Stock Collapses Hit Members Hard
Members of Congress and their families lost millions of dollars last year in some of the biggest stock collapses in history.
According to recently released forms that show where lawmakers invested their money in 2002, House Members and Senators lost between $2 million and $5 million by sinking their money into ill-fated companies as they careened into bankruptcy.
In all, dozens of Members combined to lose between $583,000 and $1.6 million in WorldCom, between $781,000 and $1.9 million in UAL-owned United Airlines and $10,000 to $150,000 in Global Crossing Ltd.
They also saw between $650,000 and $1.3 million evaporate when Enron Corp. filed for bankruptcy in the closing days of 2001.
Members of Congress who saw their investments disappear into thin air were hardly alone. After all, last year was the worst year on record for corporate bankruptcies: Five of the 10 largest bankruptcies in U.S. history were filed in 2002.
The hard-luck investments were spread between both parties. Losers included Democratic presidential candidates John Kerry (D-Mass.) and Joe Lieberman (D-Conn.) — who lost money on investments in Conseco Inc. and WorldCom, respectively, while former Majority Leader Trent Lott (R-Miss.) failed to sell his 200-share investment in Mississippi-based WorldCom until two months after the company filed for bankruptcy. At that time, the company’s stock was worth pennies.
On the House side, the biggest losers were Reps. Tom Osborne (R-Neb.), Tom Lantos (R-Calif.) and Gary Miller (R-Calif.), who saw a total of more than $1 million go down the drain.
Precise figures are not available because lawmakers report their financial holdings in broad ranges.
Kerry, for example, reported that he and his wife held between $600,000 and $1.3 million in Conseco Inc. stock before the company filed for bankruptcy.
The forms also show that several Members of Congress tried to make a quick buck by snatching up shares in the once high-flying stocks as they spiraled toward penny-stock status.
Osborne, who owned as much as $1 million in WorldCom stock, bought between $51,000 and $215,000 in additional shares as the long-distance provider headed toward the largest bankruptcy filing in U.S. history.
WorldCom’s stock fell from $14.50 at the start of the year to less than $1 just six months later.
In the months before WorldCom’s July 21 bankruptcy, the legendary former University of Nebraska football coach reversed field and dumped much of his investment at a reduced price.
“It was pretty much rock bottom when I sold it,” Osborne said. “We lost a lot of money on WorldCom.”
Likewise, Lantos purchased more than $50,000 in United Airlines before the nation’s No. 2 airline took a nosedive. Lantos’ total investment — once valued at more than $100,000 — was worth less than $15,000 just 10 days after UAL filed for bankruptcy in December.
Miller also threw between $200,000 and $500,000 in UAL as it plummeted.
Rep. Mike Bilirakis (R-Fla.) bought $1,000 to $15,000 in Adelphia Communications two months before it collapsed.
But no stock drew speculative trades like Enron.
More than a dozen Members of Congress gobbled up Enron shares as the company stock short-circuited.
Sen. Kay Bailey Hutchison (R-Texas) was one of the most active Enron speculators.
On a half-dozen occasions in the summer and fall of 2001, Hutchison bought between $1,000 and $15,000 in Enron stock — even after the Securities and Exchange Commission launched an investigation into the company.
A month after Enron filed for bankruptcy, Hutchison sold her Enron investment — once valued between $6,000 and $90,000 — for less than $200, the forms show.
On the other side of the Capitol, Rep. Joe Barton (R-Texas), whose chairmanship of the House Energy and Commerce subcommittee on energy and air quality makes him one of the most plugged-in experts on energy markets, saw his finances take a major dive in the Enron debacle.
When the stock fell to $30 a share in early October — just a third of its all-time high — Barton invested more than $1,000 in the energy-trading giant.
When, the stock tumbled below $20 per share, he pumped even more money into the doomed company.
And when Enron slid below $10 on Nov. 15 — just weeks before the second-largest bankruptcy claim in history — he gobbled up hundreds more shares.
The investment didn’t pay off.
According to his financial disclosure form, Barton sold most of his Enron holdings for $895 on Dec. 21 — when the stock was worth pennies. Barton lost thousands.
If the stock had rebounded to match its high of $90 a share, as Barton hoped, the investment would have generated about $135,000 — a bit less than his Congressional salary.
“I thought I could make some money,” Barton said at the time. “I thought it would go back up … I made a bad decision.”