In the chaotic early days of the pandemic, members of Congress sat in closed-door briefings on the emerging threat of the virus, before the public knew of its severity. In a unique position to act decisively, the impulse of many in attendance wasn’t to prepare or somehow mobilize the resources necessary to slow the spread of a deadly disease. Some Democratic lawmakers raised an alarm, of course. But their pleas for more funding were bogged down by Congress’s usual dysfunction. For other lawmakers, including top Republican and Democratic leaders, the impulse was to profit from the private information. So they did what any decent American would: They rushed to buy and sell stocks just weeks before the market crashed.
The Justice Department investigated four senators for pandemic-related insider trading as a result of the well-timed trades, but found no evidence that they broke the law, and closed the probes (though one sitting senator, Republican Richard Burr, is still being investigated by the Securities and Exchange Commission). The insider trading scandals cost Republicans both their Senate seats in Georgia, making Kelly Loeffler, wife of New York Stock Exchange chairman Jeffrey Sprecher and the wealthiest member of Congress at the time, and David Perdue, who was CEO of Dollar General before entering office, the only elected officials to pay a political price. Despite the election losses and initial outrage, the scandal was largely memory-holed, and congressional stock trading ended up increasing. Last year, over a hundred members of Congress bought and sold nearly $290 million in stocks and beat the market, according to the latest report from market tracker Unusual Whales.
House Speaker Nancy Pelosi, a multimillionaire and Wall Street legend, recently defended congressional stock trading, asserting the right of lawmakers to cash in on the very industries they oversee. “This is a free market, and people—we are a free-market economy,” Pelosi told reporters at a press conference last month. “They should be able to participate in that.”
Pelosi’s brazenness didn’t just anger the public. Her defense of open corruption—as Democrats enter this campaign year in a tremendously vulnerable position—is also fueling an effort among lawmakers and congressional candidates to ban members of Congress and their families from trading stocks.
This week, Democratic Senators Mark Kelly of Arizona and Jon Ossoff of Georgia introduced new legislation, known as the Ban Congressional Stock Trading Act, that would require members of Congress and their families to place stock portfolios in blind trusts while in office. Under the bill, lawmakers who violate the rule lose their entire congressional salary. Representative Angie Craig, a Democrat from Minnesota, wants to propose a bill that would ban lawmakers from owning any stock at all in the first place, a move that progressives like Representative Alexandria Ocasio-Cortez are also advocating.
This isn’t the first time lawmakers have faced scrutiny over stock trading. The Stop Trading on Congressional Knowledge (STOCK) Act, which prohibits members from acting on “material, nonpublic information derived from such person’s position as a Member of Congress,” was signed into law in 2012 after a 60 Minutes exposé revealed how lawmakers traded on non-public information in the wake of the 2008 financial crisis. Pelosi was one of the main officials highlighted in the 60 Minutes investigation, and not much has changed since then. These days, on TikTok and Twitter, young investors closely follow Pelosi’s trading moves, which are made by her financier husband, Paul Pelosi, and half-jokingly encourage people to copy the “queen of investing.” Currently, the Pelosis hold between $5 million and $25 million each in Amazon and Apple stock, according to their most recent disclosure.
The STOCK Act is also the reason members of Congress are required to publicly disclose stock trades made by themselves, their spouses, or dependent children, within 45 days. But key components of the law were gutted in 2013, and, as a recent Business Insider investigation revealed, at least 54 members failed to comply with the STOCK Act last year. No member of Congress has ever been prosecuted for insider trading under the law.
With fresh momentum for reform on an issue that infuriates the vast majority of Americans, Democrats have a real opportunity to restore some trust in Congress. They’re heading into midterm season without having passed the president’s signature social spending bill, the child tax credit, any sort of debt forgiveness, or climate action, all while the Omicron variant ravages the country. But Democratic Party leaders still won’t entertain the idea of running on an anti-corruption message.
House Democratic Caucus Chairman Hakeem Jeffries, widely regarded as the most likely successor to Pelosi, dodged a question from Business Insider about whether he supports such a reform. Majority leader Chuck Schumer was similarly uninterested, telling the outlet that he doesn’t own any stocks when asked about a hypothetical ban. Democratic leaders’ opposition (or outright silence) on the issue has also given Republicans the space to outflank them, even if just rhetorically.
House Republican Leader Kevin McCarthy is reportedly considering proposing new limits or an outright ban on lawmakers’ trading individual stocks if the GOP wins control of Congress. Missouri Senator Josh Hawley, a Republican, also believes it’s a “good idea” and is introducing his own less-aggressive stock-ban bill.
John Fetterman, who’s seeking the Democratic nomination for Senate in Pennsylvania in one of the highest-profile races of 2022, is among the candidates calling for an outright stock ban. “Allowing members of Congress and their spouses to trade stocks is a clear conflict of interest,” Fetterman said in a statement. “Lawmakers should not be making profits off of the same companies they are supposed to be regulating, based on closed-door information that isn’t available to the public.”
One congressional candidate, Lucas Kunce, a populist Democrat running for Senate in Missouri, doesn’t think any of these proposals go far enough. Kunce believes “elites are using the blind trust bullshit as a campaign prop” to continue trading “while thinking they pulled a fast one on us.”
“If you become a member of Congress, you’re there to serve,” Kunce told The Nation. “If you want to get rich, go do something else. Go be a stock trader, if you want to trade stocks.”
The punishment for members of Congress who violate the STOCK Act, Kunce believes, should also be clear. “It should be enough to be a real deterrent,” he said. “Not a $200 fine, but like jail time, right?”