New bill would fine Congress members for trading stocks and owning blind trusts
Two U.S. senators plan to introduce bipartisan legislation to ban lawmakers, executive branch officials and their families from trading and owning stock in individual companies, which they say has strong support from Americans.
New York Democrat Kirsten Gillibrand, who is sponsoring the legislation along with Republican Sen. Josh Hawley, told Morning Edition on Thursday she's standing behind the proposed bill because lawmakers have access to information that the public does not. If used improperly, she says, that could give lawmakers and their families an unfair advantage in the stock market.
"From the American people's perspective, they want members of Congress to come to Washington to work for them," Gillibrand said. "And they don't expect members of Congress to make money off of their jobs, particularly through the stock trade."
The bill, Ban Stock Trading for Government Officials Act would bar stock trading and stock ownership — even in blind trusts — for members of Congress, the president, vice president, and senior executive branch officials, including their spouses and dependents.
A national poll by Morning Consult and Politico shows 68% of registered voters support banning stock trading for members of Congress. Another survey conducted by the University of Maryland's School of Public Policy found a broad 87% of bipartisan majorities favor prohibiting the president, vice president and the Supreme Court from trading stocks in individual companies, too.
This is one of several attempts in the Senate to ban or limit stock trading by Congress members.
The bill builds on the STOCK Act, a federal law that forbids members from trading non-public information received from their jobs. Although the act sought to create transparency, Gillibrand said several members violated the act and improperly reported their stock trades, and others found loopholes. From 2019 to 2021, there were 97 members, their spouses or dependents, who traded in companies affected by their committees.
"So if they're not breaking the law, they're certainly creating an appearance of impropriety," Gillibrand said.
Under Gillibrand and Hawley's bill, members of Congress would be charged at least 10% of the value of the prohibited investments, while employees of the executive branch would have to forfeit their stock profits and face fine of $10,0000 or more, whichever is greater.
"It's got teeth," Gillibrand said.
The bill would also require a public and searchable database of members' stock transactions. Similar to the STOCK Act, failure to file their personal financial transaction would result in a penalty up to $500.
This issue resurfaced in 2021 when seven member of the U.S. House of Representatives were accused of failing to file reports of stock trades in large companies like airlines, gold mining and AI companies.
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Transcript
LEILA FADEL, HOST:
Bipartisanship feels increasingly rare in Washington, so it's notable that a Senate Democrat and a Republican colleague are leading a push to stop Congress members, the president and other federal officials from holding or trading stocks in individual companies. Democratic Senator Kirsten Gillibrand of New York joins us now to discuss this. She teamed up with Missouri Republican Josh Hawley on this bill. Good morning. Thanks for being on the program.
KIRSTEN GILLIBRAND: Good morning. How are you?
FADEL: I'm doing well. Thanks for being here. So why is this bill needed now?
GILLIBRAND: So from the American people's perspective, they want members of Congress to come to Washington to work for them. And they don't expect members of Congress to make money off of their jobs, particularly through stock trades. And what we found is, when we created the STOCK Act - the first time we did this about 10 years ago - we wanted to create transparency and accountability so that members of Congress had to disclose all the purchases of stocks they made - all their buys, all their sells - so that that disclosure would hold them accountable and make sure they're not trading on nonpublic information.
But, over the last 10 years, we found that there may well be a problem because 1 in 7 members of Congress - in the 117th Congress who violated the STOCK Act because they improperly reported their stock trades - and 97 members of Congress or their spouses or dependents traded in companies that were affected by their committees from 2019 to 2021. So if they're not breaking the law, they're certainly creating an appearance of impropriety. And so we thought it was important to write a law that said members of Congress and their spouses, as well as the executive branch and senior staff, should not buy and sell stocks or have blind trusts because there's too much opportunity for using nonpublic information to benefit from the stock market.
FADEL: So how would these proposed restrictions be enforced in this law?
GILLIBRAND: So the way it's enforced is members of Congress and the executive branch would not be allowed to hold stocks or hold them in a blind trust. They would need to publicly report any benefits they receive from the federal government. Sometimes the federal government gives them loans or grants because they're farms or, like, in - after COVID, the PPP loans. Some members of Congress got those. And so they have to report those. But they're not allowed to own stocks anymore, outside of something like a 401(k), but they would not be able to own those stocks. If they fail to comply, there's a really significant penalty - at least 10% of the value of the prohibited investments - and they would have to disgorge all profits from any purchase or sale of the stock. So that shows accountability. It's got teeth. And then that case would be given to law enforcement, obviously, just to see if they are trading in nonpublic information.
FADEL: Now, a University of Maryland poll suggests there's broad support among voters - bipartisan support among voters - for restrictions on stock trading by their representatives. But is that the case in Congress? Can you get this or one of a number of other bills that are like it actually passed?
GILLIBRAND: I do think there's strong bipartisan support for this. Senator Hawley and I are introducing this bill, and we've had working groups on this issue for the last several years with various groups of Democrats and Republicans. So I think there is wide bipartisan support for this kind of accountability. We want the American people to trust us...
FADEL: Yeah.
GILLIBRAND: ...To make important decisions about the economy, about their future, supporting their businesses, supporting their families, supporting our country. And we cannot afford to have this appearance of impropriety, and we can't afford for members of Congress to be using nonpublic information to get rich because they have that nonpublic information.
FADEL: On that note about the American public trusting their representatives, you know, there's a lot of concern about the fact that the Republicans and Democrats can't seem to agree. And there's a lot you and Senator Hawley don't agree on, and yet you're collaborating on this bill. Does this send a larger message to your colleagues in the Senate, both Democrats and Republicans?
GILLIBRAND: I think there's a lot more bipartisanship in Washington than people think. The rank-and-file members of Congress are always looking for common ground - things that they agree on, things they want to get done. We just finished the very large bipartisan defense bill that I worked on with my colleagues. We just agreed on numbers of amendments that are bipartisan that are going to be part of the base bill. And we passed bills like the burn pits bill and the banning gun trafficking bill that I worked on last year. So we do do big bipartisan things.
FADEL: New York Senator Kirsten Gillibrand, thank you so much for your time.
GILLIBRAND: Thank you. Transcript provided by NPR, Copyright NPR.
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