‘The American people are tired': Lawmakers take aim at insider trading in Washington — here's how they'd force Congress to put the people before their portfolios
In a mic drop moment in the debate around insider trading in Congress, Sen. Josh Hawley of Missouri has introduced the PELOSI Act – trolling former Speaker of the House Nancy Pelosi.
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With his acronym game on point, the GOP senator announced the Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act on Jan. 24 – after news broke that Pelosi’s venture capitalist husband sold 30,000 shares of Google stock just one month before the tech giant was sued over alleged antitrust violations.
Pelosi also received harsh criticism when her husband sold up to $5 million worth of shares in Nvidia, a computer chipmaker, just days before Congress approved a mega stimulus package to boost the semiconductor industry.
“Members of Congress and their spouses shouldn’t be using their position to get rich on the stock market,” Hawley tweeted. “Today, I’m introducing legislation to BAN stock trading & ownership by members of Congress. I call it the PELOSI Act.”
Hawley’s bill, which some have bashed as an act of political showmanship, is the latest attempt to prevent insider trading from members of Congress — a movement that has gained “tremendous momentum” in recent months.
The battle of the bills
The PELOSI Act is a rewrite of a bill that Hawley proposed in the 117th Congress, which failed to get a single cosponsor. But there’s another very similar bill in Congress that stands more of a chance of passing because of its bipartisan support.
On Jan. 12, Reps. Abigail Spanberger of Virginia and Chip Roy of Texas, joined by a bipartisan alliance of 35 cosponsors, reintroduced the Transparent Representation Upholding Service and Trust in Congress Act, or TRUST, for the third time.
“We saw tremendous momentum, we saw growing support in our districts, and we saw growing recognition across the political spectrum that such a reform needs to be made now,” Spanberger said in a statement.
“Our TRUST in Congress Act would demonstrate that lawmakers are focused on serving the interests of the American people — not their own stock portfolios.”
The issue these laws seek to resolve
If passed, both PELOSI and TRUST would ban members of Congress, their spouses and children from trading individual stocks and force them to place their investment assets into blind trusts.
Both pieces of legislation aim to address the advantage that politicians have as well-connected people with the inside track on new legislation that might affect a company or an industry.
“While Wall Street and Big Tech work hand-in-hand with elected officials to enrich each other, hard-working Americans pay the price,” Hawley said in his PELOSI Act announcement. “The solution is clear: we must immediately and permanently ban all members of Congress from trading stocks.”
While insider insights don’t make them clairvoyant, it’s certainly an advantage when it comes to trading in the stock market.
A survey, commissioned by conservative advocacy group Convention of States Action last year, showed that more than 75% of voters believe lawmakers have an unfair advantage when trading — and those feelings aren’t unfounded.
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And a report from Business Insider revealed that 72 members of Congress didn’t report their financial trades as they are mandated to do by the Stop Trading on Congressional Knowledge Act of 2012.
But an even larger investigation from the Wall Street Journal revealed thousands of Washington officials are taking part in ethically gray trading.
PELOSI and TRUST would aim to reduce that by requiring senior officials and others affected by the bill to either sell their holdings when they take their position in Congress or put them into a blind trust, where they would have no control over the trades.
They would still, however, be able to purchase diversified ETFs, diversified mutual funds, and U.S. Treasury bills, notes or bonds.
“The American people are tired of seeing members of Congress making pretty significant profits while they’re voting on the very policies that affect the corporations they’re meeting with on a regular basis,” Roy told Fox Business.
Pelosi’s play gets shot down
Despite being targeted for alleged insider trading, even Pelosi has championed a bill trying to tackle the problem in Congress.
The bill introduced by Democrats last September, called the Combating Financial Conflicts of Interest in Government Act, also aimed to limit investing conflicts of interest for politicians and their families.
However, that bill was heavily criticized by both sides of the House for lacking teeth and including a built-in loophole around the blind trust requirement.
With more cosponsors than ever before, Spanberger and Roy’s TRUST currently stands the best chance of passing and rebuilding trust with the American public.
“We need to do something to stop that breach of trust that is apparent to the American people that we seem to be day trading while we’re supposed to be doing the work of the American people,” Roy said in an interview with Fox Business.
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