A bipartisan cadre of lawmakers speaking Wednesday at a Members Day hearing at the House Administration Committee sought to reignite efforts to tighten the rules for, if not entirely ban, the practice of stock trading among lawmakers.
It’s an issue that has led to a multitude of unsuccessful legislative attempts despite growing calls for change.
Scrutiny of members’ trades has increased since the outset of the COVID-19 pandemic, when reports emerged that lawmakers had traded ahead of a market crash after receiving briefings about the health crisis.
“I don’t come here saying that I think I’ve got all the answers, or that I know exactly what we should do or shouldn’t do. It’s hard,” said Rep. Chip Roy of Texas, one of four lawmakers, and the lone Republican, to speak on the issue at the hearing.
“Here’s the simple thing: we don’t want to be projecting to the American people that we are somehow making decisions when we are doing our job here that are connected to our own profit, our own personal financial stake,” he said. Roy in January reintroduced with Rep. Abigail Spanberger, D-Va., a bill that would require members of Congress, their spouses and dependent children to place certain assets into blind trusts.
Reps. Pramila Jayapal, D-Wash., and Raja Krishnamoorthi, D-Ill., joined Roy and Spanberger in calling attention to the issue on Wednesday. Reps. Angie Craig, D-Minn., and Andy Kim, D-N.J., submitted written testimony advocating tougher restrictions but did not appear in person.
Members spanning the political spectrum — from former Speaker Nancy Pelosi, D-Calif., to conservative Sen. Josh Hawley, R-Mo. — have advocated for various approaches to ban or limit members’ trading. All have ultimately fallen short.
Pelosi backed legislation in 2022 that would have bolstered fines for noncompliance with the Stop Trading on Congressional Knowledge (STOCK) Act of 2012, which forbids members from trading on nonpublic, material information they receive as part of their jobs.
She also tasked the House Administration Committee with reviewing various legislative options. The committee, then led by Rep. Zoe Lofgren, D-Calif., held a hearing on the issue in spring 2022, but the panel did not reach a consensus.
Rep. Barry Loudermilk, who continues to serve on the committee, said at the time that bans could inhibit the rights of lawmakers to “participate in a free-market society.”
Pressure for Congress to act intensified after several lawmakers were accused of dubious deals. The Justice Department took up, then dropped, an investigation into the trading by former Republican Sens. Richard Burr of North Carolina, Kelly Loeffler and David Perdue of Georgia, and sitting Sen. John Hoeven, R-N.D., in the time leading up to the pandemic after being briefed on its potential to devastate markets.
House Administration Chairman Bryan Steil, R-Wis., who took the reins from Lofgren in January, appeared receptive.
“I’m really excited about this topic,” Steil said. “I think one of the big concerns is the appearance of impropriety that exists among the American public.” If he takes up the issue, there are a variety of proposals to choose from.
Kim reintroduced a bill Wednesday that would prohibit ownership of individual stocks for members of all branches of government. And Craig reintroduced her own proposal in late February that would require every member of the House to sell their individual stocks and refrain from future stock ownership.
Krishnamoorthi, meanwhile, set out a plan that would cover all members, spouses and dependents, requiring them either to divest by placing their assets in a qualified blind trust or to move entirely into mutual and exchange-traded funds and U.S. treasury bills, notes or bonds.
He and seven House colleagues in February urged Speaker Kevin McCarthy, R-Calif., to bring legislation that would ban stock trading to the floor. They cited a 2022 survey by conservative advocacy group Convention of State Action that found 76 percent of voters, including 70 percent of Democrats and 78 percent of Republicans, feel members of Congress should not be able to trade stocks.
“Maintaining the public’s faith in government is pivotal to preserving Congress’ institutional legitimacy,” he said.
Jayapal’s tack, which she introduced last Congress, would go further by barring blind trusts, which she said often aren’t truly blind and can still pose conflicts of interest. Her bipartisan legislation and its companion in the Senate both died in committee.
The Washington Democrat noted that the fine for violating the disclosure provision of the STOCK Act is just $200, adding that, “compared to the significant profits that members may make from a conflicted asset, this penalty is a drop in the bucket.”
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