Should members of Congress they be allowed to use information they obtain while on the job to inflate their bank accounts?

As 60 Minutes reported last night, “members of Congress have made well timed stock market trades in the very industries they regulate.”  Congress, of course, has access to insider information by the very nature of their jobs.  As David Dayen at FireDogLake explains, Congress “does not have to sequester off their stock trades in ways that would allow them to profit from this information is beyond dispute. The simple fix would be to force every member of Congress to put their holdings into blind trusts. But the most difficult thing to pass through Congress is rules that the institution would impose on its own members.”

Peter Schweizer, a fellow at the conservative think tank the Hoover Institution, whose book the 60 Minutes report was based on, calls the trades “honest graft,” which is unethical, but not illegal. (Sidenote: Schweizer’s new book is out tomorrow.)

Here’s a partial transcript of his exchange with CBS’s Steve Kroft:

Schweizer: There are all sorts of forms of honest grafts that congressmen engage in that allow them to become very, very wealthy. So it’s not illegal, but I think it’s highly unethical, I think it’s highly offensive, and wrong.

Steve Kroft: What do you mean honest graft?

Schweizer: For example insider trading on the stock market. If you are a member of Congress, those laws are deemed not to apply.

Kroft: So Congressman get a pass on insider trading?

Schweizer: They do. The fact is, if you sit on a healthcare committee and you know that Medicare, for example, is– is considering not reimbursing for a certain drug that’s market moving information. And if you can trade stock on– off of that information and do so legally, that’s a great profit making opportunity. And that sort of behavior goes on.

Kroft: Why does Congress get a pass on this?

Schweizer: It’s really the way the rules have been defined. And the people who make the rules are the political class in Washington. And they’ve conveniently written them in such a way that they don’t apply to themselves.

Business Insider points to one particularly egregious example of allegations put forth last night in their writeup of the segment, which has gotten the most attention around the web so far today:

CBS’s Steve Kroft revealed, for example, that Rep. Spencer Bauchus (R-AL), now the chair of the House Financial Services Committee, bet against the market days before the 2008 financial crisis hit — after getting “apocalyptic briefings” from Fed Chairman Ben Bernanke and then-Treasury Secretary Hank Paulson.

The CBS report also delves into the alleged trading activities of House Minority Leader Nancy Pelosi (D-CA) and Speaker John Boehner (R-OH).  But, as Ryan Grim points out, the evidence against Pelosi and Boehner turned out to be somewhat weak.  Here’s his take on the report’s evidence against Speaker Boehner:

“The CBS News program flagged Boehner (R-Ohio) for buying health insurance stocks shortly before the public health insurance option was killed as part of health care reform. Boehner, of course, strongly opposed the public option as a matter of ideology, as did the entire House GOP.

The public option wasn’t killed by Boehner, who had no real power in the previous Congress; it was done in by Blue Dog Democrats and a White House that didn’t push for it. The public option returned from the dead repeatedly before finally being laid to rest — and there’s no reason to think that Boehner had any better insight into what was happening within the House Democratic caucus than anybody else reading news reports at the time.”

Check out the report for yourself — You can watch the entire CBS 60 Minutes segment here: