Congress Polices Itself Very Badly-- Take Corrupt Stock Trading...
Crew-- Citizens for Ethics-- had a good idea last week. Actually, it's an idea that has been around in progressive circles for many years. But because Congress is a largely corrupted body of self-serving politicians, it's as likely to be enacted as is an effective statute against political bribery. And the idea is: It’s time to ban Congressional stock trading. The case is straight-forward and hard to deny:
Members of Congress have access to non-public information and the ability to influence legislation, giving them an advantage in the stock market over the rest of us. It’s no wonder Senators Richard Burr and Kelly Loeffler’s multiple stock trades in early 2020, including of companies likely to be impacted by the escalating coronavirus pandemic, inspired so much outrage. Recent reporting that Burr spoke with his brother in law in February 2020, who then called his stock broker one minute later and dumped tens of thousands of dollars worth of stock, has renewed anger and sparked additional calls for reform and accountability. It’s disturbing to think that any elected official’s focus could be on their own profits, rather than their constituents’ needs.
But Raja Krishnamoorthi's bill to ban the practice-- "This bill prohibits a Member of Congress or certain congressional officers or employees from (1) purchasing or selling specified investments, (2) entering into a transaction that creates a net short position in a security, or (3) serving as an officer or member of any board of any for-profit entity"-- has just two dozen co-sponsors-- two Republicans plus a fairly wide spectrum of Democrats, from AOC, Rashida Tlaib, Mondaire Jones, Ro Khanna, Chuy Garcia and Ayanna Pressley on the left to Jared Golden, Tom Malinowski and Ted Deutch on the other end of the spectrum. Jeff Merkley's companion bill in the Senate has 3 co-sponsors.
Why such scant support for reform? Meghan Faulkner suggested "Perhaps that’s because trading stocks while in Congress seems to be pretty profitable-- one analysis of trades between 2004 and 2010 found that politicians beat the market by 20 percent. Getting elected to Congress seems like a pretty decent investment strategy!"
Congress has tried to address this problem in the past. The STOCK Act was passed in 2012 in order to combat insider trading by members of Congress and congressional staffers, and it requires that members disclose trades and other transactions of stocks, bonds and similar securities within 45 days. But in recent months, literally dozens of members of Congress from both parties have made headlines with delayed filings-- ranging from Senator Cynthia Lummis being a few days late in reporting one investment, to Rep. Diana Harshbarger reporting more than 700 stock trades totaling up to $10.9 million weeks or even months late.
Clearly, the current rules are not enough. Not only can members of Congress still actively trade stocks, which raises conflict of interest issues-- many of them are not even consistently complying with very basic transparency laws and reporting their transactions in a timely manner. In order to avoid questions about stock trading and potential conflicts, disclosure is not enough: members of Congress should not be buying and trading stocks while in office at all.
...Change is possible. Supporting the Ban Conflicted Trading Act should be an obvious choice for every member of Congress who cares about ethics and integrity more than their own profits. Americans shouldn’t have to be concerned about members of Congress being more focused on their stock portfolio than on the country’s problems and their constituents’ best interests. Unfortunately, until this bill is passed, Americans will have to wonder: are our representatives making decisions in our best interest or to benefit their own bottom lines?
I asked a handful of congressional candidates and they all agreed they would co-sponsor a bill to ban congressional stock trading. One, Steven Holden (NY), said if need be he would write the bill himself. Jason Call (WA) said "I’d 100% support this bill. I’d also put an upper limit to personal net worth. We could argue about where that is, but I’d cap it at $2 million, which would include all assets-- stock, cash, real estate. I think most members of the general public would find this amenable since it still leaves seats in Congress open to the vast majority of people." Shervin Aazami (CA) added "No member of Congress should be permitted to own or trade stock-- period. We must abolish the revolving door between corporations and our elected officials." Sergio Alcubulla (HI) added that he would also "co-sponsor and vote for such a bill. Members of Congress should not be trading stocks when there is a clear conflict of interest between serving the best interests of their constituents or padding their portfolios. Elected officials are sent to office as public servants and are not there to play and beat the market and enrich themselves."
Now that Karen Bass (D-CA) is giving up her House seat to run for mayor of Los Angeles, Culver City Vice Mayor (soon to be Mayor) Daniel Wayne Lee is the progressive in the race to fill the open congressional seat. He reminded me of a powerful quote by former Supreme Court Justice Louis Brandeis: "We may have a democracy or we may have wealth concentrated in the hands of a few, but we cannot have both." Daniel told me this afternoon that "While serving in Congress I would be proud to co-sponsor the Ban Conflicted Trading Act. We do not elect leaders so that they can enrich themselves, we elect them to lead. To legislate. We need to use every means at our disposal to eliminate the influence of money in our system of governance."
"Stock trading in Congress, said Staten Island progressive Democrat Brittany Ramos DeBarros is another form of corruption that must be rooted out. It’s an obvious conflict of interest for elected and senior officials to be buying and selling ownership in companies they are tasked with regulating. As a Veteran who served during the middle of a two-decade-long war driven by corporate profits, I know the dangers and real-world consequences everyday, working-class people face when politicians put the bottom lines of their donors and their own pocketbooks over our survival and well-being."
Northern Virginia progressive, Ally Dalsimer, noted that since she announced her candidacy to battle corporate Dem Gerry Connolly to represent Viriginia's 11th district, "the current representative has updated his website to add issues from our website and copy our campaign logo; he has put out newsletters claiming he supports women, the environment, and other positions that he's ignored for years; and he has quietly sold about $200K worth of stock in the companies that are among his biggest donors, including oil & gas and companies that profit from war. He is doing all this to appear 'progressive'-- he even calls himself 'your fiend in progressive values.' It's a sham. The incumbent is a corporate-backed New Dem who does not support universal healthcare, gives lip service to women's rights and environmental action, and thinks anyone who was once incarcerated should no longer be allowed to vote. Allowing elected officials to trade stock while in office not only allows those Representatives to enrich themselves by having early knowledge, but also enables them to divest of stock that makes them 'look bad.' As an elected official, my motivation and interests will be those of my constituents, not corporations. Not only will I co-sponsor such legislation and vote for it, but I will also put forth legislation that prohibits members of Congress from voting on any bill that would impact an industry from which they receive donations. Only by removing the corporate influence in politics can politicians get back to the job of working for the people."
UPDATE: Democrats will never have any credibility on this until they start taking out the trash. Corrupt New Dem Kim Schrier (WA), a member of the House Energy and Commerce Committee, recently purchased up to $1 million in Apple stock.