn't answer Steve Kroft's questions, he headed to Washington to get some answers about their stock trades.

Most former congressmen and senators manage to leave Washington - if they ever leave Washington - with more money in their pockets than they had when they arrived, and as you are about to see, the biggest challenge is often avoiding temptation.

Peter Schweizer: This is a venture opportunity. This is an opportunity to leverage your position in public service and use that position to enrich yourself, your friends, and your family.

Peter Schweizer is a fellow at the Hoover Institution, a conservative think tank at Stanford University. A year ago he began working on a book about soft corruption in Washington with a team of eight student researchers, who reviewed financial disclosure records. It became a jumping off point for our own story, and we have independently verified the material we've used.

Schweizer says he wanted to know why some congressmen and senators managed to accumulate significant wealth beyond their salaries, and proved particularly adept at buying and selling stocks.

Schweizer: There are all sorts of forms of honest grafts that congressmen engage in that allow them to become very, very wealthy. So it's not illegal, but I think it's highly unethical, I think it's highly offensive, and wrong.

Steve Kroft: What do you mean honest graft?

Schweizer: For example insider trading on the stock market. If you are a member of Congress, those laws are deemed not to apply.

Kroft: So congressman get a pass on insider trading?

Schweizer: They do. The fact is, if you sit on a healthcare committee and you know that Medicare, for example, is-- is considering not reimbursing for a certain drug that's market moving information. And if you can trade stock on-- off of that information and do so legally, that's a great profit making opportunity. And that sort of behavior goes on.

Kroft: Why does Congress get a pass on this?

Schweizer: It's really the way the rules have been defined. And the people who make the rules are the political class in Washington. And they've conveniently written them in such a way that they don't apply to themselves.

The buying and selling of stock by corporate insiders who have access to non-public information that could affect the stock price can be a criminal offense, just ask hedge fund manager Raj Rajaratnam who recently got 11 years in prison for doing it. But, congressional lawmakers have no corporate responsibilities and have long been considered exempt from insider trading laws, even though they have daily access to non-public information and plenty of opportunities to trade on it.

Schweizer: We know that during the health care debate people were trading health care stocks. We know that during the financial crisis of 2008 they were getting out of the market before the rest of America really knew what was going on.

In mid September 2008 with the Dow Jones Industrial average still above ten thousand, 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.

Schweizer: These meetings were so sensitive-- that they would actually confiscate cell phones and Blackberries going into those meetings. What we know is that those meetings were held one day and literally the next day Congressman Bachus would engage in buying stock options based on apocalyptic briefings he had the day before from the Fed chairman and treasury secretary. I mean, talk about a stock tip.

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.

Congressman Bachus declined to talk to us, so we went to his office and ran into his Press Secretary Tim Johnson.

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