The day before the U.S. House approved a massive bailout plan for banks in October, U.S. Rep. Ginny Brown-Waite bought stock in Citigroup, one of the main recipients.
Eleven days later, on the day then-Treasury Secretary Henry Paulson said he would invest $250 billion in nine leading banks, the Brooksville Republican bought stock in Bank of America, another recipient.
Neither of the purchases was especially large — between $1,001 and $15,000, according to Brown-Waite's annual financial disclosure form — and so far they have not been profitable.
But the timing of the purchases — coupled with the fact Brown-Waite served on the House committee that oversees banks — has been generating questions and prompted one of her political opponents to call for a Securities and Exchange Commission investigation into possible insider trading.
In an telephone interview Monday, Brown-Waite dismissed any suggestion of impropriety. She said she voted against the financial rescue plan, calling it "extortion," and asserted that she has lost — not made — money on the stock purchases.
"I had no more inside information than anybody watching C-SPAN," she said. "I have purchased financial institutions before and many of the mutual funds I hold are also investors in financial stocks."
Brown-Waite's comments were her first since a Cleveland Plain Dealer examination of public disclosure forms last week found several lawmakers on the House Financial Services Committee (or their brokers) bought or sold bank stocks as the federal government pumped billions into the financial markets.
The moves — though not necessarily illegal or against congressional rules — triggered concern from securities attorneys and government watchdog groups about conflicts of interest.
"I don't think that any of these people should be owning these types of financial instruments," Brian Biggins, a securities attorney and former stock brokerage manager, told the Plain Dealer. "I'm not saying they shouldn't be in the stock market. But if they're on the banking committee and trading in these kinds of stocks, I don't think that's right."
Brown-Waite, who left the committee in January to join the powerful Ways and Means Committee, did not report an exact value of her investments because House rules only require a broad range.
She noted her assets' net worth — listed at between $330,000 and $1.3 million — fell sharply between 2007 and 2008. "I didn't make money in Congress," she said. "I didn't make money while the economy was struggling."
Unlike other lawmakers, Brown-Waite does not use a broker or put her stocks in a blind trust to create a buffer. She makes her own stock trades.
"I very often will invest in cheap stocks," she said. "I take a risk. … I've always taken a chance investing."
In this case, the risk has not yet paid off. Citigroup stock stood at $22.50 when she bought it Oct. 2; it closed at $3.02 on Monday. Likewise, the Bank of America stock valued at $22.79 when she bought it Oct. 13 closed Monday at $13.19.
Brown-Waite sidestepped questions about the timing of her purchases, saying she didn't know the dates she bought them or how it fit with the votes and implementation of the bailout.
This explanation didn't satisfy Jim Piccillo, an announced Democratic opponent in 2010. He said the SEC should investigate to determine whether insider trading took place.
"Whether you make money or not, (the law) seems pretty clear and the time line seems ethically suspicious," said Piccillo, a Land O'Lakes mortgage writer who spent five years as a bank auditor. "It's pretty close to what Martha Stewart went to prison for."
He suggested lawmakers should not buy stocks in companies that they oversee.
An SEC spokesman said such complaints are taken into consideration but the agency does not comment about investigations.
Brown-Waite called Piccillo "desperate" and questioned his background in the mortgage industry.
Despite the questions, she said, she will continue to manage her own stocks.
John Frank can be reached at email@example.com or (352) 754-6114.