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Pelosi, McCarthy, McConnell, and Schumer all say they're open to a congressional stock-trade ban. But details could derail this rare bipartisanship.

Feb 10, 2022, 03:27 IST
Business Insider
While they rarely agree, Democratic House Speaker Nancy Pelosi and Republican House Minority Leader Kevin McCarthy have both signaled they're open to bills banning federal lawmakers from trading individual stocks.Getty Images
  • Congressional leaders are moving forward with bills to stop lawmakers' stock trades.
  • But there's significant debate on the details, especially the questions of "who" and "how."

Democratic House Speaker Nancy Pelosi recently called her top Republican counterpart Kevin McCarthy a "moron," while McCarthy joked — maybe? — that he'd hit Pelosi with a gavel.

Republican Senate Minority Leader Mitch McConnell, meanwhile, has accused his Democratic peer, the Majority Leader Chuck Schumer, of "angry incompetence" either belying weakness or a tendency to bully. Schumer has chided McConnell as a Vladimir Putin toady who's personally responsible for, in his estimation, almost pushing Americans over a cliff to financial ruin.

Such antagonism implies these four American congressional leaders couldn't agree on anything, say nothing of a specific something.

Yet by Tuesday, McConnell, McCarthy, Pelosi, and Schumer had each confirmed in public they're open to advancing measures restricting or banning them and their fellow US lawmakers from trading individual stocks. Schumer this week even endorsed a congressional stock-trade prohibition: "I would like to see it done." That put Schumer in league with a foil among foils, former President Donald Trump, who last month endorsed a proposed ban.

The leaders' curious coalescence marks a dramatic and rapid shift in a debate that just a few months back didn't register the slightest peeps from the top House and Senate leaders — of either party.


But now stock trading is the topic de jour on Capitol Hill thanks in part to Insider's "Conflicted Congress" investigation, which revealed that 55 members of Congress, and at least 182 high-ranking congressional staffers, had violated the Stop Trading on Congressional Knowledge Act, an Obama-era law from 2012 that's supposed to curb insider trading and defend against financial conflicts.

Dozens of lawmakers, the investigation published in December found, have private investments that conflict with their public duties or contradict their stated orthodoxy. It's a long list that includes House Armed Services Committee members who buy and sell the stock of defense contractors and environmentalists who help write the nation's anti-pollution laws and oversee its federal agencies and yet remain bullish on fossil fuels.

Insider also found that the consequences for lawmakers' transgressions are minimal and inconsistently enforced.

Fox News host Sean Hannity and former President Donald Trump are among prominent figures on the right to support, in principle, a ban on members of Congress trading stocks.Ethan Miller/Getty Images

When AOC and Hannity agree

Pelosi's openness to a stock-trade ban represents a most dramatic reversal among congressional leaders. Responding to Insider's questions in mid-December, the speaker unequivocally endorsed lawmakers' right to buy and sell stocks. "We are a free-market economy. They should be able to participate in that," Pelosi said.

At first, Schumer, McCarthy, and McConnell stayed silent.


But quickly, they found themselves, along with Pelosi, in an politically untenable squeeze.

Among elected officials, liberals such as Rep. Alexandria Ocasio-Cortez of New York, and conservatives such as Sen. Josh Hawley of Missouri, began pressing their leaders to support a congressional stock trade ban. Lawmakers on the left and right introduced, re-introduced, and reanimated legislation designed to squelch their colleagues' stock habits.

And media talkers ranging from Fox News' Sean Hannity to the The Daily Show's Trevor Noah lampooned lawmakers for their stock trading ways — particularly Pelosi, one of the wealthiest members of Congress, whose venture capitalist husband incessantly trades stocks and stock options.

All the while, polls indicated the vast majority of Americans, conservatives and liberals alike, support a ban on lawmakers trading stocks. Congressional candidates are increasingly weaponizing congressional stock trading as a 2022 midterm campaign issue.

One by one, McCarthy, Schumer, and McConnell began warming to the idea. And during the past several weeks, Pelosi's position shifted from opposition, to reluctant consideration to what, as Punchbowl News reported Wednesday, is full-blown acceptance. Ocasio-Cortez may have helped prod Pelosi toward action with some under-the-radar legislative maneuvering, Ryan Grim of The Intercept reported.


