A growing number of Democrats are calling for a ban on individual stock trading among members of Congress, their spouses and their top aides.
The movement ― still in its infancy in Congress ― marks the first major effort to tighten rules governing congressional financial transactions in more than a decade. Democratic candidates and consultants who largely ignored the issue in previous election cycles hope it will be a strong anti-corruption message for the party in November, but warn against the prospect of Republican co-option if Democrats do not act fast enough.
The latest lawmakers to join the cause are Democratic Sens. Jon Ossoff (Ga.) and Mark Kelly (Ariz.), who introduced a bill Wednesday prohibiting members of Congress, their spouses and their dependent children from trading individual stocks.
“Members of Congress should not be playing the stock market while we make federal policy and have extraordinary access to confidential information,” Ossoff said in a statement.
In the interest of transparency about potential conflicts of interest, federal law currently requires members of Congress and their spouses to report individual stock trades, but it does not prohibit the trading itself. That opening allows for the possibility that lawmakers engage in de facto “insider trading” by taking advantage of not-yet-public information they receive to make trading decisions, or simply enables lawmakers to develop financial conflicts of interest when it comes to policymaking, good government advocates say.
Pennsylvania Lt. Gov. John Fetterman, who is running for the Democratic nomination for senator from his state, announced his support for the ban on Wednesday, calling the current trading practice a “clear conflict of interest.”
“Lawmakers should not be making profits off of the same companies they are supposed to be regulating, based on closed-door information that isn’t available to the public,” he said in a statement.
Fetterman is locked in a contentious Senate primary and one of his main competitors, Rep. Conor Lamb (D-Pa.), is a co-sponsor of legislation banning stock trades by members of Congress and their senior aides. A spokesperson for Lamb told HuffPost that Lamb also supports a ban on trading by spouses or dependents.
Following Fetterman’s declaration, Durham County Commissioner Nida Allam (D), who is running for North Carolina’s open 6th Congressional District, expressed her agreement on Twitter.
And Illinois state Rep. Delia Ramirez (D), who is running for Illinois’ new 3rd Congressional District, also backed the prohibition on Tuesday.
These new endorsements of a ban on congressional stock trading came after it emerged on Monday that Ossoff planned to introduce new legislation in the Senate to prohibit the practice.
Ossoff won his 2021 runoff election in part by attacking his opponent, the incumbent Republican David Perdue, for suspicious stock trading activity in the early days of the coronavirus pandemic.
Ossoff’s bill joins a handful of existing bills that would ban lawmakers from trading stocks.
His is a companion bill to Virginia Rep. Abigail Spanberger’s bipartisan bill, the Transparent Representation Upholding Service and Trust in Congress Act (TRUST in Congress Act), which would ban stock trading by members of Congress, their spouses and their dependent children. The bill, which Spanberger introduced in January 2021, has just 15 co-sponsors, but one-third of those supporting it are Republicans.
Her bill also has the backing of a wide array of liberal and conservative good government groups. Organizations in the latter camp include the libertarian-leaning outfits Americans for Prosperity, FreedomWorks and the National Taxpayers Union.
A spokesperson for Spanberger said the bill has picked up “momentum” on Capitol Hill in recent days.
“Just today, she has spoken with House Members — on both sides of the aisle — who are interested in preventing insider trading in the halls of Congress and joining her bill,” the spokesperson said in a statement. “She does not think that this legislation is a partisan issue — it’s an issue of good governance, an issue of eliminating the perception of corruption, and an issue of putting public service above stock portfolios.”
Spanberger, a moderate Democrat from a swing seat, refuses to accept contributions from corporate PACs for the same reason, the spokesperson added.
“If you really think that Kevin McCarthy would do anything about this if he becomes speaker, I’ve got a bridge to sell you.”
In addition, Rep. Raja Krishnamoorthi (D-Ill.) and Sen. Jeff Merkley (D-Ore.) introduced the Ban Conflicted Trading Act in March. Krishnamoorthi’s House bill boasts bipartisan support with cosponsors ranging from Rep. Alexandria Ocasio-Cortez (D-N.Y.) on the left to Rep. Matt Gaetz (R-Fla.) on the right. Unlike Ossoff and Spanberger’s bill, the Ban Conflicted Trading Act only bans lawmakers and senior aides from trading stocks, while allowing their spouses and dependent children to trade as they please.
Both of the proposed laws would still allow members of Congress to put their investments into a blind trust and own mutual and index funds.
