A coalition of watchdog organizations on Tuesday urged Democratic congressional leaders to “expeditiously” bring a ban on lawmaker stock trading up for a vote, warning that a proposal with broad support from the U.S. public is at growing risk of dying as the Senate prepares for August recess and the midterms loom.
“We fear that without your strong leadership and advocacy, this critical good government reform will stall,” reads a letter that 22 groups, including Citizens for Responsibility and Ethics in Washington and Public Citizen, sent to Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi (D-Calif) on Tuesday.
“This crisis of institutional legitimacy requires a swift and comprehensive response.”
“Each day that passes increases the chance that Congress will not have time to take up and pass this legislation. That must not happen,” the letter continues. “We would like to be entirely clear: this is not a problem that will go away as long as members are allowed to own or trade individual financial instruments. There will always be new reports of members who own stock in companies they regulate or to which they appropriate taxpayer dollars.”
“Revelations that members unscrupulously purchased or sold stock in companies at deeply suspicious moments will continue as long as this goes unaddressed,” the groups add. “And every new story will further erode public trust in our government and undermine Congress’ legitimacy.”
Democratic senators have been working for months on compromise legislation that would ban or severely limit individual stock trading by lawmakers and their immediate family members. As long as the legislative filibuster remains intact in the Senate, such a bill would need at least 10 Republican supporters to pass.
The Senate is unlikely to vote on stock trading legislation before adjourning for August recess, given that Democrats are focused primarily on getting a reconciliation package over the finish line in time.
Lawmakers in the House, meanwhile, are reportedly planning to release a proposal this month that would prohibit members of Congress as well as their spouses and senior staff from trading stocks. According to Punchbowl News, the House Democrats’ plan would “force members of Congress, their spouses, and senior staff to choose between putting their assets in a qualified blind trust or completely divesting their investment portfolios.”
Pelosi, whose husband is a prolific trader, initially dismissed calls for a ban, calling stock trading part of the “free market economy” in which lawmakers should be able to take part.
The speaker later reversed course in the face of widespread backlash.
As proposed bans and restrictions on stock trading await votes in both chambers, Republican and Democratic lawmakers and their spouses have continued buying and selling shares of individual companies, often with timing that has raised eyebrows.
Business Insider, which has been closely tracking lawmakers’ stock trades in recent months, noted last week that it and other news outlets have identified 66 members of Congress who have “recently failed to properly report their financial trades as mandated by the Stop Trading on Congressional Knowledge Act of 2012,” a largely toothless law aimed at preventing insider trading.
In their letter to Schumer and Pelosi on Tuesday, the watchdog groups argued that “our country is at an inflection point: the reports of members’ suspicious stock trades at the beginning of the pandemic and the routine and bipartisan failures to comply with the STOCK Act have severely harmed public confidence in Congress.”
“This crisis of institutional legitimacy requires a swift and comprehensive response,” they wrote. “We therefore urge you to pass legislation that addresses the full scope of the problem by eliminating a significant source of potential conflicts for members… This cannot wait any longer—the American people deserve to know that the needs of the public, not members of Congress’ stock portfolios, come first.”
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