Congress’s deliberations can arguably produce the most potent and widespread economic consequences out of any institution in the government. Taxes, trade, financial investigations, federal funding, confirming the nation’s top regulatory officials—such extensive powers should rest with impartial legislators, dedicated to their constituents and their nation, as should most duties in government.
But that’s objectively not the kind of lawmaker our current Congress encourages. Instead, our elected officials can bet on the very businesses they’re supposed to hold accountable. Their interests and decision-making can be driven by what’s best for their stock portfolios. And the worst part? Most of them can get away with it.
On September 18, 2008, the Secretary of the Treasury, the Chairman of the Federal Reserve and members of Congress from both parties met for a somber, closed-door debriefing on the upcoming economic collapse. Days later, those lawmakers dumped hundreds of thousands in investments, dodging huge financial losses. Some even made money by taking short positions—essentially betting against the very economy they were supposed to save.
Years later, journalists uncovered this meeting and numerous other insider trading incidents like it. The ensuing public outrage resulted in the overwhelmingly popular STOCK Act of 2012. Among other measures, it required lawmakers to disclose various financial activities more transparently, like mortgages and securities exchanges. But it didn’t address the issue’s root cause: that members of Congress—with all their cutting-edge, nonpublic information about the economy—can own and trade stock while in office.
Fast forward to early 2020, when COVID-19’s economic repercussions produced similar scandals. Multiple members of Congress like Sens. Kelly Loeffler (R-GA), Richard Burr (R-NC) and Diane Feinstein (D-CA) used nonpublic information from private meetings to drastically reposition their holdings right before the economic disaster, netting millions in profits while their constituents suffered heavy losses. Meanwhile, the STOCK Act remains the only significant law attempting to prevent Congressional insider trading.
Such profiteering and blatant conflicts of interest can no longer be tolerated. Our elected officials should be focused on representing our interests, not their portfolios. It’s time to ban members of Congress from owning stock, and whether because of public pressure or their ethical convictions, lawmakers seem to agree.
Right now, six different bills, proposed by lawmakers ranging from Josh Hawley (R-MO) to Elizabeth Warren (D-MA), would ban members of Congress from owning stock. Their assets would instead be managed in trust funds controlled by third-party experts who, like every other participant in the stock market, don’t get to sit in on classified Treasury Department debriefings.
These changes would remove glaring conflicts of interest that have been proven to distract leaders from their constitutional duty: acting in the interest of their constituents. They vary in terms of how strict they are and what kinds of assets they cover, but the message and theme are clear—profiteering is becoming less and less popular as more events like the 2008 and 2020 scandals are brought to the public eye. The passage of any one of these laws would be a significant first step to combat this.
James Madison, widely regarded as the Father of the Constitution, wrote that the government relies on “ambition countering ambition” to prevent corruption and tyranny. But as our society grows more and more complex, our leaders have increasingly shown that, as far as conflicts of interest go, ambitions may have to be removed altogether to achieve the same purpose. It doesn’t make sense to trust lawmakers with both their Congressional connections and their portfolios at the same time.
The opinions expressed in this article are those of the individual author.
Sources
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