Vested interest

Eric Cantor, R-Va and the House Majority Leader (i.e. 2nd in command in the Republican House) is lead negotiator for the House in the debt ceiling talks. He theoretically has an interest in keeping the US solvent; after all, he swore an oath on taking his seat which says in part “I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same. . .”

Yet that same Mr. Cantor owns shares in a mutual fund which bets heavily on the performance of US Treasury bonds, and stands to gain if those bonds do poorly. The fund is called “ProShares Trust Ultrashort 20+ Year Treasury EFT”, and its investment method is to short long-term U.S. Treasury bonds, meaning when their price drops the value of the fund’s shares rises.

If Mr. Cantor and his crowd can’t agree on raising the debt ceiling for the US Treasury, bond prices will certainly drop, perhaps calamitously. If they do, the value of Mr. Cantor’s shares will certainly rise, perhaps greatly.

So my question and that of many others is, “how is this not a conflict of interest?” It’s in Mr. Cantor’s personal financial interest if the debt ceiling negotiations fail, yet he’s in the room presumably trying to get the best possible deal he can for the good of the country.

It smells bad.