House Democrats’ legislation to prohibit lawmakers from owning and trading stocks in individual companies hit a snag Tuesday, when a top member’s support was thrown into doubt.
Democrats’ main goal for their remaining few days in Washington before leaving to hit the campaign trail until the Nov. 8 elections is to pass a bill temporarily funding the government until mid-December.
But this week also provides the last chance for them to put up a few more legislative achievements to show voters ― and the proposed ban could be one of those ― even if it will not pass the Senate soon, if ever.
The most high profile bill on the issue is Rep. Katie Porter’s (D-Calif.) STOCK 2.0 bill.
The legislation would ban trading in individual company stocks by members of Congress, the president and vice president, members of the Supreme Court, members of the Federal Reserve Board, and Fed bank presidents and vice presidents. The prohibition would also apply to the officials’ spouses and dependent children.
House Majority Leader Steny Hoyer (D-Md.) listed the bill for “possible consideration” on the floor last Friday, raising the hopes of ban backers. But according to Punchbowl News on Tuesday, Hoyer was leaning against it.
Hoyer’s office said it was too soon to say whether he would support a bill or not, holding out the possibility it could still make it to the floor.
Margaret Mulkerrin, a spokesperson for Hoyer, said he would like to see increased penalties for lawmakers who engage in insider trading, including congressional ethics citations and potential expulsion from the House.
“He has also not seen final legislation and will reserve his official decision until that time,” Mulkerrin said.
Lawmakers are already barred from using insider information to make money by trading stocks and are required to report trades by themselves or family members soon after they are made. But STOCK proponents say disclosure doesn’t go far enough.
“He has also not seen final legislation and will reserve his official decision until that time.”
– Margaret Mulkerrin, a spokesperson for House Majority Leader Steny Hoyer
An analysis by The New York Times found almost 1 in 5 members of Congress, from both parties, had in recent years bought stocks that could have intersected with the jurisdictions of the committees they served on. Often, though, according to the Times, lawmakers said they followed the law or that the transaction was made by a relative or broker who had no knowledge of the lawmaker’s congressional work.
And questionable trades are not unheard of. Former representative Chris Collins, a Republican from Western New York, pleaded guilty in 2020 to conspiracy to commit securities fraud after he passed on a tip about a drug company to his son to help him avoid losing money on the company’s stock.
Some lawmakers, though, say banning stock trading is unnecessary and would hurt office holders with little wealth by restricting them to investments like mutual funds, composed of a variety of stocks.
Porter signed on to a Sept. 1 letter to party leaders in the House with authors of competing congressional trading bills that outlined a set of seven “first principles” for any legislation. The letter included one Republican, Rep. Brian Fitzpatick (R-Pa.).
Among the principles was requiring the ban to include members of Congress, their spouses and their dependents under the age of 18 and that those covered by the ban divest within 120 days of the bill’s effective date, and either put their assets in a blind trust or diversified stock funds or in U.S. debt.
“We respectfully request that you incorporate the above principles into any bill being [considered] in the House, and we urge you to engage with our offices on this issue, so that we may work together to bring a bill reforming Member stock trading practices to the floor for a vote by September 30th,” the lawmakers wrote.
