Mar 20, 2020

An insider trading scandal rocks Congress.

An insider trading scandal rocks Congress.

Plus, a question about presidential nominees dying.

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Today’s read: 8 minutes.

Insider trading in the Senate, an important Tangle poll, and a question about what happens if a presidential nominee dies.

Sen. Richard Burr, who is now enmeshed in an insider trading scandal in the Senate.


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What D.C. is talking about.

Insider trading. Senators Richard Burr (R-NC), Kelly Loeffler (R-GA), Dianne Feinstein (D-CA) and James Inhofe (R-OK) are being accused of dumping millions of dollars in stocks after a classified briefing on the threat of coronavirus. ProPublica reported that Burr sold off between $628,000 and $1.72 million of stock holdings on February 13th in 33 separate transactions. Burr, who heads the intelligence committee, was already under fire after NPR reported that he gave a private, dire warning to North Carolina business leaders and donors about coronavirus on February 27th while simultaneously assuring his constituents everything was fine. Loeffler sold off seven figures worth of stock holdings in the days and weeks after a “private, all-senators meeting on the novel coronavirus,” The Daily Beast reported. She reported the first stock sale on January 24th, the same day her committee (the Senate Health Committee) hosted a briefing on the virus. She made 29 stock transactions in the weeks after, all but two of which were sales. The two that weren’t were $100,000 and $150,000 purchases of Citrix stock, a company that offers teleworking software and has since seen a bump in its stock price despite a historic market crash. Feinstein and her husband sold off between $1.5 million and $6 million of stock in a California biotech company called Allogene Therapeutics between January 31st and February 18th. Inhofe sold $400,000 of stock, all on January 27th, of PayPal, Apple and Brookfield Asset Management.

In 2012, President Barack Obama signed the Stop Trading on Congressional Knowledge Act, which requires all members to disclose their stock sales. Congress began requiring its members to disclose their stock sales. Sen. Burr was one of just three senators to vote against the bill. It is illegal for members of Congress to trade on non-public information they gather through official duties in office.

What the left is saying.

They’re hammering Republicans for screwing over the American people. “Senator Burr needs to resign immediately,” Zach Hudson, a spokesman for American Bridge, a Democratic advocacy group, told The New York Times. “His conduct as detailed by this report represents a gross violation of the public’s trust and he must be held accountable for his behavior that appears criminal.” On top of selling his stock while assuring Americans everything was fine, Burr was also warning private donors and members of a pay-to-play social club that the coronavirus outbreak was going to be a dire situation, according to NPR. “It is stomach-churning that the first thoughts these Senators had to a dire & classified #COVID briefing was how to profit off this crisis,” Alexandria Ocasio-Cortez said on Twitter. “They didn’t mobilize to help families, or prep response. They dumped stock.  Sen. Loeffler needs to resign, too.”  Many on the left are also noting the Loeffler is married to the chairman and CEO of the New York Stock Exchange, and both were profiting off of Senate info while downplaying the economic risk publicly. Some Bernie supporters on the left were calling for Sen. Feinstein to resign along with the Republicans, noting that it was just the kind of swampy D.C. move they want Sanders in there to stop. Others were defending Feinstein, saying that her money was in a blind trust, that the sale of the stock may have actually lost her money in the first few months and that it didn’t fit the pattern of the Republican sales.

What the right is saying.

Not many conservatives are coming to anyone’s defense. Many on the right are calling out the left for burying Burr, Loeffler and Inhofe but neglecting to mention Feinstein. While Fox News’s digital page ran the headline “Dianne Feinstein, 3 Senate colleagues sold off stocks before coronavirus crash,” primetime host Tucker Carlson pulled no punches on the Republican senators. He attacked Sen. Richard Burr in a monologue, calling on him to resign and face prosecution for insider trading if he can’t provide an honest explanation. “There is no greater moral crime than betraying your country in a time of crisis,” Carlson said. Popular conservative activist Charlie Kirk echoed the sentiment, saying “I don’t care if you’re Republican or Democrat, if you trade with inside info to enrich yourself during a crisis you are a disgrace. Resign, apologize, and donate all earnings to families of victims of China Virus.” Burr mounted his own defense on Twitter. He called the NPR story a “tabloid-style hit piece” and said the private lunch was hosted on February 27th, after many public warnings about the virus had been made. He linked to a statement the president made February 26th urging schools and health officials to prepare for possible closures. He also said the talk he delivered to the North Carolina State Society “was publicly advertised and widely attended. NPR knew, but did not report, that attendees also included many non-members, bipartisan congressional staff, and representatives from the governor’s office.” As for the trades, Burr’s spokesperson told ProPublica that he filed the personal transaction before the markets showed signs of volatility due to coronavirus. Burr said on Twitter that he’d be happy if the Senate ethics committee investigated him and that his decision was based solely on publicly available news reports. Loeffler defended herself on Twitter, saying “I was informed of these purchases and sales on 02/16/2020 – three weeks after they were made.”

