KC members of Congress divided on stock trading ban

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U.S. Sen. Roy Blunt addresses the Missouri House of Representatives Feb. 23, 2022. // Tim Bommel/Missouri House Communications Office

So far, the years of the COVID era have been as fraught with political tension and discord as any in recent memory. It now seems cliché to remark that polarization is increasing—that family, friends, and neighbors are becoming less likely to embrace an overlapping set of facts and values.

And while that may be true, there is at least one political issue that has the support of more than three in four Americans: banning Congressional stock trading.

Indeed, few members of the general public believe it’s justifiable for their elected officials to adopt financial positions that leave them in such a brazenly conflicted position.

House representatives and senators are routinely the recipients of non-public, market-moving information, and despite the fact that they are technically prohibited from trading on insider information by the 2012 Stop Trading on Congressional Knowledge (STOCK) Act, observers have noted that those on Capitol Hill substantially outperform market indices like the S&P 500.

In the months that followed the initial lockdowns of 2020, multiple members of Congress drew criticism for what appeared to be the exact behavior prohibited by the STOCK Act.

Senator Kelly Loeffler, for example, who offloaded over $18M in assets throughout February and early March, became the subject of intense national scrutiny. Senator Richard Burr, who spent that February downplaying the risk of COVID, was simultaneously dumping between $628,000 and $1.72M of his portfolio.

In light of these recent controversies, a number of bills have been introduced in both legislative chambers to ban Congressional stock trading outright, so as to completely eliminate the opportunity for these murky transactions. And with Speaker Pelosi shifting to express a fresh willingness to move forward, it’s possible that this becomes a national issue leading up to the midterms.

Here’s where KC’s representatives stand:

Representative Sharice Davids D-KS-3

Representative Davids is a cosponsor of the TRUST in Congress Act, which requires Members, as well as any spouse or dependent child of a Member, to place specified investments into a qualified blind trust (i.e. an arrangement in which certain financial holdings are placed in someone else’s control to avoid a possible conflict of interest) until 180 days after the end of their tenure.

“Members of Congress are elected to positions of public trust, and accordingly should be held to a high standard, especially given our potential access to non-public information. Particularly during COVID, we’ve seen elected officials appear to misuse that privilege for personal gain on the stock market, which is absolutely unacceptable. I’m in Congress to make government work for Kansans, and part of that is rebuilding trust. To that end, I support introducing new guardrails that further reduce the likelihood of misconduct by our elected officials.”

Representative Sam Graves R-MO-6

Representative Graves did not respond to requests for comment and has not signed on to any of the recent bills introduced in the House.

Representative Emanuel Cleaver D-MO-5

“At a time when the American public’s faith in our democratic institutions is at a low point, it is imperative that Congress take steps to instill confidence and demonstrate that public servants are, in fact, there to serve the public—not their investment portfolios. There’s a reason we don’t let professional athletes bet on games where they have a direct impact on the outcome, and the same standard should be set for lawmakers who have a direct impact on the legislative process. That’s why I am a proud cosponsor of the TRUST in Congress Act, and will continue to support the common-sense effort to ban members of Congress from actively trading in the stock market.”

Senator Roger Marshall R-KS

A statement from Senator Marshall’s office was provided:

“Senator Marshall fully supports the full disclosure of any type of market trading done by elected officials and high paid, unelected bureaucrats. He is reviewing these pieces of legislation and remains focused on maintaining a high level of transparency.”

Senator Marshall has not signed on to any of the major Senate bills and has previously been found in violation of the STOCK Act.

Senator Jerry Moran R-KS

Senator Moran did not respond to requests for comment. He is the fourth most active trader in the Senate.

Senator Josh Hawley R-MO

Senator Hawley has been an outspoken proponent of banning Congressional stock trading, introducing the Banning Insider Trading in Congress Act in January.

“Year after year, politicians somehow manage to outperform the market, buying and selling millions in stocks of companies they’re supposed to be regulating. Wall Street and Big Tech work hand-in-hand with elected officials to enrich each other at the expense of the country. Here’s something we can do: ban all members of Congress from trading stocks and force those who do to pay their proceeds back to the American people. It’s time to stop turning a blind eye to Washington profiteering.”

Senator Roy Blunt R-MO

Senator Blunt has expressed criticism of a stock trading ban:

“I think it’s a lot easier to say than do… Seems to me there’s some danger here of creating one more reason to make it either hard to come, hard to serve or hard to stay, and we’ve done plenty of that.”

With the notable exception of Senator Hawley, the Heart of America appears to be fractured along partisan lines on the issue of Congressional stock trading. And given the current climate of distrust and political skepticism, it’s likely that even the most optimistic reformers will remain dubious of any progressive rhetoric that isn’t backed by a demonstratively serious legislative record.

Samuel Forster is a freelance writer focused on national politics and current affairs. He was previously a Graduate Associate at the University of Toronto’s Centre for Ethics. You can follow him on Twitter @ForsterSam.

Categories: Politics