A bipartisan rush earlier this year to limit stock trading by members of Congress has given way to the slow grind of finding a consensus on a complex issue that critics say erodes public trust in government.
House Speaker Nancy Pelosi, once a stalwart opponent of the effort, and GOP Leader Kevin McCarthy are both open to reining in lawmakers’ ability to trade individual stocks, marking a rare moment of bipartisan accord in the fiercely divided House. But lawmakers must act quickly to find consensus among competing proposals before legislating grinds to a halt in August and their attention turns to the mid-term elections.
Dozens of lawmakers have introduced bills overhauling or updating the 2012 law that currently governs legislator transactions and public disclosure. Controversies about transactions by some lawmakers and an ethics scandal involving trades that engulfed the Federal Reserve last year spurred the flurry of proposals from conservative Republicans and progressive Democrats alike.
The proposals include everything from boosting transparency of lawmakers’ financial disclosures to outright bans on trading stocks by members of Congress and — in some cases — their immediate family.
The Committee on House Administration held a hearing Thursday to review the options and implications of banning trading among members of Congress. The panel also reviewed current restrictions put in place by the STOCK act, which bans members of Congress from using nonpublic information available to them for personal benefit and requires members, along with their spouses and dependent children, to disclose security transactions.
“While there is growing bipartisan consensus that reforms are necessary, there remain significant policy questions about the appropriate approach and the details,” House Administration Chair Zoe Lofgren said Thursday.
The committee did not make any specific recommendations during the hearing.
Senate Majority Leader Chuck Schumer has assigned a group of Senate Democrats to come up with a single bill that would incorporate multiple stock trading proposals introduced in that chamber. Some key elements remain under debate including whether spouses will be covered under the bill, according to a Senate aide.
Their focus is combining elements of Senator Jeff Merkley’s bill that prohibits lawmakers and senior staff from buying or selling individual stocks and other investments while in office with another from freshman Senators Jon Ossoff and Mark Kelly that would require lawmakers and their families put their holdings in a blind trust.
They want to find some agreement by the time Congress returns from an upcoming two-week break.
“We have to use these two weeks to work this issue with every member,” Merkley said Thursday. If they can’t get a consensus on a compromise bill during the recess, “we are going to miss this opportunity.”
Some Senate Republicans have backed the idea and introduced their own bills.
Supporters of limiting lawmakers’ ability to trade stocks — an issue brought to the forefront early in the pandemic when some lawmakers sold securities — span the political spectrum. Critics equate the practice to insider trading.
Sixty-three percent of voters support banning lawmakers from stock trading, according to a January Politico/Morning Consult poll. Sixty-nine percent of all Democrats and 58% of all Republicans back a ban.
But some lawmakers have expressed personal concerns about the more stringent proposals. Representative Bob Gibbs, an Ohio Republican, is among lawmakers who are emphasizing tightening transparency and disclosure rules over limits or bans on member financial trading.
“How about the people like me? I’m in my late 60s. I’ve worked my whole life and I’ve tried to save and invest. Being forced to liquidate stocks in a down market could result in losses,” Gibbs, 67, who announced this week he is retiring at the end of this term, said. “You’re really decimating what kind of members you’re going to have. You’re going to have members who are young and don’t have any assets, and inexperienced, or you’re going to have the super-wealthy.”
The tighter scrutiny of lawmaker-related transactions in recent months have included traded stocks transactions exercised by Pelosi's husband Paul Pelosi, though no illegalities have been alleged.
Representative Rodney Davis of Illinois, the top Republican on the House Administration Committee, questions whether the speaker plans to move quickly.
“I’m interested to see if Speaker Pelosi will even be around to see her new proposal effective?” Davis said.
Pelosi has announced she is running for re-election this November for another two-year term representing her San Francisco-area district, but questions swirl about how long she intends to remain in Congress after this term.
Davis concedes he has concerns about some of the proposals, such as potentially requiring lawmakers to place their holdings into blind trusts, a costly undertaking.
Lofgren dismisses any suggestion House Democrats are slow-walking the issue. The California Democrat had COVID-19 last month and had to postpone the meeting until Thursday.
But Lofgren acknowledged, “People have a lot of interest in it and, you know, we should move apace.”
