House Speaker Nancy Pelosi at a press conference on Capitol Hill on August 12, 2022.
Sarah Silbiger for The Washington Post via Getty Images
House Democratic leaders released the “Combatting Financial Conflicts of Interest in Government Act.”
The text comes after months of back-and-forth between Pelosi and lawmakers, and a vote may come this week.
Interest in lawmakers’ stock trades rose after Insider’s “Conflicted Congress” investigation.
House Democratic leaders late Tuesday released the text of a bill to ban members of Congress and other government officials — including Supreme Court justices — from owning or trading stocks ahead of a possible vote this week.
The 26-page-long “Combatting Financial Conflicts of Interest in Government Act” would also increase penalties for violating federal conflicts-of-interest law and strengthen several transparency provisions.
It comes after Insider’s “Conflicted Congress” investigation found widespread violations of the Stop Trading on Congressional Knowledge (STOCK) Act, as well as countless potential conflicts of interest among lawmakers.
While these violations are decidedly bipartisan, with Republicans and Democrats alike breaking the rules that Congress set for itself, numerous high-profile Democrats are among the stock-disclosure scofflaws.
They include Sens. Dianne Feinstein of California and Sheldon Whitehouse of Rhode Island, Assistant House Speaker Katherine Clark of Massachusetts, and Reps. Jamie Raskin of Maryland, Tom Malinowski of New Jersey, and Debbie Wasserman Schultz of Florida.
Members of Congress in both parties and across both chambers have proposed legislation to ban the practice, and the Committee on House Administration held a hearing to examine the issue in April.
House Speaker Nancy Pelosi, after initial opposition to the idea, tasked Committee on House Administration Chair Zoe Lofgren with writing the legislation, which led to an insular process where the California Democrat — who’s close to Pelosi — largely did not consult with lawmakers who’ve written their own ready-to-go bills, leading to months of wrangling and delays.
Pelosi’s husband, venture capitalist Paul Pelosi, is one of the most active traders among congressional spouses, having bought and sold tens of millions of dollars worth of stock and stock options during the current congressional session.
Members of Congress won’t have much time to consider the details of the bill; the House is set to be in session only from Wednesday evening until Friday afternoon, with other must-pass government funding legislation also on the legislative calendar. Hurricane Ian, a massive and potentially deadly storm, is also about to strike Florida’s Gulf Coast, prompting widespread evacuations and government mobilization.
Further complicating matters is House Majority Leader Steny Hoyer’s reported opposition to the legislation, which will add to existing opposition from some corners of the party.
While the House leadership bill is driven by top Democrats, some notable Republicans have, in principle, supported the idea of a congressional stock ban; Sen. Josh Hawley of Missouri and Rep. Chip Roy of Texas have sponsored or co-sponsored bills calling for such a ban, though other Republican have complained of being shut out of the legislative process.
House Minority Leader Kevin McCarthy, who himself does not trade stocks, said earlier this year that he’d consider barring members of Congress from trading stocks if the GOP wins the House in November.
The Senate, for its part, is unlikely to take action on its own proposal until after the November midterm elections.
Here’s what the bill includes:
The bill would ban top officials across all three branches — as well as the spouses and dependent children of members of Congress — from owning or trading stocks, as well as cryptocurrencies.
In addition to cryptocurrencies, the bill also bans covered government officials from owning other “digital assets.” The bill doesn’t expressly ban “non-fungible tokens,” or NFTs, by name, but does state that “coins and tokens” are subject to prohibitions, and that other digital assets that rely on blockchain technology may be subject to regulation by government ethics offices.
Along with lawmakers and their senior staff, the president, vice president, political appointees, Supreme Court justices, and the rest of the federal judiciary are included in the sweeping, wide-ranging ban.
The inclusion of the Supreme Court has been a source of contention — some advocates have warned that including the judiciary is likely to garner Republican opposition, making it a so-called “poison pill.” But Hawley told Insider at the Capitol on Thursday that he was not generally opposed to the judiciary’s inclusion.
“That doesn’t bother me,” he said. “I’m fine with that.”
In order to comply with the ban, members of Congress may place holdings into qualified blind trusts, though the bill would allow lawmakers to put their money in range of other investments including diversified mutual funds and exchange traded funds; US Treasury bills, bonds, and notes; and state and municipal bonds.
One ethics watchdog — Walter Shaub, a senior ethics fellow at the Project on Government Oversight who’s worked with some members on stock ban legislation — immediately questioned whether the qualified blind trusts described in the House leadership bill would truly be blind to those who establish them.
The legislation would require individuals to comply with the ban within 180 days of the bill’s enactment, or when they become a member of Congress (or President, or federal judge).
The bill also increases fines for violating the STOCK Act to $1,000, increasing the penalty from the meager $200 fine currently in place, and provides for the penalty to be adjusted by inflation.
Members of Congress would also be required to file financial disclosures electronically, eliminating a long-standing problem with lawmakers submitting illegible information about their personal finances.
The bill would likewise require the government to disclose, on a public website, the identities of members of Congress or other covered government officials who paid a fine for violating financial trading laws. The amount of the fines would also be public.
Today, it’s impossible to comprehensively review who has paid such fines, as the government does not make such information a matter of public record and most members of Congress, for their parts, refused to volunteer the information to Insider when asked.
Here’s the text of the bill: