Stock trading ban for lawmakers gains momentum on Capitol Hill
By Jonathan Weisman
An effort to strictly control stock ownership by members of Congress is gathering momentum on Capitol Hill for the first time in a decade, fueled by politically vulnerable lawmakers who recognize the potency of signaling to voters that they will act on the perceived corruption in Washington.
The issue of banning the ownership and trading of individual stocks by lawmakers is complex. It raises questions of just what other kinds of personal investments or economic liabilities could be perceived as conflicts of interest, and how far the prohibitions should extend. House Speaker Nancy Pelosi of California and Rep. Steny H. Hoyer of Maryland, the House majority leader, initially expressed opposition, and even now, it is not clear how far Pelosi will go to ensure passage of strong legislation.
But with pressure mounting from rank-and-file members in both parties and both chambers of Congress, the top two Democrats on Wednesday signaled an openness to action.
Sen. Chuck Schumer of New York, the majority leader, took to the Senate floor to embrace a stock ownership ban and encourage Democrats to reach out to Republicans to reach agreement quickly.
Pelosi was less effusive, telling reporters at her weekly news conference that she would accept such a ban, but with a complicating twist. She said she wanted any stock limitations, including a toughening of existing disclosure rules on stock ownership and trading that now apply to members of Congress and the executive branch, to also apply to the judicial branch of government, especially the Supreme Court.
The judiciary branch does have ethics rules that oblige some disclosure, in some cases more quickly and more often than the congressional branch. But an investigation last month by The Wall Street Journal found hundreds of instances in which federal judges presided over cases involving companies in which they or their family members owned stock.
“It has to be governmentwide,” she said, adding, “the judiciary has no reporting. The Supreme Court has no disclosure. It has no reporting of stock transactions, and it makes important decisions every day.”
Multiple proposals for a trading ban already exist in the House and Senate, including a new bill unveiled this week by Sens. Elizabeth Warren, D-Mass., and Steve Daines, R-Mont. One proposal by Sen. Kirsten Gillibrand, D-N.Y., and Rep. Katie Porter, D-Calif., reintroduced Wednesday, would ban individual stock trading and extend financial disclosure rules to both the judiciary and the Federal Reserve Board.
The speaker’s caveats angered some of the strongest proponents of fast action to ban congressional stock ownership, who saw them as a veiled attempt to ground the effort. For all the merits of applying disclosure rules to the judiciary, they argued, such legislation would spark debate on the constitutional separation of powers and the rights of Congress to dictate to the judicial branch.
“That is literally a different conversation, and one that is so hard to wrap your arms around that you’ve tanked the movement,” said Rep. Abigail Spanberger, D-Va., a co-author of bipartisan stock-ban legislation that has been gaining momentum.
She added, “I haven’t heard from a single constituent, ‘I’m really worried about the Supreme Court ruling in such a way for their personal gain.’ That’s not a thing.”
The drive to ban congressional stock trading was touched off in 2020 by a spate of revelations that senators from both parties had traded health care stocks after closed-door briefings on the then-nascent coronavirus pandemic.
It has gathered momentum in recent weeks as Democrats from conservative-leaning districts, eager to demonstrate independence from Pelosi and other party leaders, have taken up the issue to appeal to a growing populist sentiment among their constituents. Proponents readily admit that voters perceive Congress as corrupt.
“The idea that we’re coming in and buying, selling, buying, calling in puts, it’s a bipartisan problem,” said Rep. Chip Roy, R-Texas, who co-wrote the stock-ban legislation with Spanberger in 2020.
Lawmakers saw the power of the issue in the 2020 elections, when it propelled the Senate victories of two Georgia Democrats, Jon Ossoff and Raphael Warnock, who castigated their incumbent Republican rivals for their stock trades.
The sophisticated and lucrative trades of Pelosi’s wealthy husband, Paul Pelosi, have also attracted attention, after investors on TikTok and other platforms took to reviewing her stock disclosures and mimicking his investments.
Schumer said Wednesday, “I believe this is an important issue that Congress should address, and it is something that has clearly raised interest on both sides of the aisle over the last few weeks.”
Pelosi’s embrace was hardly unequivocal. She said she had tasked the House Administration Committee, which has jurisdiction over the chamber’s operations, to produce new stock-trading legislation, and that she assumed “they will have it pretty soon.”
She also called for stricter penalties on lawmakers who flout existing rules on reporting stock ownership and trading under a 2012 law called the Stop Trading on Congressional Knowledge (STOCK) Act.
“What we’re trying to build is consensus,” she said.
The worry among proponents of action is that the committee, led by Rep. Zoe Lofgren of California, a close Pelosi confidant, will bottle up the effort. Lofgren has said little other than that she is reviewing the issue and the merits and shortcomings of the existing stock prohibition bills. She has not scheduled any hearings or a public drafting of committee legislation.
Spanberger conceded that some of her colleagues had suggested that a ban on stock ownership could dissuade capable people from running for Congress. But she expressed little sympathy.
“There are a lot of jobs and millions of Americans out there,” she said. “If this is too much of a limitation, you’ve just demonstrated what your priorities are, and you shouldn’t be in Congress.”