WASHINGTON — For years, populist lawmakers have clamored for a ban on members of Congress trading stocks while serving in office, only for party leaders to blow off their demands.
This week, House Speaker Mike Johnson (R-La.) announced a seeming breakthrough: a House committee would advance legislation that would apply new restrictions on lawmakers’ stock ownership.
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“Republicans are going to take an important step in our efforts to restore the people’s faith in Congress,” Johnson said Tuesday at a press conference. “Obviously, members of Congress should not be allowed to profit from insider trading.”
But the bill stops short of banning lawmakers from owning or trading stocks, instead homing in on “insider trading,” or lawmakers profiting from their privileged access to information. Lawmakers could still own or sell stocks under the legislation, with new restrictions.
“This is a sham bill to try to confuse people about what the problem is,” Kedric Payne, vice president, general counsel and senior director for ethics at the nonpartisan Campaign Legal Center, told HuffPost.
Rep. Anna Paulina Luna (R-Fla.), one of the foremost proponents of an outright ban on lawmakers owning stocks, has backed the measure, but the new bill has little Democratic support — at least so far.
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Rep. Alexandria Ocasio-Cortez (D-N.Y.) slammed the bill as a fake stock trading ban on Tuesday, but on Wednesday, she sounded more open.
“I’m engaging in conversations about it,” Ocasio-Cortez told HuffPost. “I don’t believe that members of Congress should own stock. I have concerns that this continues to allow that.”
Under current law, members of Congress are allowed to own stock and to buy and sell stocks so long as they disclose their trades within 45 days and make an annual account of their holdings. The thinking behind the policy is that transparency discourages corruption.
The new Stop Insider Trading Act would ban lawmakers from buying individual stocks and require advance public notice of plans to sell, while boosting penalties for noncompliance.
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Rep. Bryan Steil (R-Wis.), chair of the House Administration Committee, which advanced the bill on Wednesday, acknowledged the measure doesn’t go as far as many lawmakers wanted.
“Perfection is far too often the enemy of the good in this town,” Steil said before his committee approved the bill on a party-line vote, with every Republican in favor and every Democrat opposed.
The measure could see a full House vote in the coming weeks, and if it passes, it would probably face resistance in the Senate, which has always been far less interested in a stock-trading ban. It’s drawn heavy criticism from Democrats so far, who’ve pointed to language allowing stockholders to buy more stocks by using dividends.
“The Stop Insider Trading Act allows members of Congress to continue to trade a substantial number of individual stocks,” the committee’s top Democrat, Rep. Joe Morelle (D-N.Y.), said Wednesday. “Under this bill, the wealthiest members of Congress can keep every single share of stock they currently own and use their dividends to buy even more stock.”
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Before this week, lawmakers had rallied behind a different bill, the bipartisan Restore Trust in Congress Act, which would ban lawmakers from even owning individual stocks. The legislation, by Reps. Chip Roy (R-Texas) and Seth Magaziner (D-R.I.), has 100 Democratic and 30 Republican co-sponsors, including Luna, who’d threatened to use a “discharge petition” to circumvent leadership and force a vote. Like Luna, Roy has signaled support for the Steil bill.
The Roy-Magaziner bill also had support from good-government groups, including the Campaign Legal Center, which this week reiterated its position.
Payne said there are two problems a stock bill should address — one is members profiting from trades, and the other is the possibility lawmakers make decisions based on the value of stock they own.
“The public doesn’t know if decisions made by members of Congress are intended to protect their constituents or protect their investments,” Payne said. The new legislation, Payne said, “doesn’t fully get rid of the problem of conflict of interest with stocks in Congress.”