Tuesday, September 14, 2010

Senator Richard Burr, a crook?

I am fairly certain that North Carolina Republican Senator Richard Burr used his position as a US Senator to obtain insider information on a stock he owned. Using this insider information, he sold his stock at an opportune time. That sale enabled him to avoid recognizing a larger loss on his investment. As a result, he wound up passing his loss onto the buyer of his stock. Using insider information, our US Senator stole money from the buyer. If this is true, and I believe it is, then North Carolina Senator Richard Burr is a crook.

We know from Senator Burr's own admission that he acts in his own financial self-interest on information he obtains from insider, US Government sources. After speaking with Secretary of the Treasury, Hank Paulson, in the fall of 2008, our Senator learned that our nation's financial system was close to a total melt-down. Obtaining information not available to the general public, our US Senator acted in his own financial self-interest:

"On Friday night, I called my wife and I said, 'Brooke, I am not coming home this weekend. I will call you on Monday. Tonight, I want you to go to the ATM machine, and I want you to draw out everything it will let you take. And I want you to tomorrow, and I want you to go Sunday.' I was convinced on Friday night that if you put a plastic card in an ATM machine the last thing you were going to get was cash."

It's not a stretch then to believe Senator Burr would also sell a security he owned if he learned information that led him to believe his investment was about to take a dramatic drop in value.

We also know from recent financial disclosures (click on transactions) that Senator Burr bought stock in Bear Stearns on Jan 16, 2008. So going into the initial stages of our nation's financial crises in the spring of 2008, North Carolina Republican Senator Richard Burr was a shareholder of the very first financial institution that would get into severe financial trouble.

The trouble at Bear Stearns came as a complete surprise to the vast majority of the investing public. In the week of March 10, 2008 a run on Bear Stearns started. Clients began pulling money out of Bear at an alarming rate. And while rumors of Bear's trouble were making their way around Wall Street, few outside of officials at the US Treasury and Federal Reserve Board, and senior executives of Bear Stearns, knew just how severe the problem was. Even with these troubles, at the end of the week, on Friday March 14, 2008, Bear Stearns stock was valued at $3.5 Billion. The following Monday morning, March 17, Bear Stearns was sold for only $236 million to JP Morgan. $3.3 Billion got wiped off the map in the flash of an eye, and few knew it was on the horizon. A stock that closed in the $30s on Friday, got sold for $2 on Monday morning! It was a shock that came out of left field. But I suspect US Senator Richard Burr knew it was coming.

When did Senator Burr sell his Bear Stearns stock? He sold on Friday, March 14, 2008, right before the stock fell from $30s to $2. Coincidence? I seriously doubt it. After reading page 157 of David Wessel's book, In Fed We Trust, we know a number of government officials got intimate details of Bear's problems. They knew on Thursday night, March 13, that Bear would be filing bankruptcy. They knew Thursday night. Senator Burr sold his stock the very next day, on Friday. Over that weekend, the US government brokered a deal to sell Bear to JP Morgan. The following Monday morning, Bear was worth almost nothing.

Exerts from page 157 of David Wessel's book:

"While Bear Stearns and its investment bankers desperately sought a partner with very deep pockets, the guardians of the US financial system convened an almost nonstop series of conference calls. On Thursday afternoon [March 13, 2008], "the KD committee" - named for Don Kohn - chewed over the situation: Kevin Warsh, Bob Steel at Treasury, John Dugan at the Office of the Comptroller of the Currency, and Geithner [NY Fed]. The climatic call came around 7:30 p.m. when Bernanke [Fed] and Paulson [Treasury] came on the line and the SEC staff told them all that Bear Stearns was going to have to file for bankruptcy the next morning."

That evening (March 13, 2008), these US Government officials made the decision to find a buyer for Bear Stearns. US Government officials knew on March 13 that Bear Stearns was next to worthless. North Carolina Republican Senator Richard Burr sold his stock in Bear Stearns the following day.

Hello Raleigh News and Observer? Someone needs to pour over our US Senator's calendar for March 13 and March 14, 2008, and check his incoming and outgoing phone calls. If Richard Burr had contact with any person in the US Treasury or Federal Reserve Board, then Richard Burr is, beyond a doubt, a crook. It's highly likely that he learned of, and used, insider information to prevent himself from losing more money on his Bear Stearns investment. Using this information, he sold his stock right before the bottom dropped out. He passed his loss on to another investor who didn't possess the Senator's insider information. That's illegal. And that would make our Senator a crook.

It's simply too convenient for our US Senator not to have learned from someone at the Fed or Treasury about Bear's problems. And I suspect our Senator likely learned about Bear's pending demise from Bob Steel (who was present at the key Thursday evening meeting), or someone on Bob's staff. Bob later became the CEO for Wachovia, a once proud North Carolina based financial institution that got decimated in this financial crises. I don't think Bob would have been appointed to that position without support of Richard Burr. So, that's where I'd start looking. But the bottom line, I don't think one would have to look hard to find out that Senator Richard Burr doesn't hesitate to use his position to better his own personal financial situation, even if it means using illegal insider information.

North Carolina deserves better than Republican Senator Richard Burr.

Addendum:  When I wrote this post in 2010,  there was clearly a series of transactions reported for Richard Burr.  They mysteriously disappeared weeks after this post.   The transactions were numerous and detailed.   Then,  they just disappeared from the records.   Why?  I do not know.  But,  its fishy.  And,  likely,  illegal.   Our Senator owned stock in Bear Stearns.  He received insider information about pending troubles for Bear,  and the overall financial system.  He sold the stock based on these insider tips.  He reported the sale.  Then,  later,  the records were scrubbed clean.

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