BUSINESS INSIDER, KIMBERLY LEONARD AND WARREN ROJAS
A key US House of Representatives panel will soon unveil a proposal for “substantial changes” to the rules for members of Congress who trade stocks.
The Committee on House Administration will introduce a “legislative framework recommending reforms to improve transparency and accountability” in the coming weeks, the committee’s communications director, Peter Whippy, told Insider.
The changes in question would apply to the Stop Trading on Congressional Knowledge Act of 2012, a law designed to quash corruption and curb financial conflicts-of-interest. Insider’s “Conflicted Congress” investigation, initially published in December, found that 63 lawmakers and at least 182 senior-level congressional staffers have violated the STOCK Act by failing to disclose their stock transactions on deadline.
Whippy said the Committee on House Administration recently received responses to questions it sent witnesses who appeared before federal lawmakers during an April public hearing on the topic.
“This valuable input is necessary to build a complete legislative record to support substantial changes to the law and current disclosure regime,” he said.
Will proposed changes include an outright ban on members of Congress trading stocks?
Whippy indicated that it was still on the table, but it’s not clear yet what the proposed changes will be.
Congress could make other changes to the STOCK Act that fall short of a ban, including levying higher penalties against members who don’t disclose their stock trades on time, or improving ethics training for freshmen members.
Insider has found that a $200 late fee for first-time violators of the STOCK Act is inconsistently enforced, especially in the US House. It also found numerous examples of conflicts of interest among federal lawmakers, including both Democrats and Republicans.
Momentum or stagnation?
April’s congressional hearing underscored lawmaker’s focus on congressional stock-trade matters. But it’s unclear whether Congress will be able to come to an agreement on the matter before the 2022 midterms — even though there is some bipartisan consensus that changes are needed.
Recent polling shows voters support a ban on congressional stock trading.
During April’s hearing, Chairwoman Zoe Lofgren of California at times expressed doubts about a full-blown congressional stock trading ban. She suggested focusing on harsher penalties for people who violate existing law and offering better compliance training for freshmen members of Congress.
Her GOP counterpart on the committee, Rep. Rodney Davis of Illinois, voiced a similar perspective.
Still, the two sides don’t appear to be tackling the issue together since April’s hearing, according to Davis’ office.
“There has been no minority involvement despite repeated asks to work together on a consensus bill,” said Tim Monahan, Davis’ spokesman.
Elsewhere in Congress, Democrats and Republicans alike have together introduced several bills to ban members of Congress from trading individual stocks.
After the hearing, a bipartisan group of House members sent a letter to the Committee on House Administration asking for a markup of “strong legislation to ban members of Congress from directly owning or trading stocks while in office.”
House Speaker Nancy Pelosi initially rejected the idea of a congressional stock trading ban before relenting earlier this year and allowing a group of bipartisan lawmakers to craft bills and to conduct the public hearing that happened in April.
Rep. Abigail Spanberger, a Democrat of Virginia who sponsored the bipartisan TRUST in Congress Act to ban members of Congress and their spouses from trading individual stocks, told Insider on Thursday that any proposal falling short of a congressional stock-trade ban would “not meet the threshold of reforms the American people deserve.”
Improving disclosures and enforcing penalties, but doing nothing else, wouldn’t address “the overarching perception of impropriety while in a position of public trust,” said Spanberger, who’s been frustrated by the slow pace of negotiations. “As predicted, the movement to ban Members of Congress from buying, selling, or trading stocks is being stonewalled, delayed, and shuffled to the back of the line.”
Roughly a dozen Republicans have signed onto Spanberger’s bill, and House Minority Leader Kevin McCarthy floated a stock ban earlier this year.
Over in the US Senate, a group of Democrats working to hammer out a compromise bill say they’ve largely reached agreement on the fundamentals of a congressional stock-ban bill, although no hearings or votes have been scheduled. Republican Sens. Josh Hawley of Missouri and Ben Sasse of Nebraska have also introduced their own bills.
A frustrated-looking Sen. Jon Ossoff said Thursday that negotiations are still happening, but he’s ready to get members on record about clamping down on potential conflicts of interest.
“There’s still talking. Time to get voting,” the Georgia Democrat and co-author of the Ban Congressional Stock Trading Act told Insider at the US Capitol. His bill would cover investments attributed to lawmakers, their spouses, or any dependent children.
The office of Sen. Jeff Merkley, who has a similar bill to Ossoff’s though it wouldn’t ban trades by spouses, said the senator believes that banning lawmakers from owning and trading stocks was “the right way to solve this conflict of interest.”
Last month, a coalition of 16 reform advocates, government watchdog groups, and political organizations wrote President Joe Biden a letter urging him to “publicly and actively” push Congress to ban its members from trading individual stocks.
Biden was vice president when the STOCK Act was signed into law. But he has said little about Congress and stocks this year and has not publicly responded to the reform advocates’ letter.