Members of Congress shouldn’t play the market
If ever there was a time to try to restore trust in government, this is it.
And there’s no better place to start than in the halls of Congress – where members are privy to a wealth of valuable information long before the public. Think about the pre-pandemic period, government purchases of pharmaceuticals, and new Department of Defense contracts, to name a few possibilities.
Finally, House Speaker Nancy Pelosi pledged to introduce a compromise bill to prevent members of Congress — and their immediate family members — from trading individual stocks while in office. The bill, crafted from a number of proposals that have surfaced over the year, could also expand the ban on stock trading to include senior congressional staffers, who , after all, are also privy to this same level of insider information.
Pelosi’s commitment to House action on the bill before the end of the month follows a New York Times report that found that at least 97 members of Congress or their immediate family members ( typically spouses) traded shares or commodities closely related to lawmakers’ committee missions. So close, in fact, that they risked a conflict of interest.
Now, true insider trading is prohibited by the STOCK (Stop Trading on Congressional Knowledge) Act of 2012, which was supposed to prohibit members and employees of Congress from using “any nonpublic information derived from the position of individual…or obtained in the exercise of the functions of the individual”. , for personal benefit.
But proving that has been a tricky business.
Under the disclosure provisions of that earlier law, we know that Senator Richard Burr, then Chairman of the Senate Intelligence Committee, before the pandemic really hit the United States, sold up to 1.7 million dollars in stocks before the market takes a colossal hit. The North Carolina Republican privately told a group of voters gathered in Washington on February 13, 2020 that the coming health threat “is more aggressive in its transmission than anything we have seen in recent history.”
A Justice Department investigation cleared him of insider trading charges in January 2021.
The Times report found two members of the Massachusetts delegation among those trading stocks with potential conflicts. Rep. Katherine Clark’s husband, the fourth-highest-ranking Democrat in the House, The Times reported, has made a number of stock trades involving health care companies, including two Hologic stock purchases in late 2020 or so. one week before the company award. a $119 million COVID-19 testing contract with the Departments of Health and Human Services and Defense. The shares were sold a few days after the announcement of the contract. Clark’s office said neither she nor her husband trade their retirement accounts directly — and she favors a congressional ban.
Representative Bill Keating, a member of the House Armed Services Committee, said he traded between $22,000 and $155,000 worth of stocks and bonds in companies under contract with the military. Keating says the picks were made by an investment firm and he also favors a stock trading ban.
The shape of the current legislation is still a work in progress — currently the subject of negotiation led by House Administration Committee Chair Zoe Lofgren of California.
But an earlier bipartisan framework paves the way for the ban on stock trading and provisions allowing lawmakers to assign or place their assets in a blind trust. This would allow covered individuals to “diversify those investments by placing them in broadly distributed, diversified mutual or exchange-traded funds, or U.S. Treasury bills, notes, or bonds.”
It also calls for better enforcement mechanisms and “sufficient penalties to ensure member compliance.”
“With members of Congress from both parties flouting basic financial conflict of interest laws and appearing to take personal advantage of their positions of public trust, Americans understandably wonder if their government is working on their behalf,” wrote Citizens for Responsibility. and Ethics in Washington in a letter to lawmakers last week calling for the adoption of something resembling the “framework” proposal.
The House clearly got the message. The Senate, however, works at a somewhat more leisurely pace. Sen. Jeff Merkley of Oregon, a supporter of a stock trading ban, said last week he expected no action before the midterm elections. Senator Elizabeth Warren, who introduced a stock trading ban bill last February with fellow Republicans Steve Daines of Montana and Marsha Blackburn of Tennessee, told the Globe editorial board she was still seeking additional GOP supporters.
“Every day that we delay passing meaningful restrictions on stock trading among members of Congress is a day that further erodes the credibility of this body,” she told Business Insider.
Public confidence in Congress — always a cellar dweller in Gallup polls — hit a new low this summer, dropping from its already abysmal 12% in 2021 to 7% this year.
Whether members of Congress are guilty of real or perceived conflicts is almost irrelevant. The question has become one of restoring public trust in a branch of government that desperately needs to face its own demons and emerge from the swamp of Washington.
Editorials represent the opinions of the Editorial Board of The Boston Globe. Follow us on Twitter at @GlobeOpinion.