(The Center Square) – Pennsylvania leads the renewed charge against Congressional insider trading.
Rep. Brian Fitzpatrick, R-Penn., revived 2023’s Bipartisan Restoring Faith in Government Act for the new legislative season. He’s joined by fellow Republican Cory Mills, of Florida, and Democrats Alexandria Ocasio-Cortez, of New York, and Raja Krishnamoorthi, of Illinois.
The goal? End stock trading by members of Congress.
“The American people deserve leaders who are accountable, transparent, and wholly committed to serving their communities and country — not their stock portfolios,” said Fitzpatrick. He noted that in 2022, members of Congress outperformed the S&P 500 by an “alarming” 17.5%.
The legislation would go beyond 2012’s STOCK Act, which the bill’s sponsors say one in seven members of Congress have violated, to prohibit legislators, their spouses and their dependents from trading altogether.
STOCK currently prohibits members of Congress from using information obtained in their roles for personal gain.
According to Fitzpatrick, 97 members traded stocks tied to industries their committees oversee between 2019 and 2021. Unusual Whales, a trading news site, found through analysis of public documents that “a quarter of Congress actively traded up to $788M in various assets through 12,700+ transactions in 2022.”
“There have been far too many instances where elected officials have profited millions through practices that would land any regular American in prison for insider trading,” Mills said. “This blatant double standard erodes trust in our government and must come to an end.”
In December, President Biden indicated support for legislation like Fitzpatrick’s, telling Faiz Shakir he thinks the law should change.
“I don’t know how you look your constituents in the eye and know, because the job they gave you, gave you an inside track to make more money,” he said.
A bipartisan coalition of over 40 former lawmakers wrote Senate leaders Chuck Schumer, D-NY, and Mitch McConnell, R-Ky., in September of last year to support the Ending Trading and Holdings In Congressional Stocks (ETHICS) Act, which had similar aims.
They advocated for its inclusion in any “must-pass” package, saying “It addresses pressing issues, especially low levels of trust in Congress and the appearance of insider trading.”
Former Speaker of the House Rep. Nancy Pelosi, D-Calif., received intense scrutiny for her early opposition to the bill. Open Secrets estimates the speaker’s net worth at nearly $115 million in 2018, an increase of over $83 million in the decade following her first stint in the role.
Other reports estimate even higher figures. Her husband, Paul Pelosi, is an investor.
Researchers have found that firms donate to political campaigns, whether or not it falls under the umbrella of lobbying. A 2017 report in Harvard Business Review detailed many of the issues legislators are confronting today. The report notes these contributions “are still largely seen as quid pro quo, where firms supply members of Congress with cash in their campaign war chests to curry favor later.”
The Bipartisan Restoring Faith in Government Act offers one step toward a dream shared by a majority of Americans to excise corporate money from the political sphere, something that can’t be achieved exclusively with campaign finance reform.
According to a 2023 Pew Research poll, 63% of Americans believe that “all or most of the people who currently serve as elected officials ran for office to make a lot of money.” It also found that about 8 in 10 Americans say “members of Congress do a bad job of keeping their personal financial interests separate from their work in Congress.”
The sentiment has been growing, but it isn’t new. Americans have expressed wariness through notoriously high-profile conflicts of interest like former Vice President Dick Cheney’s involvement in oil company Halliburton and the revelation of dozens of government officials selling off stock ahead of the COVID-19 pandemic.
Refraining from this kind of trading won’t prevent legislators from finding lucrative income sources after their public service has ended. If history is any indication, most lawmakers will have no problem using their influence and insider expertise to land high-paying private sector positions after leaving office.
Former presidents and congressional leaders make millions from book deals, speaking gigs, academic appointments, and entertainment ventures, from the Obamas’ film company, Higher Ground Productions, to the disgraced George Santos’s cameo appearances and ‘Pants on Fire’ podcast.
Senator Elizabeth Warren, D-Mass., compiled a report detailing the pipeline from federal service to private sector leadership roles in the aerospace and defense industry and jobs under foreign leadership. Moves like these not only line pockets but pose potential national security risks and themselves have become areas of potential reform.
