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Rep. Eric Cantor: Covering His Bases With an Ultrashort Treasury Fund?

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"ProShares UltraShort 20+ Year Treasury seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the Barclays Capital U.S. 20+ Year Treasury Bond Index."

Someone bearish on the US economy would be well-served by an investment such as this, which "aggressively shorts" long-term Treasuries. As Senate Majority Leader Harry Reid said last month, “Failure to avert this crisis would have dire consequences” and "would result in the most serious financial crisis this country has ever faced.”

In other words, had a debt limit deal not been reached, the value of the ProShares UltraShort fund would have gone through the roof as the bottom fell out of the bond market -- and House Majority Leader Eric Cantor (R-Virginia) made absolutely, positively sure to cover his ass, just in case.

When the Center for Responsive Politics reviewed Cantor's 2010 financial disclosure documents (which showed a wide range of positions across various sectors, including, among others, shares of Goldman Sachs, General Electric, Disney, and Newmont Mining, as well as a small piece of John Kerry's family business, HJ Heinz), they found "an investment of between $1,001 and $15,000 in the ProShares UltraShort" fund, creating the appearance of a breathtaking conflict of interest -- which his mouthpiece vigorously disputes.

"Conspiracy theorists would have to believe that Eric would want to lose hundreds of thousands of dollars to make a few thousands in return," Laena Fallon, a spokeswoman for Cantor, told the Center's Kathleen Ronayne. "Putting aside the lunacy of it all, he would lose hundreds of thousands of dollars if he did what they suggest. Any person who would seriously identify themselves with this ridiculous conspiracy theory reveals complete inability to understand diversification and basic investing.”
POSITION:  No positions in stocks mentioned.