The effort to ban members of Congress from trading stocks is mostly dead - at least for now




  • In Politics
  • 2022-12-06 11:00:00Z
  • By Business Insider
House Speaker Nancy Pelosi at her weekly press conference on December 1, 2022.
House Speaker Nancy Pelosi at her weekly press conference on December 1, 2022.  
  • Time has largely run out in this Congress to ban lawmakers from trading stocks.

  • But lawmakers are holding out hope that the popular ethics reform can be enacted in the future.

  • "I do think there could be bipartisan progress," said Democratic Rep. Raja Krishnamoorthi.

Despite months of talk in the US Senate and an aborted September vote in the US House, it's increasingly likely that this congressional session will end without a vote in either chamber on banning members of Congress from trading stocks.

Before Republicans take control of the House in January, Democrats are scrambling to keep the government funded, raise the debt limit, and reform the Electoral Count Act, among other priorities.

"I care deeply about this legislation, I want to push it, push it, push it," Democratic Rep. Abigail Spanberger of Virginia, perhaps the most vocal House Democrat on the issue, told Insider last week. "I also want us to fund the government."

And Democratic Sen. Jeff Merkley of Oregon told Insider last week that lawmakers were "holding meetings."

But no breakthrough appeared imminent.

"I'll be happy to update you after those meetings," he said. On Monday, he told Insider in a statement that he would "keep pushing to get this debated on the floor and get it passed."

As Insider's "Conflicted Congress" investigation revealed last year, members of Congress may hold and trade stock in companies whose financial well-being may be influenced by those same members' votes, plum committee positions, or other knowledge to which only lawmakers are privy. That's led to several clear instances of potential conflicts of interest.

While Congress passed the Stop Trading on Congressional Knowledge (STOCK) Act in 2012, requiring lawmakers to disclose those trades, Insider continues to report that dozens of lawmakers and hundreds of senior staffers have failed to do so in a timely fashion, violating federal law in the process. Furthermore, enforcement of penalties for violations is severely lacking.

For a year now, Congress has trod a tortured road toward what could ultimately be their failure to pass meaningful reforms.

House Speaker Nancy Pelosi initially rejected the idea of banning stock ownership by members of Congress entirely last December, but a slew of new legislation and public outcry led her to reverse her position.

Democratic senators formed a working group, with Senate Majority Leader Chuck Schumer's blessing, to draft legislation to ban stock trading among lawmakers. The Committee on House Administration held a hearing on the matter in April.

But the Senate group never produced a product, punting the potential introduction of legislation toward the lame-duck period as the House teed up - and then promptly aborted - a vote on a bill drafted by Administration Committee Chair Rep. Zoe Lofgren of California that contained a massive loophole and was written without the input of members who'd been pushing the idea for months.

Meanwhile, Insider and other media have since last year identified 75 members of Congress who've violated the STOCK Act.

All of this comes despite polling consistently showing that wide majorities of Americans support a ban.

'The calendar is kind of short right now'

Following the November midterm elections, a new Congress will convene on January 3. Just two weeks in the House legislative calendar and two and a half weeks in the Senate remain before then.

Much of legislators' time and energy is currently taken up by the National Defense Authorization Act and an omnibus bill to fund the government - two sweeping pieces of legislation that lawmakers strive to pass each year.

House Majority Leader Steny Hoyer, who's tasked with setting the floor schedule for the House, pointed to those legislative efforts as he threw cold water on the idea of passing a stock trading ban.

"We've got to get these important pieces of legislation done, and we only have two weeks, or three weeks, left to go," he told Insider during a briefing with reporters last week.

And he reiterated his belief that the legislation was unnecessary, pointing to the current disclosures mandated by the STOCK Act and the fact that blatant insider trading is already illegal.

"There are a lot of members who want to go further on that," he said. "I'm not one of those, necessarily."

Democratic Rep.
Democratic Rep.  

Democratic Rep. Raja Krishnamoorthi, another stock ban advocate, told Insider that his constituents are "bewildered by the lack of action on this issue" but also pointed to the "challenge" posed by the dwindling number of weeks left in the current session.

"The calendar is kind of short right now," he said.

Meanwhile, there's little indication that anyone else in House Democratic leadership is interested in moving legislation.

House Speaker Nancy Pelosi's office did not respond to Insider's request for comment, while Peter Whippy, spokesman for the Committee on House Administration, told Insider in an email that the committee didn't "have any comment or update on this right now."

House leaders could still put their stock-ban bill up for a vote. And prior ethics reforms - including requiring senators to file their personal financial disclosures digitally - have been included in larger bills before, and there's always the possibility that lawmakers could slip a stock-ban provision into another piece of last-minute legislation.

But Spanberger's comments signaled an unwillingness to potentially jeopardize must-pass legislation.

"The number one priority that I think should be our point of attention, from a responsible government standpoint, is ideally funding the government by December 16," she said. "I don't want even the threat of a potential shutdown."

In the Senate, Democratic Sen. Elizabeth Warren of Massachusetts told Insider that it was "not yet" time to declare the effort dead, pointing to ongoing discussions. But she, too, alluded to a winding-down calendar jam-packed with other priorities.

"There's a scramble here at the end," she said.

'The clock restarts in January'

Though fair number of Republicans have been even more critical of banning stock trading than Democrats, House Minority Leader Kevin McCarthy has said several times over the course of the last year that he supports banning members of Congress - something his Democratic counterparts have taken note of.

"There is a record of him supporting it in principle," said Spanberger.

House Minority Leader Kevin McCarthy has expressed support for a stock trade ban.
House Minority Leader Kevin McCarthy has expressed support for a stock trade ban.  

But the impending Republican takeover of the House complicates the effort to enact any bill into law. While McCarthy, the Republican most likely to serve as the next House Speaker, has expressed openness to the idea, it's unclear if he would be willing to work with whatever legislation Senate Democrats might propose.

The opposite is also dubious: he told Punchbowl News in October that he was opposed to the bill that House Democratic leadership had introduced.

In the Senate, talks could theoretically continue into the new Congress - Democrats will retain the majority, and have even gained a new vocal supporter of banning stock trading in Congress with the election of Democrat John Fetterman of Pennsylvania.

And Democratic Rep. Hakeem Jeffries of New York, who was just elected as House Democrats' new leader, has said he is supportive of the idea.

"I support a stock ban for members of Congress," he told reporters in September.

Both Spanberger and Krishnamoorthi said they were hopeful the issue could be an area of bipartisan consensus in the new Congress, pointing to the sizable number of Republicans who have co-sponsored their respective bills.

"This is one of those areas where I do think there could be bipartisan progress," said Krishnamoorthi.

"I mean, compare this to a year ago when there was zero action, and nobody was even talking about bringing this to a vote," he added. "We've come some distance, but we have a long way to go."

Spanberger said she would continue to work with her Republican co-sponsor, Rep. Chip Roy of Texas, to add more co-sponsors to her bill as well.

But when asked if House Democratic leadership had successfully "run out the clock" on the legislation - an accusation she first lobbed in May - Spanberger laughed, putting an optimistic spin on it.

"And the clock restarts in January," she said.

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