A ‘let’s trade stocks’ moment in Congress felt a lot like ‘let ’em eat cake’

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House Speaker Nancy Pelosi argued in favor of barring members of Congress from trading individual stocks, although she opposed such a ban.

A reporter asked about this potential ethics reform in December, and she quickly dismissed it.

“We are a free market economy,” she said. “They should be able to participate in that.”

The question followed a Business Insider report that found about 50 members of Congress and more than 180 congressional staffers violated the Stop Trading On Congressional Knowledge (STOCK) Act, a law passed nearly 10 years ago in the purpose of combating insider trading by members of Congress. . However, even seemingly obvious violations are difficult to prosecute given the limits of the law.

Walter Shaub, former director of the US Office of Government Ethics, was unimpressed with Pelosi’s response. No one who cares about ethical governance should be.

“That’s a ridiculous comment!” Shaub wrote on Twitter. “She might as well have said ‘let them eat cake.’ Sure, it’s a free market economy, but your average schmuck doesn’t get confidential briefings from government experts filled with nonpublic information directly related to stock prices.

The need for stronger ethical protections, to help ensure public service is better and more clearly insulated from personal gain, goes beyond lawmakers. Other recent events highlight the work that remains in the judiciary and at the Federal Reserve.

In September, the Wall Street Journal reported that over a seven-year period, 131 federal judges failed to recuse themselves in 685 cases involving companies in which they or family members owned stock – which goes to against federal law and conflicts. -rules of interest.

Obviously, stricter ethics rules, better enforcement or both are also needed for judges. Supreme Court Chief Justice John Roberts made similar remarks in his year-end report, although he argued that reform should come from within the judiciary. Roberts acknowledged ethics shortcomings and outlined internal steps the federal justice should take, such as improving ethics training and updating compliance-related software.

“Let me be perfectly clear: the judiciary is taking this matter seriously. We expect judges to adhere to the highest standards, and these judges violated an ethics rule,” Roberts wrote, while pointing out that the cases reported by the Wall Street Journal represented only a small fraction. of the total number of cases over this period. “However, this context is not [an] excuse. We have a duty to strive for 100% compliance because public trust is essential, not incidental, to our job. »

The Federal Reserve has had its own stock trading troubles recently, with controversy surrounding trades by two regional bank presidents, as well as trades by Fed Chairman Jerome Powell and Vice Chairman Richard Clarida. This fall, the Fed announced new rules to “prohibit the purchase of individual securities, restrict active trading, and increase the timeliness of reporting and public disclosure by policymakers and senior Federal Reserve officials,” according to a October 21 press release.

“The new rules are a good start, but they don’t go far enough,” one financial transparency advocate told NPR.

The rich are getting richer and richer. Those in positions of power remain relatively comfortable, at times appearing to blur the lines between public service and self-interest, as many Americans scramble to stay safe, housed and fed during this protracted pandemic.

In that context, we don’t think it’s particularly hyperbolic to view Pelosi’s recent comments as some kind of “let’s trade stocks” moment. And it’s far from the only current example of powerful people, and the rules that are supposed to guarantee their ethical behavior, being disappointing and out of touch.

It’s not like there’s a lack of ideas for ethics reform in Congress. For example, the Ban Conflicted Trading Act, which Rep. Jared Golden co-sponsored, would require members of Congress to divest individual stock ownership.

“With comments like these from House leaders, it’s easy to see why confidence in Congress is at rock bottom,” Golden said. tweeted after Pelosi’s remarks. “It *should* be illegal for members of Congress to trade stocks. Period. We should pass the law prohibiting conflicting trade and ensure that it is done.

That would be a good starting point.

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