Editorial: Members of Congress Should Not Trade Stocks | Editorials
We are pleased to note that no South Carolina official appeared on The New York Times’ recent list of 97 current members of Congress who have bought or sold stocks or bonds in connection with their work in Congress, or whose a spouse or child has reported such a transaction. This should make it easier for members of our congressional delegation to wage an overdue campaign for tougher rules to reduce this serious conflict of interest and improve the public’s view of congressional ethics.
The Times analyzed transactions between 2019 and 2021 using a database of members’ financial records, comparing members’ transactions with their committee assignments and the dates of congressional hearings and investigations. Many lawmakers have defended the trades. Some told the newspaper that their trades were done independently by a spouse or their broker. Some have since moved their assets into blind trusts. Two said the exchanges were accidental.
The potential issue seemed to evenly cut party lines. For example, the newspaper noted that Sen. Tommy Tuberville, a Republican from Alabama who sits on the agriculture committee, routinely reports buy-and-sell deals tied to livestock prices. Another exchange of Rep. Alan Lowenthal’s wife, D-California, sold Boeing shares on March 5, 2020 – a day before a House committee on which Mr. Lowenthal sits released its damaging findings on the 737 jet Max from the company, which was involved in two fatal accidents. The newspaper’s analysis found that more than 3,700 transactions reported by lawmakers on both sides in three years posed potential conflicts between their public role and their private wallets. This is unacceptable.
Under a 2012 law, members of Congress can trade stocks, bonds and other financial instruments as long as they are not trading on inside information and as long as they disclose within 45 days any transaction by themselves or by members of their immediate family with a value of $1,000 or more. . We’ve urged Congress to tighten its rules further after earlier revelations by senior government officials who tried to enrich themselves by trading what looks like insider information. And to be fair, the problem extends beyond House members and senators to federal judges and members of the Federal Reserve Board.
These senior officials often stumble upon information that has not been made public and that could give them an unfair advantage over other investors. Again, as we noted, at least 54 lawmakers violated the 2012 reform, according to Business Insider’s investigation, while a previous Wall Street Journal report found an astonishing 131 judges Federals had heard cases between 2010 and 2018 involving companies in which they or a family member held stock. Sixty-one actually traded the stock in question.
While there have been signs of bipartisan support for further reforms, it’s unclear if a bill will make it to President Joe Biden’s desk soon. It should, and we support, the approach that would require members of Congress to place their individual stocks, bonds, and certain other financial assets in a blind trust that would be managed by an outside advisor without owner involvement.
A recent Dartmouth College study found that members of Congress who said they bought and sold stocks between 2012 and 2020 did not, on average, make more money than they would have made with other similar actions. “Our study looked at about eight years of data, and the returns are similar to what one would expect if monkeys picked stocks,” said economics professor and study co-author Bruce Sacerdote. “Stock picking is a very difficult task for anyone, whether you are a professional hedge fund manager or a US senator, so it doesn’t shock me at all that senators tend to perform very poorly. “
But Congress should know full well that this issue goes beyond whether senior federal officials profit from privileged information: it depends on our belief that our nation’s leaders are focused on acting in our best interests, not their.