But some say that requiring blind trusts would not go far enough. Lucas Kunce, a populist Democrat running for Senate in Missouri, called blind trusts “bullshit” in a tweet on Wednesday afternoon.
“Outlaw stock ownership for Congress,” he wrote. “If they break the law, lock them up.”
Despite the high-level attention these bills have received, they are not expected to come under consideration on the House or Senate floor anytime soon.
Speaker Nancy Pelosi (D-Calif.), whose husband is a venture capital and real estate investor and prodigious stock trader, shot down the idea of banning lawmakers from owning or trading stocks at a press conference on Dec. 15.
“We’re a free market economy,” Pelosi said. “They should be able to participate in that.”
Pelosi’s answer came in response to a question about an Insider investigation into the failure of lawmakers to properly file stock trading disclosures required under the 2012 Stop Trading on Congressional Knowledge (STOCK) Act. Forty-nine lawmakers and 182 high-level congressional staff covered by the law failed to file their STOCK Act disclosures on time, the investigation found.
House Democratic Caucus Chairman Hakeem Jeffries (D-N.Y.), widely viewed as Pelosi’s heir apparent, was similarly noncommittal about bringing the legislation to the floor in a recent interview with Insider. He told the outlet that he was “unfamiliar” with the bills.
Congressional Republican leaders, who are generally more averse than Democrats to additional ethics regulations, have sensed an opportunity to capitalize on Democrats’ internal disagreements.
House Republican Leader Kevin McCarthy (D-Calif.) has said that he is considering adopting a ban on individual trading if Republicans take over the House in November. He has focused his attention on the volume of trades conducted by Pelosi’s husband.
“I just think if you’re the Speaker of the House, you control what comes to the floor, what goes through committee, you have all the power to do everything you want — you can’t be trading millions of dollars,” he told the New York Post on Tuesday.
Several Democratic strategists emphasized that while they do not take McCarthy’s flirtation with a ban seriously, it is still good policy — and good politics — for Democrats to get behind a trading ban. More than three-quarters of Americans support banning trading by members of Congress, according to a poll commissioned by a conservative group earlier this month.
“If you really think that Kevin McCarthy would do anything about this if he becomes speaker, I’ve got a bridge to sell you,” said a Democratic consultant, who requested anonymity for professional reasons. “But that makes it more important than ever that Democrats draw a bright line by passing legislation that bans this, and make the GOP vote against it.”
Eric Koch, a New York City-based Democratic strategist, had a similar assessment. “This is a no brainer,” Koch said. “Of course Democrats and Democratic candidates should back Sen. Ossoff’s bill.”
Progressive candidates locked in competitive Democratic primaries are already signaling that they plan to use support for a ban as a point of contrast with more moderate rivals. Fetterman, Allam and Ramirez are all running as progressives in races with more than one Democratic candidate.
The Working Families Party, which has endorsed nine candidates for Congress so far this cycle, is encouraging its slate to embrace the ban.
“Democratic legislators should be reining in Wall Street, not trying to get even richer off privileged information and access,” Joe Dinkin, the WFP’s campaigns director, said in a statement. “We should end this practice and we’re urging our endorsed candidates to as well.”
While current legislation to ban congressional stock trading appears stalled at the moment, the same was said about the STOCK Act in the fall of 2011 when it had only nine co-sponsors, according to Craig Holman, a lobbyist on ethics, lobbying and campaign finance rules for the nonprofit consumer group Public Citizen.
A “60 Minutes” episode in November 2011 on congressional stock trading and the D.C. political intelligence industry brought the issue to national attention. Reporter Steve Kroft even confronted Pelosi about her husband’s stock trading at a press conference. The STOCK Act, a languishing bill first introduced in 2006, saw its co-sponsor list jump from nine to over 180 in the week following the “60 Minutes” report.
“We’re seeing the same type of public scandal now with congressional insider trading now due to the pandemic,” Holman said, noting the questionable trades of Sens. Perdue, Loeffler, Richard Burr (R-N.C.), Dianne Feinstein (D-Calif.) and Jim Inhofe (R-Okla.) that spurred investigations. “It’s given this legislation legs just like the STOCK Act. Once the public gets involved then Congress gets embarrassed into doing the right thing.”
As for Pelosi’s public opposition, Holman hopes she changes her mind.
“I’ve worked arm in arm with Nancy Pelosi for years,” Holman said. “When she came out and announced opposition to this effort I was very stunned. I am hoping that the public pressure we now see mounting will get her to reverse course. I got a feelling this is going to pass with or without her help.”