If there is any issue that should be a gimme for a political party seeking support, it’s putting a stop to stock trading by members of Congress and others in senior federal government positions while in office.
But if you think that Democrats — who, frankly, could use a political victory — are rushing to embrace the legislation introduced on Wednesday by Sen. Jon Ossoff (D-Ga.) that would halt their stock trading while in office, think again.
And, no, it’s not because they favor the rival bill that Republican Sen. Josh Hawley (Mo.) introduced last week.
It’s because many elected officials of both parties want to preserve their ability — and that of their spouses — to keep up with the meme traders on Reddit.
And that demand is supported at the very top of the Democratic House leadership.
When asked late last year about curtailing federal lawmakers’ ability to buy stocks while in office, House Speaker Nancy Pelosi (D-Calif.) all but ridiculed the idea. “This is a free market, and people — we are a free-market economy. They should be able to participate in that,” she said.
No, actually, they shouldn’t.
Right now, the only curb on federal lawmakers buying and selling stocks while in office is the Stop Trading on Congressional Knowledge Act of 2012. Its standards are not exactly tough. Specifically, it says that members of Congress cannot trade on insider information. They also must file reports on their stock market moves within 45 days of making them.
But even these requirements are too much for some lawmakers. The business website Insider, which monitors the issue, tracked 54 U.S. representatives and senators who did not get their paperwork in on time last year.
Others have attracted attention for different reasons. Pelosi’s financier husband pocketed about $5 million last summer after big bets on tech stock options he bought in February 2020 paid off. The thing that many noticed? Paul Pelosi sold just before Congress held scheduled hearings on regulating the tech sector.
This was almost certainly a coincidence: Paul Pelosi is a frequent trader, and his options were set to expire the day he exercised them. Still, the optics stink. Members of Congress frequently receive confidential information. It’s hard to believe they ignore things they have been briefed on when they buy and sell stocks. Hence the investigation, and fury, over stock sales made by Sen. Richard Burr (R-N.C.) shortly before markets crashed as covid-19 hit. Other senators, too, were investigated for pre-pandemic stock sales.
Some Americans want to get in on the “action.” Myriad accounts on TikTok, Twitter and other platforms track the trades of elected officials. “I’m at the point if you can’t beat them, join them,” Chris Josephs, founder of the social investment app Iris, told NPR last year. He sends push notifications to his followers when Pelosi files her mandatory disclosures.
For others, congressional stock trading triggers disgust. A recent poll by the Convention of States Action, a conservative lobbying group, found that 3 out of 4 Americans say members of Congress have an “unfair advantage” from confidential info and should not be allowed to trade individual stocks. A mere 5 percent support allowing Washington pols to buy and sell shares.
Republican leaders apparently see an opportunity. House Minority Leader Kevin McCarthy (R-Calif.) told Punchbowl News that he’s considering getting behind the movement to ban stock trading by members of Congress should Republicans regain the House majority in November.
Left unsaid: Republicans held the House majority from 2011 through 2019. Yet GOP leaders haven’t supported the issue in a meaningful way since the 2012 Stock Act became law. Pelosi’s stance allows McCarthy to spout off, taking a high-ground posture that’s underserved.
To be clear, no one is demanding that members of Congress forswear holding all stock. Ossoff’s legislation, which is co-sponsored by fellow Democratic Sen. Mark Kelly (Ariz.), would require federal lawmakers, their spouses and dependent children to place their portfolios in a blind trust. Those who want more control over their money would have to invest via diversified mutual funds, exchange traded funds and Treasury notes.
Hawley’s proposal is similar, though it differs on penalties for noncompliance.
Neither bill demands major financial sacrifice. But it’s still asking too much for some. What do you call it when Democrats refuse to get behind a plan to end trading among fellow lawmakers, leaving the door open to disingenuous posturing by Republicans? A losing political investment.