Ever since Pelosi cluelessly blurted out a ritual self-serving defense of congressional corruption a few weeks ago, there has been a strong movement towards banning congressional stock trading. And the battle lines are very bipartisan. The establishments of both thoroughly corrupted parties are blocking all serious consideration of any such thing while both parties' young Turks are pounding on the issue, some, like Lucas Kunce (MO) and Tom Nelson (WI) with great frequency and intensity.
This morning the one populist-- in a sea of establishment hacks-- running for the Wisconsin Senate seat, Tom Nelson, released a press release championing the reform issue again, backing the Senate bill introduced by John Ossoff (D-GA) to forbid sitting lawmakers and their family members from holding and trading individual stocks. Nelson was quoted saying "Democrats and Republicans take advantage of this and it is wrong…They don’t need to be trading like Gordon Gekko or Bud Fox. Just get mutual funds and CDs like the rest of us. How difficult can that be?" Although his press release contrasts him with right-wing multimillionaire Ron Johnson, his wealthy self-funding primary opponents have nothing to say about the issue either.
Today Nelson, who has been endorsed by Blue America, told me that "Public trust in our institutions especially the US Congress is at an all time low. It is incumbent upon all elected officials and candidates to do all they can to regain the trust of the American people. A simple step is to ban stock trading. Too often, members of Congress take advantage of insider information and too often they are let off with not so much as a slap on the wrist. Senators are stewards of a $25 trillion economy; not day traders for their stock portfolios. Even without a ban, those members of Congress ought to be prosecuted to the full extent of the law and do time."
Another Blue America-endorsed Senate candidate, Iowa reformer Glenn Hurst told me that "Congress is explicitly charged in the US Constitution with the regulation of commerce. Knowing how their legislation may affect a business interest, an entire industry, and in fact, the global economy gives them advantages as investors. Not only do they know when and where to invest and divest, but they are also at risk for legislating based on their own personal interest or wealth-building designs. So much of addressing the Climate Catastrophe relates to how we do business. The very outcome of this existential crisis is imperiled when personal finance might trump actions necessary for the survival of the planet. A cancer patient’s access to life-saving drugs should not hang in the balance because those who are charged with legislating healthcare access also have investments in a competing drug company. Just as a corporate influence should be eliminated from campaigns by eliminating Citizens United, so too, its influence must be eliminated from the floor of Congress. Addressing individual stock ownership of our elected Senators and Representatives is one step in reducing the influence of commerce on government." His right-of-center Democratic opponent, Abby Finkenauer, the EMILY's List candidate in the same exact way Sinema was when she ran, has nothing whatsoever to say on the subject. Basically, all she says is that she's not a Republican. There is no worse Senate candidate running anywhere in the country.
Morgan Harper, the progressive running for the open Ohio Senate seat, has also been campaigning on banning individual stock trading for members of Congress. "It's inappropriate for legislators to benefit financially off insider information, or to even appear as if they have done so," she told me this afternoon. "It erodes trust in the system, and it's exactly what we try to prevent business leaders and wealthy individuals from doing. We even sent Martha Stewart to jail for it! If we want to enact real change for everyday Americans, we need to stop electing leaders who are more concerned with lining their pockets than improving the lives of their constituents."
Also this morning, Judd Legum wrote that "Congress has a lot of work to do to restore public trust [and that] a 2021 poll found that 67% of Americans believe that most politicians are corrupt" and pointed out that "Under federal law, if a federal government employee owns stock in a company, the employee is prohibited from participating in any matter that may impact the financial interests of that company. It is considered a conflict of interest and the employee must recuse themselves from the matter. This law applies regardless of whether the employee has any decision-making authority or if the matter can plausibly impact the stock price. The restriction also applies to any stock owned by a spouse or minor child of the employee. The law is not just designed to avoid actual conflicts of interest, but the appearance of conflicts. Each violation of the law carries a maximum penalty of five years in jail and a fine of $50,000. In other words, it's something the government takes very seriously. Members of Congress hold exponentially more power than a typical member of the federal bureaucracy. And every member has a direct say on policy issues, like corporate tax rates and environmental regulations, that can have large and immediate impacts on stock prices. Yet, under the law, members of Congress are not considered employees of the federal government. They are free to actively trade an individual stock while voting on bills that would directly impact the stock's price. And many members of Congress do just that. Members of Congress are not required to avoid conflicts of interest, actual or perceived, when it comes to stocks."
Congress makes laws to deal with it's own corrupt practices and writes laws that allow members to take, for example, massive bribes from special interests that materially impact those members ability to win reelection as well as their lifestyles and retirements. Although Manchin and Sinema in the Senate and crooked members in the Blue Dogs and New Dems are perfect examples of how bribery works to harm the country, the Republican Party is built on this kind of corruption as well, even though 76% of Americans-- including a majority of Republicans-- favor banning members of Congress from trading individual stocks.
