A Congressional Scandal, in Plain Sight
January 19, 2022
MOST OF US WHO WORK in the financial services industry have to comply with strict trading and reporting standards, continuing education, and blackout periods. The industry — and the regulators — take this very seriously, but members of Congress are largely exempt.
STOCK TRADING BY CONGRESS is an ongoing scandal, so loosely regulated that legislation has been introduced to set new standards. A handful of members in both parties want to toughen regulation, but their bills — which have strong public support — have stalled.
MOST MEMBERS OF CONGRESS FEEL THEY HAVE A RIGHT TO TRADE, even though they have access to information that is not always available to the general public.
A LEADING PROPONENT OF CONGRESSIONAL TRADING is none other than liberal House Speaker Nancy Pelosi, who said recently that “this is a free market economy.” Members “should be able to participate in that,” she said. Pelosi’s husband Paul is a frequent trader who has made millions in stock options.
ANOTHER FREQUENT TRADER has been Sen. Richard Burr (R-N.C.), who lightened up his holdings just before Covid-19 engulfed the world. Burr had been briefed on the virus just before selling many of his holdings, but Congress chose not to censure him.
A WEAK BILL PASSED IN 2012 to bar insider trading, and it also required members to report stock trading within 45 days, but dozens of the lawmakers have not reported their transactions.
NEEDLESS TO SAY, THIS HAS GENERATED SCATHING PUBLICITY, angering voters who already have a dim view of Congress, which has an approval rating in the low-20s. (This issue has also embarrassed the Federal Reserve, which has been rocked by reports of aggressive trading by Fed governors and regional presidents.)
ONE WOULD THINK THAT REFORMS WOULD BE A NATURAL ISSUE for Democrats, who are desperate for a victory, but President Biden has refused to take a position. The pending bills have a chance, but the reforms would be modest, such as requiring members to put their holdings in a blind trust.
IT STRIKES US that on issue after issue, there’s a lack of public confidence: Congress clearly is dysfunctional — unable to pass budgets in a timely manner, unwilling to address blatant gerrymandering by both parties, and adamantly opposed to age limits (Pelosi is 81, Mitch McConnell turns 80 next month).
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