Missouri Republican Sen. Josh Hawley introduced a bill on Thursday to stop members of Congress from profiting from insider trading.
The bill, called the Banning Insider Trading in Congress Act, would prevent lawmakers and their spouses from holding, buying or selling individual stocks. The bill would allow for mutual funds and similar investments to continue.
“Year after year, politicians somehow manage to outperform the market, buying and selling millions in stocks of companies they’re supposed to be regulating. Wall Street and Big Tech work hand-in-hand with elected officials to enrich each other at the expense of the country. Here’s something we can do: ban all members of Congress from trading stocks and force those who do to pay their proceeds back to the American people. It’s time to stop turning a blind eye to Washington profiteering.”
The act would prohibit members of Congress and their spouses from holding, acquiring, or selling stocks or equivalent economic interests during their tenure in elected office. Any holdings in diversified mutual funds, exchange-traded funds, or U.S. Treasury bonds are exempt from the prohibition.
It would also give members of Congress and their spouses six months, upon assuming office, to divest any prohibited holdings or place those holdings in a blind trust for the remainder of their tenure in office.
Further the act would ensure members or their spouses forfeit any investment profits to the American people via the U.S. Treasury if they are found to be in violation if the Act. Members who violate the requirements will also lose the ability to deduct the losses of those investments on their income taxes. The ethics committees of Congress may levy additional fines and will publicize violations.
The bill comes as 54 lawmakers, both Republicans and Democrats, failed to properly disclose stock transactions according to the STOCK Act.
Of course, the new legislation will face hurdles as many of the lawmakers voting on the bill are also among those who would be negatively impacted by it.
Minority Leader Kevin McCarthy (R-CA) said Tuesday that he would consider a ban on stock trades by members of Congress but did not endorse a specific plan.
“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,” McCarthy told The New York Post on Tuesday.
House Speaker Nancy Pelosi, on the other hand, has not joined in the talk to put a stop to lawmaker trading. Her husband is an investment manager who has made an estimated $30 million in stock trades during his wife’s time in Congress. The Pelosi’s net worth is estimated to be $100 million despite her making less than $200,000 a year as a member of Congress.
Americans shouldn’t be surprised that lawmakers find it difficult to pass a bill to ban stock trading among its members when those voting on the bill are making money from stock trades.
But Americans should be surprised that the actions have been tolerated for so long, from members of both parties.
It should be an obvious conflict of interest, but it has taken more than 50 members of Congress involved in stock trading to bring the matter to the point of introducing a law to stop it.