Push to ban lawmaker stock trading gets new life
The years-long effort to ban members of Congress from trading stocks is back in the spotlight following a House Ethics Committee report that took issue with transactions made by a member’s spouse, and after a Senate panel advanced legislation to prohibit lawmakers from making transactions.
And some lawmakers are vowing to keep the topic front and center into the fall as they look to make headways on a matter that has mystified Congress.
Leading that effort is Rep. Anna Paulina Luna (R-Fla.), who plans to file a discharge petition on legislation to prohibit lawmakers and their immediate families from owning, trading or controlling stocks, commodities or futures, directing lawmakers to divest their holdings within 180 days of the bill’s enactment.
If the procedural gambit is successful, the legislation, sponsored by Rep. Tim Burchett (R-Tenn), would hit the floor in the fall. But if the past is prologue, getting the measure over the finish line will be a tall task.
Supporters, however, are optimistic they will find success.
“I think America is aware of what’s going on,” Burchett told The Hill. “They know it’s not natural for somebody to, day in and day out, pick stock and have a 100, 200, 300 percent return, and they’re tired of seeing Congress members making $170,000 a year retiring worth millions.”
While the idea of banning members from trading stocks is widely popular among the public, some lawmakers for years have balked at the push, raising concerns about the level of pay for members — a $174,000 salary, which has been frozen since 2009, constituting a 30 percent pay cut when adjusting for inflation.
And even among those who support banning members from trading stocks, there is disagreement about the details.
The Senate Homeland Security and Governmental Affairs Committee last weekadvanced a bill that would bar not only members, their spouses, and their dependent children from buying and trading stocks, but also the president and vice president — with a carve-out for President Trump, since the requirement would not apply until the start of the elected officials’ next terms.
The hearing over the bill became contentious, with some Republicans on the panel arguing against a ban altogether, Democrats arguing in support and Sen. Rand Paul (R-Ky.) asking why Trump should be exempt.
Trump, who earlier in the day had said he liked the stock trading ban “conceptually,” attacked Sen. Josh Hawley (R-Mo.) for his support of the bill. Hawley later said Trump was under the mistaken impression it would apply to him.
Former Speaker Nancy Pelosi (D-Calif.) — who as leader of the House opposed a stock trading ban and after whom Republicans cheekily named a previous effort to ban trading — threw her support behind the bill as well. Pelosi had opened the door to supporting a stock trading ban in 2022, but her outright endorsement was nonetheless notable.
But Burchett’s bill that Luna hopes to force a vote on, as well as several other stock trade bills — such as the Transparent Representation Upholding Service and Trust (TRUST) in Congress Act, from Rep. Chip Roy (R-Texas) and Rep. Seth Magaziner (D-R.I.) — do not include the barring trades by the president.
Despite those hangups, proponents of the ban are optimistic they can get it done this time around.
“It’s an increasingly public fight that people care about,” Rep. Chip Roy (R-Texas), a large supporter of a prohibition on lawmaker stock trading, told The Hill. “And Congress is running out of runway with the people.”
“We will force votes,” he added.
The difficulty in crafting a stock trading ban is personified in Rep. Rob Bresnahan (R-Pa.), who has caught heat for continuing to trade stocks despite saying he wants to ban member stock trading. Bresnahan, a businessman whose estimated net worth is in the multi-millions, has continued to report many stock trades despite writing a letter to the editor during his campaign calling to ban stock trading.
Bresnahan has introduced a stock trading ban bill and says that he has no involvement with the trades that his financial advisers have made on his behalf. While he has said he wants to keep his current financial advisers and create a blind trust that would put a more stringent firewall between him and those trades, he has found problems in crafting that plan with the House Ethics Committee.
Local public news organization WVIA noted that Bresnahan could simply ask his advisers to not make any more trades, but Bresnahan dismissed that idea.
“And then do what with it?” Bresnahan said to WVIA News. “Just leave it all in the accounts and just leave it there and lose money and go broke?”
Despite some critics, supporters of a stock trading ban are plowing full-steam ahead, hoping to make headway on the headwinds created by the House Ethics Committee.
“Members of Congress should be banned from trading individual stocks because their access to privileged, nonpublic information creates unavoidable conflicts of interest that erode public confidence in government,” Luna said in a statement. “As lawmakers, we receive classified briefings, shape economic policies, and interact with industry leaders, giving us insights that can influence stock prices.”
“Even if no laws are broken, the appearance of profiting from this access fuels distrust among Americans,” she added. “The American people do not trust the US government, and this is a step forward to building that trust.”
The impetus for the current push was a report from the House Ethics Committee that said Rep. Mike Kelly (R-Pa.) violated the lower chamber’s code of conduct when his wife traded stocks for the company Cleveland-Cliffs — which has a facility in Kelly’s district — after the congressman learned non-public information about the firm.
On April 28, 2020, Kelly learned that the Commerce Department would make an announcement that would benefit Cleveland-Cliffs. The day after, the congressman’s wife, Victoria Kelly, bought 5,000 shares of the company for $23,075. The department’s news was ultimately made public on May 4.
She sold all her shares of the company in January 2021 shortly after Cleveland-Cliffs acquired a steel manufacturing corporation, turning a $64,476.06 profit.
“Representative Kelly’s conduct with respect to Cleveland-Cliffs and his wife’s stock purchase raised significant concerns for the Committee, even if it did not rise to the level of insider trading or clearly violate conflict of interest rules,” the committee wrote in its report, later adding that Kelly “has not demonstrated sufficient appreciation for the harm to the institution caused by the appearance of impropriety.”
It is, to be sure, already illegal for members of Congress to make transactions based on information they receive through their job, and the Stop Trading on Congressional Knowledge (STOCK) Act, which was enacted in 2012, requires that lawmakers report their stock trades within 30 days.
But some ethics advocates believe the law should be stronger.
Speaker Mike Johnson (R-La.), while he said he is supportive of the efforts to ban stock trades, has noted the difficult position the restrictions could put on members and their families, given the salary for members of Congress has been frozen since 2009. That amounts to around a 30 percent pay cut when adjusting for inflation. Most members make a salary of $174,000.
“If you stay on this trajectory, you’re going to have less qualified people who are willing to make the extreme sacrifice to run for Congress,” Johnson said in May. “I mean, just people just make a reasonable decision as a family on whether or not they can come to Washington and have a residence here, residence at home, and do all the things that are required.”