Legum noted that "The only restrictions on Congressional stock trading were put into place in 2012. That law, the Stop Trading on Congressional Knowledge Act of 2012 (STOCK Act), was passed in response to a 60 Minutes exposé that 'showed that everyone from [then] House Minority Leader Nancy Pelosi to [then] House Speaker John Boehner… stood to benefit by legislation being considered at the time the investments were made.' The STOCK Act gave the appearance of responding to the controversy while allowing the status quo to continue. The law only prohibits trading stock based on inside information-- a term that, perhaps by design, is difficult to pin down. It is very hard to prove that a member of Congress executed a trade based on information the member learned in a confidential briefing as opposed to other information that is publicly available. Even when members trade stocks immediately after receiving non-public information, as several members of Congress did in the early days of the pandemic, the investigations fizzle. Nevertheless, members of Congress, who are generally not professional investors, seem to have an edge over everyone else. Studies 'consistently show that the investments of members of Congress outperform the market.' There is a cottage industry of stock analysts who track the trading patterns of members of Congress."
Recent stock-trading scandals have damaged the reputations of crooked members of Congress from both parties, particularly former Senator Kelly Loeffler (R-GA), retiring Senator Richard Burr (R-NC) and two crooked fossils who refuse to resign, Dianne Feinstein (D-CA) and Jim Inhofe (R-OK). One who was just defeated, at least in part because of the corruption scandal, David Perdue (R-GA), has been recruited by Donald "I Am The Swamp" Trump to run for governor of Georgia.
“We need to end the era in which members of [C]ongress buy and sell individual stocks for personal gain,” [Sen Jeff] Merkley said in a statement. “First, it biases the viewpoint of members when working on legislation related to a stock they own. Second, members trade on information they hear that the general public doesn’t. And that’s just wrong. Let’s bring some integrity to Congress and end the trading in individual stocks.”
This January, Senators Jon Ossoff (D-GA) and Mark Kelly (D-AZ) also introduced a bill to “ban members of Congress and their families from buying and selling stocks while in office.” The bill would also require lawmaker’s spouses and dependent children to place their stock portfolios into a blind trust, and members of Congress who violated the act would be “fined in the amount of their entire Congressional salary.” This is similar to a bill introduced by Representative Abigail Spanberger (D-VA), which would also apply to members of Congress as well as their spouses and dependent children.
Senator Josh Hawley (R-MO) also introduced a similar bill in January that would require both lawmakers and their spouses to “divest any prohibited holdings or place those holdings in a blind trust” six months after assuming office. The legislation would also force members and their spouses to “forfeit any investment profits to the American people via the U.S. Treasury if they are found to be in violation of the Act.”
Despite the multiple pieces of legislation being introduced on the topic, House Speaker Nancy Pelosi (D-CA) has already expressed her opposition. “We’re a free-market economy,” Pelosi said in a press conference. “[Members of Congress] should be able to participate in that.” Senate Majority leader Chuck Schumer (D-NY), however, has yet to comment directly on the issue. Schumer has dodged direct questions, stating that he doesn’t “own any stocks.”
This issue alone makes Pelosi unfit to be speaker, although God only knows what her handpicked successor, Hakeem Jeffries, thinks about this. He's a Wall Street hack through and through. Pelosi's likely November opponent, Shahid Buttar, has been warning about her corruption for years. Today, he told me that "Policymakers are elected to pursue the public interest. If they prefer to act as capitalists engaging a free market, they are free to do so without the information to which they have unique access as members of Congress. No one forced career or dynastic leaders to run for office. Frankly, America would be better served if they retired, and abandoned any pretense of serving the public. Their private portfolios are their priority. It serves no one to hide or obscure that. Pelosi, in particular, has not only defended insider trading by members of Congress, but also grown fantastically wealthy through it. Her defense of open corruption disregards her own conflicts of interest implicit in that position, as well as the broader corporate corruption of Congress that has resulted from it."
In case you didn't get the point from Lucas Kunce's tweets, I asked him this morning how big a deal this DC corruption issue is in his Missouri campaign. "Serving in Congress," he said, "shouldn’t be about getting richer; it should be about service. We ask our servicemen and women to give their lives for this country, yet we can’t demand that members of Congress do their jobs on behalf of the people who sent them there rather than on behalf of their own stock portfolios? The elites in Washington have the chance-- a rare bipartisan opportunity-- to start rebuilding trust again. To say: 'Hey, there’s this bad thing we’ve been doing, so we’re going to actually stop it once and for all.' Members of Congress, their immediate families (spouses and children) and their senior staffers should be banned from owning or trading any individual stocks. If they break this law, they get thrown in jail. Just like I would. Just like you would. Just like Martha Stewart was."