Senate Majority Leader Chuck Schumer (center), a Democrat from New York, will be instrumental is ironing out details of various stock-ban proposals.Drew Angerer/Getty Images

What about spouses? Judges?

So what — beside incessant partisan backbiting and a most virulent strain of political ill-will that's so typified the 117th Congress — could derail progress?


And, oh, how many of them there are.

Should a congressional stock ban bill just include members of Congress? Or should a ban extend to spouses, who are sometimes the real family market mavens?

What about a lawmaker's dependent children? Or their top congressional staffers, who in dozens of cases have revealed their ineptitude for following existing stock trade laws and otherwise avoiding potential conflicts of interest?


Should federal judges or members of the Federal Reserve — some are also in major trouble for their financial trades — get lumped in?

As for the ban itself, should those affected be forced to sell all their stock upon entering federal employment? If so, immediately? Some point in time after?

Would certain stock assets — say, a single, sentimental share of Walt Disney Co. stock a Mickey Mouse-loving future congressman received from his grandfather in 1987 — be exempt?

If not, would placing their stock assets in a blind trust suffice? Is any blind trust truly blind enough to prevent potential conflicts? (See Manchin, Sen. Joseph.)

How about members exclusively putting their money into broad-based investments such as mutual funds or exchange-traded funds, or conservative, conflict-of-interest-free US Treasury notes or municipal general obligation bonds?


Rep. Abigail Spanberger, a Democrat of Virginia, is one of Congress' leading advocates for a ban on members of Congress trading stocks.AP Photo/Jacquelyn Martin

Fear of 'watering-down'

Several legislative vehicles, designed to deliver Congress from its current mess to somewhere better, now abound. While fundamentally similar, each one offered a different cocktail of provisions and provisos that are a bit more — or less — restrictive than the next.

One idea, floated by Democratic Rep. Angie Craig of Minnesota, isn't even a bill, but a House resolution that would only apply to Congress' lower chamber but sidesteps the Senate and President Joe Biden, who's effectively sitting out Congress' debate over what to do with stocks.

A House committee and Senate working group are also actively working on the issue.

While an overhaul of the decade-old STOCK Act seems closer at hand than ever, "the biggest danger is that some senators opposed to meaningful reform will try to water down these bills," said Walter Shaub, former director of the Office of Government Ethics who's now a senior ethics fellow for the Project on Government Oversight.

That scenario could very well occur. One possibility is that after months of legislative sturm and drang, Congress doesn't pass any of the various bills being offered, but quickly and quietly slips some half-measure into a much larger, must-pass bill, then calls the issue quits.


In 2013, Congress and then-President Barack Obama filleted the STOCK Act with a set of rapid actions that largely avoided public scrutiny. Most notably, they killed the planned creation of a searchable, sortable public database of financial trades by members of Congress and top staffers. In particular, this has made it nearly impossible for the public to investigate whether top staffers are violating the STOCK Act or otherwise engaging in conflicts of interest.

Some lawmakers have resolved to avoid a repeat, where officials "spend a lot of time talking about this issue without actually doing something," Rep. Abigail Spanberger, a Virginia Democrat who with Republican Rep. Chip Roy is sponsoring the TRUST in Congress Act, told Insider on Wednesday. "If we wanted to take action, we would put the most bipartisan bill ... forth."

Sen. Jeff Merkley, a Democrat from Oregon and lead co-sponsor for the separate Ban Conflicted Trading Act, acknowledged Wednesday that "it's possible for us to get derailed and have no bill at all. And we don't want to let that happen."

Outright opposition remains. Sen. Tommy Tuberville, a Republican from Alabama and one of Congress' most notable STOCK Act violators, on Wednesday told The Independent's Eric Michael Garcia that a lawmaker stock ban is "ridiculous.

"They might as well start sending robots up here," Tuberville said. "I think it would really cut back on the amount of people that would want to come up here and serve."


But on Tuesday came another sign that a congressional stock ban is gaining even more widespread buy-in on Capitol Hill.

Axios' Sophia Cai reports that Sen. Elizabeth Warren, a Massachusetts Democrat and 2020 presidential candidate, made good on a pledge she made to Insider in May 2021, by teaming with Republican Sen. Steve Daines of Montana to introduce legislation banning members of Congress and their spouses from owning individual stocks.

Bryan Metzger contributed to this report.

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