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We’ve been bullish for some time on the need to strengthen the rules around members of Congress and their ability to make individual stock trades. With yet another report about lawmakers and their family members making a host of trades in sectors related to their official work, there should be little doubt the time has come for a ban on this activity.
Maine 2nd Congressional District Rep. Jared Golden has been making the case for such a ban for a while, and that case continues to get stronger.
At the beginning of the month, Golden was part of a bipartisan group of members in the U.S. House of Representatives who sent a letter to House leaders outlining their priorities for potential legislation to reform congressional stock practices. These lawmakers have been involved in various efforts to address this issue, which hopefully will be condensed into one package that can pass both houses of Congress and be signed into law.
Currently, for a member of Congress to violate the STOCK Act, a 2012 law passed with the aim of preventing insider trading by lawmakers, a trade or trades must be made using nonpublic information gained through their role as an elected official. That can be difficult to prove, even in cases when the appearance of a conflict of interest is overwhelming.
There may be no more prominent and glaring example of the limits of existing law than House Speaker Nancy Pelosi’s husband, Paul Pelosi, a venture capitalist who recently sold millions of dollars of shares in a microchip company ahead of a House vote on a bill to support domestic chip manufacturing.
Speaker Pelosi was previously dismissive of the idea of a stock trading ban, until she wasn’t. Now, encouragingly, she says such a bill could come to the floor later this month. The reasons for action keep piling up.
This week, the New York Times published an analysis of congressional stock trades between 2019 and 2021, which found that nearly 100 members (or their spouses or dependent children) made trades that could be connected to their committee work in Congress.
Maine Sen. Angus King was on the list, with the Times finding that his wife “bought or sold shares of oil giants, a water utility company and defense contractors, all of which were under the purview of committees of which he was a member.” King serves on the Energy and Natural Resources and Armed Services Committees, among others.
According to King’s office, his wife has a financial advisor who manages a portfolio without her direction.
“Senator King and his wife keep their own financial counsel and do not consult each other on investments,” King spokesperson Matthew Felling said in a statement.
This tracks with many other lawmaker responses we’ve observed in situations such as this. Lawmakers and their offices often point out that the trades in question were made by their spouse, or a financial advisor. And based on current law, that all seems totally legitimate. But frankly, it shouldn’t be.
We’re neither lawyers nor financial analysts, but it wouldn’t surprise us if not a single one of the lawmakers on the New York Times list has ultimately, undeniably violated the STOCK Act. We don’t have to be legal or financial experts, however, to recognize the corrosive effect that repeated stock controversies have on the public’s trust in their government.
King’s office also told us that he is working with Sen. Jeff Merkley of Oregon to strengthen congressional stock trading guidelines. That is a good thing. And it reminds us of a good point Merkley made last year.
“It is a huge conflict of interest for someone to be trading in, say, pharmaceutical stocks at the same time as making policy for pharmaceutical companies,” Merkley told NPR in September of 2021.
With repeated news about lawmakers (and their families) making trades in sectors where they are involved in legislative oversight and policymaking, there doesn’t really even need to be fire in terms of actual conflict or corruption. The smoke is bad enough. The pervasiveness of these apparent conflicts of interest across Congress proves that past attempts to address this issue, like the STOCK Act, have failed.
No more half measures. It’s time for a total ban.