Members of Congress should not own or trade stock
Few issues in Congress transcend partisan polarization as reliably and consistently as members’ stock portfolios. Americans from all ideological backgrounds overwhelmingly agree that their federal officials should not buy and sell securities given their obviously advantageous access to information that is not available to most investors. And judging by the persistence of high market participation on Capitol Hill, members of Congress from both parties agree that they like to take advantage of this privilege to enrich themselves.
The Post-Watergate Ethics in Government Act and the Obama-era STOCK (Stop Trading on Congressional Knowledge) Act, which required more frequent disclosure of Congressional dealings, have served primarily to highlight the extent of the problem without doing much. thing to solve it. A recent Insider study found that 59 lawmakers broke the law, which usually results in a minimal fine. Meanwhile, waves of remarkably prescient buying and selling by lawmakers have taken place on the eve of world- and market-shattering events such as the 2008 financial crisis, the 2020 emergence of the novel coronavirus and the Russian invasion of Ukraine this year, suggesting all senators and representatives were making lucrative use of information obtained through their duties.
A surge in pre-pandemic stock dumping prompted the FBI and the Securities and Exchange Commission to open an investigation into four senators. Sen. Dianne Feinstein, D-California, finally admitted to failing to disclose a transaction by her late husband and said she would pay a fine, although she maintained that her transactions were not related to the emergence of COVID-19 or any information they may have had. Sen. Richard Burr, RN.C., who has come under further scrutiny based on a wider sellout by himself and a relative, has resigned as the intelligence committee chair. And the scrutiny of former Sen. Kelly Loeffler, R-Ga., may have helped hand the Senate over to Democrats. But the federal government eventually dropped all investigations without filing charges.
The husband of another California lawmaker, Speaker of the House Nancy Pelosi, is so prolific and successful as an investor that he inspired a following on social media, where amateur investors follow the transactions disclosed by the speaker . The thousands of transactions disclosed by members of Congress, and imitated by those who monitor them, are proven to influence the entire market. Like Burr, who voted against the reform, Pelosi made matters worse by opposing any restrictions on those congressional profits last year, though she has since changed her position.
The cause of Congressional stock trading reform is nearly as popular and bipartisan in theory as members’ pursuit of market riches is in practice, with more than a fifth of lawmakers signing the one of many current reform proposals. As past anemic efforts demonstrate, they have little hope of regaining credibility on the subject if they continue to allow their members and immediate families to own and trade individual stocks.
Requiring members of Congress to limit their investments to diversified funds that do not invite personal dealings and conflicts of interest is not asking much given their unfair advantages over the investing public and the power and the responsibility entrusted to them. The alternative is another reason to be wary of a legislature that Americans already hold in unsustainable esteem.
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