Reviews | Congress must pass a ban on stock trading
Americans are in a bad mood with their elected officials. Blame the pandemic or inflation or Trumpism or stress or structural issues like inequality, but people don’t feel like the system, let alone its leaders, is working for them. The nation is going through a crisis of confidence that is eating away at its strength and its unity.
Solving this problem requires long-term vision and commitment – things that politicians aren’t always known for. But a simple idea gaining traction on Capitol Hill could reassure a frustrated and exhausted public that lawmakers at least acknowledge this trust deficit: a ban on stock trading by members of Congress and their spouses.
This idea received a further jolt at the start of the pandemic after some lawmakers faced awkward questions about whether they were using nonpublic information to conduct lucrative stock trades just as the severity of the threat posed. by the coronavirus was becoming clear.
A report in December by Insider was more definitive. He revealed that in 2020 and 2021, dozens of lawmakers failed to follow rules requiring them to quickly disclose stock trades above a certain threshold. The survey also found that Congress is doing a poor job of enforcing accountability and transparency measures.
In response to the uproar, there has been bipartisan pressure, in both houses of Congress, to establish stronger safeguards on Congressional ownership. Several lawmakers have introduced bills pushing variations of a ban on trading individual stocks, some stricter and more expansive than others. House Minority Leader Kevin McCarthy reportedly told donors in January that if, as expected, Republicans regain the House in midterm elections this fall, they would work to pass legislation that would limit the ability of legislators to trade stocks.
In a high-stakes election year, with lawmakers eager to show voters they feel their rage, now is the time to push through this popular, common-sense reform. Americans have lost faith in Congress. Restoring trust in this institution requires concrete, bipartisan change.
It has been a decade since Congress last made a significant effort to control itself in this area. The Stock Act of 2012, among other measures, made it illegal for lawmakers to trade based on access to nonpublic information. The reforms were well-intentioned but insufficient. In practice, there are too many legal shades of gray. A clearer and brighter line should be drawn.
Despite all the rhetoric from the Democratic Party about restoring public trust in government, its leaders in the House have, until recently, been reluctant to talk about a trade ban for members. “We are a free market economy,” Speaker Nancy Pelosi said in December. “They should be able to participate in that.”
Majority Leader Steny Hoyer was similarly weak, suggesting a ban is unnecessary. Although Mr. Hoyer does not own any shares, he said “members should not be in a different position than they would otherwise be if they were not members of Congress”.
This justification does not pass the detection test. Members of Congress have access to a constant stream of information that ordinary Americans do not. They already exist in a different, more privileged situation.
The common argument that a trade ban would cause lawmakers difficulties is no longer persuasive. Most of the proposals under consideration do not call on members of Congress to sell all their stock. They would simply prohibit lawmakers from trading shares in individual companies. Assets could still be held in vehicles such as index funds or blind trusts.
It’s also worth noting that only a handful of American families, about 15%, directly own stock in individual companies, as opposed to indirectly through mutual funds and the like. A ban on stock trading would bring lawmakers more in line with the 85% of Americans who own no individual stocks, rather than aligning their interests with the 15% who do.
A congressional trade ban enjoys a bipartisan appeal that is rare in this polarized era. A January poll found that 63% of American voters are at least somewhat supportive of such a move – with strong support among Democrats, Republicans and independents.
With support for reform growing, Ms Pelosi adjusted her course this month, saying she was open to a ban and announcing that the House Administration Committee would look into the situation. Committee chair Zoe Lofgren of California said her team is analyzing existing bills and developing a broad-based consensus proposal.
The speaker’s public change of course was essential to maintain momentum, but there is a difference between grudging acceptance and vigorous support. Proponents of reform must keep up the pressure to ensure that this effort is not slowed down or bogged down in fiendish details. Ms. Pelosi, for example, insisted that reform legislation should apply not only to Congress but also to the judiciary, including the Supreme Court. “It has to be government-wide,” she said.
The judiciary would certainly need ethical support. A Wall Street Journal investigation last year found that between 2010 and 2018, 131 federal judges “illegally ruled on cases involving companies in which they or their families held stock.” People involved in nearly 800 lawsuits have since been told their cases can be reopened because of those disputes.
There are proposals circulating that would concern the three branches. Two Democrats, Senator Kirsten Gillibrand of New York and Representative Katie Porter of California, recently reintroduced a bill that would tighten reporting requirements at all levels, as well as individual stock trading by members of Congress, the President and the Vice President of the Supreme Court. judges and senior officials of the Federal Reserve – which suffered its own trade scandals last year.
But trying to extend a government-wide ban, while valid in substance, would introduce unnecessary and potentially counterproductive complexity at this time. There are particular fears that an attempt by Congress to impose its will on the judiciary could spark a debilitating debate over the separation of powers. “It’s literally a different conversation and so hard to understand that you’ve turned the tide,” Rep. Abigail Spanberger, a Virginia Democrat who co-authored one of the major reform bills, lamented to The Times. .
Lawmakers’ top priority — arguably, their first duty — should be cleaning up their own branch of government. They are, as elected officials, directly accountable to their constituents, and many of those to whom they owe their jobs and salaries have serious doubts about their ethical guidelines and fair play rules.
In a series of recent Times Opinion focus groups, voters from all political backgrounds described their frustrations and even anger with the political class and the system, viewing elected officials from both parties as acting in their own interests, without rules. nor consequences. “They all go to their barbecues and cocktail parties and laugh,” said an independent voter. “They just want power. They don’t care about us. Some Democratic voters have expressed interest in term limits, restrictions on lobbyists’ influence on lawmakers and new rules on money in politics.
The push for a trade ban goes beyond imposing rules to keep lawmakers on track. It is about changing the widespread perception of public service as a playground for corruption and personal dealings. It is about restoring the confidence of Americans in their government. For Congress, there is perhaps no more worthy cause.