A House Democrat representing Lower Manhattan's Financial District sold shares in an embattled California bank days before the stock plummeted in value, a financial disclosure shows.
PacWest Bancorp, a Beverly Hills-based bank holding company, has seen its stock value decrease dramatically following the historic collapse of Silicon Valley Bank on March 10 due to its announcement of needing to raise $2.2 billion,while also offloading $21 billion in assets. Just four days earlier, on March 6, Rep. Dan Goldman (D-NY) sold up to $15,000 in shares of PacWest Bancorp, which has gone from over $27 per share since the transaction to about $5 per share as of this writing, according to records.
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"The timing doesn't look good, and that's for sure," Dylan Hedtler-Gaudette, senior government affairs manager for the Project on Government Oversight, a nonpartisan watchdog, told the Washington Examiner. "It's just another reason why the practice of members of Congress trading stocks is so problematic."
Upon the market opening Thursday, regional banks continued to slide in value, particularly as news broke Wednesday that PacWest is weighing a sale as well as being reportedly advised by Piper Sandler and Stephens, two financial firms. Regulators on Monday seized the San Francisco-based First Republic Bank, which announced it would sell securities and bonds to raise equity and start laying off employees, and sold its assets to JPMorgan Chase Bank in an effort to quell market chaos.
Regional stocks rebounded on Friday after the major week-to-date losses, providing a window into the volatility to come in the banking sector, according to experts.
Goldman office spokeswoman Simone Kanter told the Washington Examiner that the congressman "is not involved in trading stocks in his portfolio, which is managed entirely by an investment adviser, with whom he has had no discussions about any stock trades since entering Congress." The congressman also supports legislation to ban lawmakers from trading stocks, Kanter added.
Still, news of Goldman's well-timed sale, which was executed as a subholding of a trust account, comes amid intensified scrutiny over lawmakers trading on the banking crisis. It also comes as Congress mulls a sweeping ban on lawmakers trading stocks as a whole.
Rep. Lois Frankel (D-FL) disclosed last Friday that she sold up to $15,000 in shares of First Republic Bank stock on March 16, and then bought up to $15,000 in JPMorgan stock shares on March 22. The congresswoman told the Daily Caller that her “account is managed independently by a money manager who buys and sells stocks at his discretion.”
Another lawmaker who has faced criticism for a recent stock trade is Rep. Josh Gottheimer (D-NJ), who sold up to $15,000 in shares of Silicon Valley Bank stock on March 9, according to a financial disclosure. The next day, on March 10, the bank collapsed and triggered mass market uncertainty. A spokesperson for Gottheimer said the congressman is in the process of preparing a blind trust.
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It's not only House Democrats that have cashed in on the banking crisis. Rep. John Curtis (R-UT) sold up to $15,000 in First Republic Bank shares on March 16. Shares traded that day at around $34 per share and now sit at $0.30 per share, records show.
In mid-April, Senate Democrats introduced a bill that would prohibit Congress from buying or selling stocks, and also mandate divestment or holdings to be placed into a "qualified blind trust," the Washington Examiner first reported. In a rare team-up, Reps. Alexandria Ocasio-Cortez (D-NY) and Matt Gaetz (R-FL) helped introduce a bill on Tuesday that would also ban lawmakers, their spouses, and dependents from trading.