In 2012, Congress boasted it had removed members’ ability to do insider trading by passing the so-called STOCK Act. However, with Congress being Congress, the law was weak to begin with, and then rarely enforced—which has led to situations like the one in January 2020, when members were secretly informed that a deadly virus was headed toward America, and immediately dumped a bunch of stocks.
But public pressure is building on Congress to try again, harder this time. Since 2022 started, lawmakers have already introduced three separate bills to prevent another embarrassing trading scandal. Congress now has four in total, with a fifth that may be introduced in the coming weeks. House Majority Leader Nancy Pelosi—who is married to an investment manager, and in December defended members’ right to trade stocks by saying, “We’re a free market economy”—announced today that she’s come around and is now pro-reform. Her Republican counterpart, Kevin McCarthy, is reportedly interested in passing something, and just yesterday Senate Minority Leader Mitch McConnell said, “We’ll take a look at that kind of legislation and see what may be appropriate.”
Momentum appears to be there, but the question is for which piece of legislation? Right now, these five bills that are already introduced or being written are the ones getting attention.
Ban Conflicted Trading Act
- Whose bill is it? It was first introduced into both chambers of Congress last March by a large bipartisan group of lawmakers, led by Senator Jeff Merkley of Oregon and Congressman Raja Krishnamoorthi of Illinois.
- What would it do? It would ban elected members of Congress and their senior staff from buying and selling stocks and most bonds and options contracts.
- Who supports it? The bill’s other Senate co-sponsors are Democrats Sherrod Brown and Raphael Warnock. Then the House co-sponsors include both Alexandria Ocasio-Cortez and Matt Gaetz, plus 12 other lawmakers. Since momentum for a trading ban started building, other Congress members have voiced support. Senator Jon Tester did on Monday.
Ban Congressional Stock Trading Act
- Whose bill is it? Democratic senators Jon Ossoff and Mark Kelly introduced this act in mid-January.
- What would it do? Their bill would require members to park their portfolios in a blind trust while in office. Their spouses and dependent children would have to do the same, for the lawmaker’s entire tenure in office. The fine for violating the law would equal their congressional salary for the year—$174,000, for most members.
- Who supports it? The Washington Post‘s Jennifer Rubin just dedicated a whole column to it, and Representative Abigail Spanberger, who introduced her own trading ban last congressional term, has said she’s open to doing a House companion bill with her previous bill’s co-sponsor, Chip Roy.
Banning Insider Trading in Congress Act
- Whose bill is it? This is Republican Senator Josh Hawley’s version, also introduced in mid-January.
- What would it do? Hawley’s bill is similar to Ossoff and Kelly’s—in fact, there were initially talks of everyone jointly sponsoring one piece of legislation. While Hawley’s bill would also require both lawmakers and their spouses to put everything into blind trusts, his version has one carve-out: It wouldn’t prohibit their dependent children from trading. The penalty for breaking his rule would be to forfeit all profits to the Treasury.
- Who supports it? Likely some conservatives, who may prefer working with Hawley over Ossoff and Kelly.
Ethics Reform Act
- Whose bill is it? Nebraska Senator Ben Sasse first introduced this bill in 2018; it went nowhere then, but last week he brought it back, saying, “If Congress wants to rebuild some public trust, we ought to put some pretty simple rules on Washington.”
- What would it do? As the name suggests, this is a more sweeping ethics-reform package. The stock-trading ban is just one provision among many, including a separate ban on lawmakers working as paid lobbyists after they leave office.
- Who supports it? Beyond the need to rally support for the whole package, Sasse also needs to convince fellow lawmakers his stock-trading ban doesn’t have a loophole—it doesn’t apply to spouses, which concerns reform advocates, since presumably spouses and their office-holding significant others discuss their personal finances.
As-yet-unnamed piece of legislation
- Whose bill is it? Two senators—Elizabeth Warren, a Massachusetts Democrat, and Steve Davies, a Montana Republican—are finalizing it right now, Axios reported yesterday.
- What does it do? Based on “people familiar with the conversations,” the language that Warren and Davies agreed on would ban lawmakers and their spouses from owning and trading individual stocks of any kind. It reportedly goes further than other bills that merely require members to place stocks in blind trusts, though it’s said to create an exemption for diversified, publicly held investment funds, such as mutual funds.
- Who supports it? Once introduced, this would be the Senate’s first bipartisan stock-ban bill, which clears a major hurdle for the possibility of being filibustered.