Why National Lawmakers Shouldn’t Be Allowed to Trade Stocks
No member of the national legislature, and no spouse thereof, should trade in stocks. It’s bad ethics, bad politics and bad politics. There’s no way to make this sneaker shine. This is especially true when it comes to the leadership of the national legislature. Of Reuters:
In a periodic transaction report signed last Friday and posted on the House of Representatives website on Monday, the senior Democrat revealed that her husband, financier Paul Pelosi, on May 13 purchased Apple call options for an amount between $500,001 and $1 million. On May 24, he bought more Apple call options, for an amount between $250,001 and $500,000, the disclosure shows. On the same day, Paul Pelosi bought Microsoft call options for $600,000.
If you accept, as I do, that Wall Street is little more than an elaborate scam, then no elected politician should come near it. If you want to try to win money at the casino, get out of professional politics. If your spouse wants to guess which front company the pea is under, tell them to wait until you’re away.
Pelosi in January signaled that she may be willing to push forward legislation to ban stock trading altogether by lawmakers. It was a reversal of his previous position defending lawmakers’ right to trade in stocks. Proposals by Democrats in Congress this year to ban lawmakers from stock trading have yet to pass. Pelosi’s stock performance ranked sixth in Congress in 2021, with Republican Congressman Austin Scott leading, according to a analysis by Unusual Whales, a financial data sales service.
Senator Professor Warren has been on this case since the beginning of the year. She joined Senator Steve Daines, Republican of Montana, and several co-sponsors from both parties behind a bill that would categorically bar members of Congress from owning or trading in stocks. Currently, a 2012 law full of loopholes anemicly regulates these issues. During an April Senate Banking Committee hearing, the SPW really went to town, calling out congressional critics for what it calls “insider trading.”
Members of Congress are in a unique position to gain information they can use to outsmart the stock market. In fact, the risks with government officials are even higher than with most CEOs, because government officials can sometimes use their public offices to influence private outcomes – and the value of the stocks they own or trade. For example, voting on laws that will protect — or break — a giant tech company could directly impact the wealth of a congressman who owns shares in giant tech companies.So listen, this is not a hypothetical problem. Last year alone, members of Congress and their spouses traded more than half a billion dollars in stocks and other investments. And here’s the most alarming part: On average, members of Congress have outperformed the S&P 500. And yet, not a single member has been accused of insider trading. Now, there is no doubt in my mind that members of Congress who violate federal law by engaging in insider trading should be criminally prosecuted. But there is no doubt that this is not enough to solve this problem. It’s already the law.
(It is historically interesting, especially for the “bipartisan” fetishists among us, that it was Daines who was presiding over the Senate the night Mitch McConnell silenced the SPW, leading to the now-famous “She persisted”. No grudges held here.)
Seems like one of the easier calls to me at a time when there aren’t many around. While you’re doing people’s business, avoid going into business for yourself.
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