This is the Cato Daily Podcast for Tuesday, November 15, 2011.

I'm Caleb Brown.

It's illegal for corporate managers to trade company stock on insider information, but for members of Congress who regulate corporations,

the practice is perfectly legal.

Is voter repugnance at the idea a sufficient disincentive to engage in the practice. Mark Calabria, Director of Financial

Regulation Studies at the Cato Institute, comments.

CBS is reporting something that has been known to exist in the past but has some cases that seem pretty egregious to people

watching which is that

effectively in insider trading.

That is, they can trade their portfolios

based upon information that's not available to the public.

And that overall is a reflection of the law is correct.

So actions that Congressman Senators, and of course it's important to keep in mind their staff as well

might know about things that would come up that

impact a company stock for instance you might know that there's a hearing

being announced the next day or the next week on a particular practice or

particular company and of course you could go out and short that and you would probably

be able to make money off that.

Of course same things could happen in legislation.

You might have a provision that becomes law that would really help a particular company,

you might have a provision in law that hurts a company.

And it certainly is worth saying there is a large literature within sort of political science and finance

...