RAW STORY, MATT LASLO
WASHINGTON – A new measure released this week to bar sitting federal lawmakers from trading stocks has more support than ever in the Senate. The bill faces steep opposition from congressional critics who say it’s either too lenient or totally unnecessary, and in its absence, lawmakers continue trading away.
After spending the past few months getting input from colleagues, Sen. Jeff Merkley (D-OR) and other Democrats unveiled new consensus legislation that’s already supported by 20 percent of United States senators.
“To now have, for the first time, a fifth of the Senate on a single bill is a real accomplishment,” Merkley told reporters at the bill’s unveiling Tuesday.
Dubbed the ETHICS Act – which stands for “Ending Trading and Holdings in Congressional Stocks” – the measure prohibits “members of Congress, their spouses and dependent children from abusing their positions for personal financial gain by owning or trading securities, commodities, or futures.”
Merkley says it’s vital.
“Members of Congress are held to serve the people, not their portfolios,” Merkley said. “That’s why we need to end the corrupt trading in individual stocks.”
The effort isn’t new, but the bill is. The biggest change from past versions is a new carveout for sitting lawmakers, which would allow them to hold onto their current stock portfolios, even as they’d be restricted from trading any stocks.
Merkley attempted to win bipartisan Senate support, but he’s yet to convince a single Republican senator to co-sponsor the legislation, including those who support his goal. Sen. Josh Hawley (R-MO) commends Merkley’s effort, but he says the provision to allow sitting lawmakers to keep their stock holdings is so expansive it makes the measure meaningless.
“If you’re going to ban stock trading by members of Congress, you should probably include the members of Congress in that ban,” Hawley told Raw Story. “This ban applies to no member of Congress. It’s a classic, like, ‘we’re banning it, but it applies to none of us.’ It’s a huge loophole.”
Hawley’s pushing his own measure, the PELOSI Act – technically, the Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act – which would force lawmakers and their spouses to divest their holdings within six months of assuming office. Merkley argues his new bill goes further than Hawley’s proposal.
“Spouses are covered. Children are covered, which are not covered under Hawley’s bill which is a problem,” Merkley told Raw Story while walking through the Capitol. “It is the most comprehensive bill by far.”
It also attempts to punish lawmakers for using a loophole in current law. In 2012, Congress passed and then-President Barack Obama signed the STOCK – Stop Trading on Congressional Knowledge – Act into law. The measure was intended to bar lawmakers from trading stocks based on insider information, but a Business Insider investigation found more than 75 members of Congress skirted reporting requirements in the last Congress.
The new proposal would hit lawmakers with a $500 fine each time they’re found to violate the STOCK Act. That seems paltry, but it could quickly add up, especially for lawmakers like Rep. Daniel Goldman (D-NY) who just this week Raw Story found “has bought or sold shares of individual stocks more than 480 times” since January. He’s far from alone.
That’s part of the reason why supporters of this latest effort to clamp down on congressional stock trading say the bill’s long overdue.
“There were reports of people trading on bank stocks during the Silicon Valley [Bank collapse]. People in Congress have more information about more things than the public has,” Senate Banking Committee Chair Sherrod Brown told Raw Story while riding an elevator in the Capitol. “When you’re a member of Congress, you shouldn’t be able to, because there are too many opportunities to take advantage of what you know.”
While Brown talked to Raw Story in the front of the elevator, Sen. Tommy Tuberville (R-AL) smirked in the back. As soon as the elevator opened, Brown jetted to the Senate floor to cast a vote, even as Tuberville sought out Raw Story.
“I’m number one on the list for trading,” Tuberville laughed.
That Business Insider investigation, Conflicted Congress, found Tuberville violated stock-trading rules 132 times in 2021. But the former football coach isn’t about to sign onto this new effort – or any of the others floating around the Capitol – to prohibit money making the Wall Street way.
“It’s ridiculous. It’s a free country. I don’t get any more information than anybody else gets,” Tuberville told Raw Story.
Tuberville says he doesn’t conduct the trading himself, but Brown and other bill sponsors say that’s not the point: Tuberville – along with dozens of his colleagues in both parties – isn’t necessarily violating federal law, as currently written (loopholes and all), him and others are blurring lines that federal lawmakers shouldn’t.
“It’s an ethical problem,” Brown told Raw Story, “but it’s not a legal problem.”
The new ETHICS Act also attempts to increase transparency through mandating lawmakers file their financial disclosures electronically so they can be compiled in a searchable database. And, while in the past Merkley has advocated for banning congressional staffers from trading stock, that provision was cut from this latest bill. While many progressives and watchdog groups want to see any new restrictions placed on federal lawmakers also applied to Supreme Court justices, the new measure leaves them out.
Over in the House, a companion measure does have bipartisan support. It’s sponsored by Reps. Michael Cloud (R-TX) and Raja Krishnamoorthi (D-IL). And the ETHICS Act has competition.
The Bipartisan Ban on Congressional Stock Ownership Act would slap lawmakers with as much as a $50,000 penalty for trading stocks. It was introduced in January by Reps. Ken Buck (R-CO), Pramila Jayapal (D-WA), and Matt Rosendale (R-MT).
In January, a different bipartisan group of lawmakers re-introduced the TRUST in Congress Act, which would force all elected officials, their spouses and dependent children to place their stocks in a blind trust until 180 days after leaving office. It’s sponsored by Reps. Dusty Johnson (R-S.D.), Chip Roy (R-TX), and Abigial Spanberger (D-VA) – who was highly critical of former Speaker Nancy Pelosi and other Democratic leaders for refusing to bring the measure up in the last Congress.
And just yesterday, another bipartisan measure aimed at curtailing stock trading was introduced by Reps. Nancy Mace (R-SC) and Angie Craig (D-MN) – only their measure would ban all stock trading on federal government property and devices. Their Prohibition of Financial Trading on Government Property Act extends beyond elected lawmakers and would also cover federal employees.
While momentum continues to build for restricting stock trading, there’s currently no consensus, and Democratic senators claim their new ETHICS Act is the most comprehensive measure introduced to date.
Proponents say one of the most surprising things is that an outright stock ban isn’t already in place for the nation’s political class. If for nothing else to help Congress try to regain some legitimacy in the eyes of the American public, some 78 percent of whom report disapproving of Congress, according to Gallup.
“We know what position members of Congress can be in, and we know the temptations are too great for some members of Congress to resist,” Sen. Brown told Raw Story. “That’s why this legislation is so important.”