Can Congress really use inside information to trade stocks? (VIDEO) – YubaNet

Members of Congress are using inside information to make money on the stock market when they are supposed to be working for you. Don’t get me wrong, this is legalized bribery.

There is no good reason for elected officials to trade individual stocks. Unless you have special knowledge, buying and selling individual stocks is a terrible way to get rich. It’s gambling, pure and simple. That’s why many Americans with retirement accounts prefer to invest in index funds, which are tied to the performance of the broader stock market.

But many members of Congress continue to invest in individual stocks, and some are doing quite well. How do they do?

Consider this: Just before the economy collapsed in 2008, several lawmakers frantically shifted their holdings to “safer” investments. The frenzy came on the heels of private meetings with Treasury officials who warned economic disaster was imminent.

I imagine most of you weren’t invited to those meetings—I certainly wasn’t. But those lawmakers were — and likely chose to act on that information.

When this story came to light, people were understandably outraged. After immense public pressure, Congress passed the STOCK Act in 2012. The law required lawmakers to disclose their and their spouses’ stock sales within 45 days. By forcing these transactions to be public, the hope was that lawmakers would stop making dodgy transactions.

And it worked. Well… partially.

In January 2020, a handful of senators – including Richard Burr, Dianne Feinstein and Kelly Loeffler – all made significant exchanges after receiving a classified briefing on COVID-19, long before the public knew the full extent of the threat. .

Few, if any, lawmakers have faced serious consequences for breaking the spirit or letter of the law, as insider trading is notoriously difficult to prove.

In 2021 alone, the media identified 43 lawmakers who failed to properly disclose their occupations. Their punishment? Nothing. Lawmakers are supposed to face a paltry $200 fine for failing to report on time — but congressional ethics officials typically waive that.

There is an obvious solution to all of this: prohibit members of Congress from trading individual stocks.

This is exactly what the adversarial trade prohibition bill does. Lawmakers would have six months after their election to sell their individual holdings, transfer them to a blind trust over which they have no control, or hold them until they leave office without trading them.

But Congress has yet to vote on the bill, even though 67% of Americans agree it’s a good idea to prevent members of Congress from trading individual stocks.

As usual, follow the money: the majority of lawmakers are millionaires, who likely derive a significant portion of their wealth from investments and trading. So they will not support this bill unless there is enough public outcry to do so.

It’s there that you intervene.

With distrust of government near an all-time high, even the appearance of a conflict of interest is hurting our democracy. Members of Congress are elected to represent the interests of the people, not the money in their brokerage accounts.

Prohibiting members of Congress from trading individual stocks is a no-brainer. Let’s do it.

By the way, if you want my daily reviews, comments and drawings, please sign up for my free newsletter: robertreich.substack.com

Robert Reich writes at robertreich.substack.com. His latest book is “THE SYSTEM: Who Rigged It, How To Fix It”. He is Chancellor Professor of Public Policy at the University of California, Berkeley and Senior Fellow at the Blum Center. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the 10 Most Effective Cabinet Secretaries of the 20th Century. He has written 17 other books, including the best-selling “Aftershock”, “The Work of Nations”, “Beyond Outrage” and “The Common Good”. He is the founding editor of American Prospect magazine, founder of Inequality Media, Fellow of the American Academy of Arts and Sciences, and co-creator of the award-winning documentaries “Inequality For All”, broadcast on YouTube and “Saving Capitalism”, now streaming on Netflix.

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