Paul Ryan Snookers The Press: TPM Edition

And now, in the continuing tradition of US media figures taking what known Republican liars like Paul Ryan say at face value, I give you this.

Team Ryan managed to shut down a media examination of the 58 individual-stock trades, 27 of them in large money-center banks, that Ryan made during the crisis of 2008 — and where he moved money back and forth between teetering banks like Wachovia and Citi and (drum roll, please) Goldman Sachs, this last of which was of course being propped up by Bush’s Treasury Secretary (and former Goldman Sachs CEO) Henry Paulson. Per Benjy Sarlin of Talking Points Memo:

It had the makings of a scandal: Paul Ryan traded banking stocks during the financial crisis the same day as a meeting with top Treasury Department officials, a Virginia blog wrote Monday. But the rumor, which spread rapidly across the Internet, doesn’t hold up to scrutiny.

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The Romney campaign said Ryan had nothing to do with the trades in the first place. They were part of a Russell 1000 index fund that automatically traded stocks as part of a pre-set formula. Ryan’s disclosure forms include several similar trade patterns at various points throughout the year.

Sarlin also notes that the meeting happened outside of normal New York Stock Exchange trading hours, which for him means no trading was possible. The SEC begs to differ:

The New York Stock Exchange and the Nasdaq Stock Market—the highest volume market centers in the U.S. today—have traditionally been open for business from 9:30 a.m. to 4:00 p.m. Eastern Time. Although trading outside that window—or “after-hours” trading—has occurred for some time, it used to be limited mostly to high net worth investors and institutional investors.

But that changed by the end of the last century. Some smaller exchanges now offer extended hours. And, with the rise of
Electronic Communications Networks, or ECNs, everyday individual investors can gain access to the after-hours markets. 
Before you decide to trade after-hours, you need to educate yourself about the differences between regular and extended trading hours, especially the risks. You should consult your broker and read any disclosure documents on this option. Check your broker’s website for available information on trading after-hours. As with trading during regular hours, the services offered by brokers during extended hours vary. You should therefore shop around to find the firm that best suits your trading needs.

Another entity that begs to differ is Fidelity Investments, which executes after-hours trades — and after hours, not waiting until the next business day.

But that’s only part of what’s wrong with Sarlin’s attempt at debunking. Here’s Brad DeLong:

There is no way in hell–if you are rebalancing to try to track the Russell 1000 index–you make only 58 trades in a year, that you make 27 of those 58 in large money-center banks, and that 10 of those trades involve shifting your money from Citi to Goldman and back five times.

DeLong’s commenters chimed in with their own observations:

Yes. What does “rebalancing the index” even mean in this context? Nothing. It’s just some buzz words thrown out to sow confusion.

“They were part of a Russell 1000 index fund that automatically traded stocks as part of a pre-set formula. ”

News flash for Ryan flack: If you own an index fund, or any other fund, you don’t trade the individual stocks.

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I am a little more concerned about the fact that these disclosures show Paul Ryan and his wife have a rather large limited investment partnership headquartered in income-tax-free Florida given that he’s so proud of having never left his roots and all. I wonder if the homestate coattails would be a little less effective if folks in WI started asking whether Ryan’s been scamming them out of income tax money. This and another partnership could also hold interest in Ryan’s family business… a sizable inheritance would really put a dent in the whole Galt image.

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It is very obvious what was going on. This was tax-loss harvesting, designed to avoid the 30 day wash sale rule. All the sales came 30 days or more after purchases and everytime something was sold, a correlated asset was bought. Rebalancing the index??? That is hilarious.

I’d love to see if Tom Hamburger’s current bosses would let him take a crack at this.