Cash covered Congress considers curbing cupidity

For the first time since early 2020, when the Campaign Legal Center revealed that members of Congress made over 1,500 controversial stock trades at the onset of the COVID-19 pandemic, a bill prohibiting congressional stock trading is moving forward.

During a July 24 business meeting, the U.S. Senate Committee on Homeland Security and Governmental Relations voted 8-4 to advance the bipartisan Ending Trading and Holdings in Congressional Stocks (ETHICS) Act, sending it to the Senate floor for consideration.  

The ETHICS Act is the product of nearly two years of conversations between Senate offices and stakeholders. It received a committee vote after Sens. Peters (D-MI), Merkley (D-OR), Hawley (R-MO), and Ossoff (D-GA) reached a bipartisan agreement to revise and strengthen the bill.  

This important legislation prohibits members of Congress, as well as the president and vice president, from buying and selling stocks and other securities, commodities, or futures.

New Jersey government reform advocate Lisa McCormick said the measure reflects the public’s clear preference that members of Congress should be banned from stock trading while in office, with 86% of people across party lines supporting such a prohibition.

“If it becomes law, the ETHICS Act could help restore voters’ confidence that their elected officials, who craft and implement laws directly affecting their lives, are acting in the public’s best interest and not for their own financial gain,” said McCormick, who blames the political establishment in both parties for sacrificing public needs for campaign contributions.  

“Under the Stop Trading on Congressional Knowledge (STOCK) Act of 2008, members of Congress are required to report stock trades worth over $1,000 within 45 days of making the trade,” said McCormick, but as exemplified by Hunterdon County Democratic Chairman Tom Malinowski, these reporting requirements are routinely ignored with little consequence.

If a member is sanctioned under the law, the $200 penalty it imposes is hardly impactful, and the stock trades had little to do with Malinowski’s 2022 midterm election defeat by silver spoon Republican Tom Kean Jr.

“Under the ETHICS Act, if a covered elected official fails to divest or conducts a trade while in office, they would face a penalty equal to their monthly salary, or 10% of the value of the covered asset, whichever is greater,” said McCormick, who took nearly four of ten votes cast in the 2018 Democratic primary away from US Senator Bob Menendez, who was recently convicted of bribery. “This penalty better reflects the seriousness of an elected official breaking the public’s trust.”

Importantly, McCormick noted that the ETHICS Act also prohibits spouses and dependent children from trading stock.

By doing so, the ETHICS Act decreases the significant risk that spouses and dependents can be used as conduits for insider trading or create conflicts of interest through their own stock trading.

“Now that the ETHICS Act is out of Senate committee, lawmakers must swiftly pass the legislation,” said McCormick. “This essential reform will help restore voters’ trust that Congress, the president, and the vice president are focused on the public’s needs, rather their own wealth.”