My take.

All of this is the swampiest of the swamp. If you’re wondering why so many Americans hate Congress and vote for candidates like Trump or Sanders, you can put stories like this at the top of the list. It appears Burr’s moves are the most egregious of anyone’s: he is not a particularly wealthy member of Congress (his net worth is $1.7 million, which is towards the bottom for members), so his sell-off preserved a huge chunk of his personal wealth. It was the largest selling spree of his stocks in 14 months, and unlike most of his trading days, it included no buys but only sales. But he claims he sold based “solely on CNBC’s daily health and science reporting” out of its Asia bureau and relied only on public news reports for his decision. Pardon me, but I’m not really buying it. And yes, he was one of just three senators to vote against the bill to make members of Congress’s trading actions public.

Burr tried to defend the warnings he privately gave the North Carolina social club, too, but it really doesn’t look good. Yes, the club is non-partisan. And yes, it’s technically available to anyone. But membership in the club costs $500 to $10,000 and dozens of guests attending were donors to his campaign or worked for corporations who were donors. Plus, Burr was publicly backing the president’s effort to assure people everything was fine, and privately he was saying things like this: “It is much more aggressive in its transmission than anything that we have seen in recent history.  It is probably more akin to the 1918 pandemic."

The Loeffler case is also gross and infuriating. Not only was she on Twitter telling everyone to chill and blaming Democrats for over-hyping it, but she is also married to the head of the New York Stock Exchange. She’s the wealthiest member of Congress, worth an estimated $500 million, and only got her seat in the Senate because of her long history of donating to Republicans. Loeffler’s defense that she doesn’t make investment decisions and has third-party advisors is probably true, but it doesn’t pass the sniff test. It requires us to believe that she, a senator who hadn’t made a single move since joining Congress, happened to sell off hundreds of thousands of dollars worth of stock on January 24th, the same day the Senate Health Committee hosted a private, all-senators briefing with CDC officials about the coronavirus, and it was all a coincidence. Please. How dumb must she think we are? And then she just happened to buy up $250,000 of stock in a remote working tech company? Amazing how those things just work out!

Feinstein and Inhofe’s cases both need more probing, but they don’t necessarily fit the pattern of the other two. For one, Feinstein’s stocks are held in a blind trust, a barrier between her and her finances specifically built to prevent conflicts of interest. Secondly, she actually took a loss on the move for most of February. The investment was in Allogene Therapeutics, which rose from $21.72 on the day she sold it to $28.25 on March 4th. It’s currently trading at $20.29, just below where it was when she sold it — but it’s easy to make the case she didn’t really profit from the move. Still, just like the others, the timing of Feinstein’s sale is suspicious and I’m fine if it’s investigated. The biggest difference, though, is that Feinstein wasn’t playing down the virus’s threat (like Burr or Loeffler) and isn’t voting against financial aid packages (like Inhofe) for Americans. She was actually sounding the alarm as early as January 17th about our need to be prepared.

All of this is ugly. I am absolutely in the camp that each of these senators needs to be investigated, but you’re going to have a hard time convincing me all are equal. What Burr and Loeffler did looks a lot more egregious and the reporting on it is a lot more thorough. I’d love to find out more about Inhofe and Feinstein before passing more serious judgment in their direction. I will point out, though, that Lachlan Markay (a conservative reporter who is an expert on financial reporting) said the stock sales from Inhofe and Feinstein were innocuous while the only serious ones worth probing were Loeffler’s and Burr’s. I’ll take his word for it.

A story that matters.

“Trump country” is more at risk of coronavirus than anywhere else in America. The demographics and polling of Trump’s base show that they are simultaneously the least concerned about coronavirus and the most at-risk to suffer serious consequences if they contract it. The U.S. counties with the highest percentage of people 65 years and older tend to be very Republican and pro-Trump, according to Axios. All but one of the six states with the largest percentages of the at-risk population went for Trump in 2016. On top of that, younger people with pre-existing health conditions face elevated danger. States with the highest rates of diabetes and hypertension are also disproportionately Republican-leaning, Axios said. At the same time, those same voters seem less afraid and more cavalier about how to beat coronavirus. The mix could have deadly consequences. Axios has the report here.

Your questions, answered.

Reminder: Reader questions are at the heart of what Tangle is about. If you want to ask something, all you have to do is reply to this email and write in.

