Representative Nancy Pelosi reignited the debate after explaining why she was against the trade ban.
There has been a brewing battle over the past few months over whether Congress should be able to freely trade stocks. The main concern is whether this would allow conflicts of interest and huge financial influences on legislation.
In December, House Speaker Nancy Pelosi revived the debate after being asked why she is against the trade ban.
“Because this is a free market and people – we are a free market economy, people should be able to participate,” Rep. Pelosi said.
Then two bills were introduced this month in Congress proposing new restrictions: one by Democratic Sen. Kelly and Sen. Ossoff, and another by GOP Sen. Hawley.
It’s one of the few issues in Congress that enjoys fairly broad bipartisan support. While there is a good chance that reform will happen, there are changes that the country’s trade rules would need.
Currently, Congress has no limit on what it trades and what earnings from stocks, and until 2012 Congress was allowed to trade stocks based on insider information – in the open – that which is illegal for any ordinary person.
But in 2012, Congress passed the STOCK Act by an impressive Senate margin of 96-3. This prohibits insider trading and requires Congress to disclose all of their transactions generally within 45 days.
However, the STOCK law was not successful. The penalty is quite low and often overruled by ethics committees anyway, and the standard fine is around $200, making it difficult to enforce.
According to Initial Insider Investigationin 2021, 54 members of Congress and about 180 high-level staffers violated the rule, with Alabama Rep. Tommy Tuberville alone having 132 violations.
This law also does not prevent legislators from serving on committees, writing laws, or voting on bills that may affect them financially. In other words, “conflict of interest” exchanges are endemic.
Another example from Insider showed that those 15 lawmakers all sit on the House and Senate Armed Services Committee, which was tasked with drafting the Defense Authorization Bill that funds military contractors. All have invested in or traded stocks of well-known contractors like Lockheed Martin, Boeing and Raytheon.
These legislators sit on committees that oversee energy regulations. Between them, they own shares of Duke Energy, Chevron and Exxon Mobil – the last of which is one of the most popular actions possess in Congress.
In addition to conflicts of interest, there were also some interesting exchanges at the right time, which received varying degrees of scrutiny.
Former Senator Kelley Loeffler, a member of the Senate Health Committee, has come under fire for a series of stock sales starting Jan. 24, 2020, the same day the committee held a private session on COVID-19. Then the threat of COVID was not yet clear to the public, as it was only days after the first reported case in the United States. Her trades totaled more than $18 million, although she claims she sold it all after the outcry and ultimately suffered a loss.
His committee colleague, Senator Rand Paul, has also come under scrutiny over his wife’s sudden investment in the company behind the antiviral drug Remdesivir, used for COVID treatment. The stock was purchased as early as February 2020 and disclosed 16 months late. The senator notably speaks out against COVID precautions, voting alone against the emergency spending bill in early March 2020.
“Now is not the time for anyone to profit from the sale of ventilators, vaccines, drugs, treatments, PPE, all over the world,” said Rep. Tom Malinowski, (D) New Jersey.
Although Rep. Malinowski said this, he also apparently used private information to sell stock in a company that does COVID testing. He is still under investigation by the House Ethics Committee.
A bill proposed in the Senate would force members of Congress and their families to place their wallets in blind trusts, essentially preventing them from knowing what they have invested in or controlling sales, and both bills propose fines much higher in case of violation.
Having stricter enforcement and limits on trade in Congress is popular in the aisle and with voters, and therefore the reforms could be a major first step in regaining some public trust in Congress. American.