Dozens of members of Congress, both Democrats and Republicans, have signed onto bills that would ban members of Congress from trading stocks, something that more than two-thirds of Americans want, according to a bipartisan poll recently conducted by the Campaign Legal Center. But most of those lawmakers have gotten behind a bill that would keep a major loophole, while a more stringent bill proposed in the House has struggled to find backers.
The leading bill to ban congressional stock trades in terms of cosponsors, an important factor in a bill’s likelihood of passing, is the Ban Conflicted Trading Act, proposed in the House by Rep. Raja Krishnamoorthi (D-Ill.) and in the Senate by Sen. Jeff Merkley (D-Ore.). That bill, with 22 House cosponsors and four Senate cosponsors, would prohibit members of Congress and some congressional employees from trading corporate securities, but it would not prohibit members of Congress’ spouses from making trades. Spouses talk to each other (usually), and the bill would do nothing to stop the passing of insider information from a member of Congress to a husband or wife who could use it to inform purchases and sales. (Insider trading by members of Congress is illegal, but that law is nearly impossible to enforce.)
Of the nearly 6,000 corporate securities that House members reported in their 2020 financial disclosures, more than 1,000 of them are owned by the representatives’ spouses. At least 78 House members disclosed that their spouses own corporate securities.
Another bill in the House, which would require members of Congress and their spouses to put corporate securities in a qualified blind trust while in office, has 15 House co-sponsors and no companion version in the Senate. That bill, the Transparent Representation Upholding Service and Trust in Congress Act or TRUST in Congress Act, was introduced by Rep. Abigail Spanberger (D-Va.). The bill refers to the definition of qualified blind trust in the Ethics in Government Act of 1978, which explains that trustees must be independent and that the trustees shall not consult any interested party regarding their actions with their assets, unless the interested party gets approval from their supervising ethics office to put a restriction on an asset. The bill has been endorsed by good government groups including Campaign Legal Center, Public Citizen, Issue One, and others.
Four House members who cosponsor the Ban Conflicted Trading Act have spouses who own and/or trade corporate securities: Rep. Mary Gay Scanlon (D-Pa,), Rep. Earl Blumenauer (D-Ore.), Rep. Ro Khanna (D-Calif.), Rep. Jim McGovern (D-Mass.). None of these four cosponsor the TRUST in Congress Act. Khanna’s spouse is a frequent stock trader, often making more than one hundred corporate stocks trades per month, yet Khanna was able to accurately tell Newsweek reporters in October that he is in compliance with the Ban Conflicted Trading Act’s proposal because the trades are made by his wife’s fund and not by him.
Other reps who cosponsor the Ban Conflicted Trading Act but not the TRUST in Congress Act include “squad” members Rep. Alexandria Ocasio-Cortez (D-N.Y.), Rep. Rashida Tlaib (D-Mich.), and Rep. Ayanna Pressley (D-Mass.), as well as Rep. Matt Gaetz (R-Fla.).
Rep. Chip Roy’s (R-Texas) spouse owns stocks in ExxonMobil, Chevron, and Energy Transfer, yet the congressman is a cosponsor of the TRUST in Congress Act. If that bill were to become law, Roy’s spouse would be forced to give up control over those assets during Rep. Roy’s House tenure.
Neither bill is likely to pass any time soon. House Speaker Nancy Pelosi, whose husband is a frequent trader of corporate stock options, said recently that she does not believe members of Congress or their spouses should be prohibited from trading stocks. “We’re a free market economy,” Pelosi said at her weekly press conference. “They should be able to participate in that.” Both the Ban Conflicted Trading Act but not the TRUST in Congress Act have been referred to committees chaired by stock traders and have so far received no action.