Q: Not to sound too morbid or anything, but what would happen if Biden (presumably the nominee) or Sanders were to die?  They're both in age groups that have the highest risk for mortality with COVID-19, and they've both been spending the better part of the last few months in large crowds, shaking hands with people, etc.  What would happen to the nomination process?  Has that ever happened before?

- Josh, Pittsburgh, PA

Tangle: You’re not the only one asking this question. Right when coronavirus broke out, I actually heard a number of people talking about this possibility and what it might mean. First off, no — nothing like that has ever happened before. No presidential candidate has ever died or withdrawn before a presidential election and no president-elect has ever died or stepped down after winning an election and before the inauguration. However, there are some historical examples close to what you’re asking about. William Henry Harrison, the ninth president-elect, died in 1841 after giving an inauguration speech in the snow. He passed away 31 days later of pneumonia. Because of widespread fears that Abraham Lincoln was going to be assassinated before being sworn in, the conversation about how to back-up a presidential nominee or president-elect has been happening for most of America’s history. But it wasn’t until 1933 that we adopted the 20th amendment, which turns the presidency over to the vice presidential nominee in the event the president dies.

However, what it sounds like you’re asking about is a bit murkier. Since you’re talking about the nomination process, Democrats have a pretty clear set of bylaws to handle such a situation. If Biden were to die before he were officially given the nomination at the Democratic convention, I presume the process would go on as anticipated: delegates would have to vote and then superdelegates would vote on who the nominee would be. I broke down the convention process in this edition of Tangle where you can read how that voting works.

The short version is: representatives of each state — or delegates — who are representing voters that chose Biden would have to pick someone who wasn’t Biden. There would be a roll call vote at the convention and those delegates could rally behind anyone (likely Sanders) and make them the nominee. That would mean getting 1,991 delegates votes. If no single candidate hit that threshold, then there would be a second round of voting with superdelegates (members of Congress, past living presidents, governors, etc.) who would get to have a say in the nominee. This voting process would continue until someone got a majority of the votes. Essentially: the party would choose at the convention.

If both Sanders and Biden were to die of coronavirus, I have no idea what would happen. I suspect a candidate would be chosen from the leftover field — my money would be on Buttigieg or Warren. Or, if I’m really getting wild, I could see Hillary Clinton getting called up. The situation would be absolutely unprecedented.

Also worth noting (now we are really down the morbid rabbit hole!), if the nominee were to die between the convention and the general election, the head of the Democratic National Committee would call a meeting of the DNC (447-person body) and they would replace the party nominee. That happened in 1972 when the Democratic party replaced Thomas Eagleton with Sargent Shriver as VP after Eagleton stepped down in the wake of the 1972 convention.

In another murky scenario: if the general election happens and Biden wins but then dies before the electoral college votes are received by Congress, we’d be in totally uncharted territory. There’s actually no constitutional framework for that scenario, and it’s possible it could lead to a second election or Congress somehow deciding whether the Vice President or someone else would be chosen. Washington Post broke down that scenario here.

This tweet.


  • 2. The number of members of Congress who have now tested positive for coronavirus after Reps. Mario Diaz-Balart (R-FL) and Ben McAdams (D-UT) announced their positive tests yesterday.
  • 20%. The estimated number of people hospitalized in the U.S. due to coronavirus who are between the ages of 20 and 44.
  • 1,667. The number of confirmed cases in the U.S. as of March 12th.
  • 14,250. The number of confirmed cases in the U.S. as of today, March 20th (experts say the dramatic rise is partially due to an increase in testing).
  • 3,954. The number of those confirmed cases in New York City alone.
  • 55%. The percentage of Americans who approve of President Trump’s handling of the coronavirus crisis, according to a new ABC News poll.
  • 43%. The percentage of Americans who disapprove of President Trump’s handling of the coronavirus crisis, according to a new ABC News poll.
  • 281,000. The number of people who are filing for unemployment in America now, a spike this week that puts unemployment at its highest levels in two years.
  • 2 million. The Goldman Sachs estimate of how many people will be filing for unemployment by the end of next week.

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Taiwan says it will donate 100,000 hospital masks to the United States per week. The news will be welcome to nurses and doctors who are already struggling with shortages across the country despite the spread of the virus not yet nearing its peak. Masks are critical for health care workers on the frontlines who are encountering sick patients daily, and some evidence suggests heavy loads of the virus are more deadly for those health care workers — making the masks essential. In exchange, the U.S. “will be reserving 300,000 hazmat suits for Taiwan in the event that it requires them,” reports say. It’s a strong moment of diplomacy between two nations with a complicated history in a time of desperate need. You can read more about it here.

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