Owning and trading stocks by Members of Congress

Thoughts about whether Congress members should be allowed to own and trade (individual) stocks are getting a lot of publicity recently. For example, a recent poll reported that 76% of voters think people in Congress have an unfair advantage when it comes to owning and trading stocks and support a ban on the practice by elected officials. Nancy Pelosi disagrees, saying the US is “free market”.

If the President is expected to either divest from their stocks and other wealth or to at least place them into a “blind” trust (that may not be exactly all that blind, but that’s a different issue), why can’t the same standard be applied to all other elected officials?

Here is a pertinent quote from the article linked above.

I’m an extremist on this. National and state-level legislators should entirely divest themselves of equity, fixed-income, etc. holdings for the entire period of their service. (Generalized investments like mutual funds, 401k’s, etc are different.) And if they are caught passing valuable inside information (such as pending legislation that may impact industrial sectors) to their financial buddies, they will be charged and tried with potential sentences in the decades.

Also, your example about the president is not on point. Placing investments in a blind trust has been done previously by convention and tradition, but it’s not required by law, which Trump abused like every other norm. That also should change.

I used to work for a big auditing/consulting firm. They had very strict rules governing owning of stocks and reporting of ownership. The rules were centered on companies that were clients of the firm (if Apple was a client, I or a direct family member could not own Apple stock). I had to go through a special evaluation because my spouse’s job was potentially in a position of financial decision at a listed client. If that were found to be the case, the remedy would have been that one or the other of us would have had to find a new job. Everybody at the firm very much followed the rules, as evidenced by the fact that a Partner in our local office was found to have passed insider information on to a brother-in-law and that story made national news.

All of this to say that there are models out in the world of rules and governance and punishments that the Members of Congress should look at for a starting point to apply to themselves. Yes, I agree that better controls and punishment is needed.

I would not expect anyone at that level of income to completely eschew any involvement in participation in the money markets. That would force our elected officials into some sort of monkhood. The result would be driving qualified people away from the job.


I hate this argument. There would be ZERO shortage of qualified candidates for a job requiring no qualifications and paying upwards of $175,000 per annum. NONE. Highly qualified candidates would be tearing each other’s eyes out for a shot at being in a party’s primary for such a position.

Maybe the winner could afford only a few years in the job while deprived of any control over his portfolio. Excellent. This is what is known as a “sacrifice for public service.” Also this would cause what people are demanding be legislated, namely some sort of term limit on congresscritters.

I’m in complete agreement with Cervaise, and frankly don’t see how this view could possibly be described as “extreme”. Pelosi is completely full of shit if she thinks the inequality of information between a Confessman and your average investor (hell, even an extremely savvy one) is a “free market”.

I’m with Cervaise. It’s a non-negotiable requirement. (Mutual funds excepted).

I used to work for UBS and Lehman Brothers. Insider trading is an evil festering sore on the free functioning of capital markets.

I’m with Pelosi and I work in the financial markets. Insider trading. Is blown way out of proportion.

I’d want our Congress to have the best and the brightest. Many hard working intelligent people achieve financial success and need more to their investments than dumping it all into an index fund.

Agreed that this should be be banned and it is in fact a scandal that it still exists.

It’s not even much of a sacrifice. For the vast majority of people, investing in mutual funds, especially index funds, is the best investment strategy anyway. It is very difficult for even professional fund managers to beat the market consistently and there is little reason to believe that politicians can do this consistently unless they are benefiting from insider knowledge.

Not only is she obviously wrong that members of congress trading stock is the “free market” Pelosi and all of the Dems are blowing an opportunity to be on the right side of this in the eyes of the public.

With all the trouble they’re having with the rest of their legislative agenda, it should be the easiest thing in the world for the Dems to come up with a blind trust requirement or similar proposal and shout it from the rooftops. They can even use this as an example of senate GOP obstruction and put this forward in the Senate.

Even Labour in the UK is smart enough to take advantage of a similar but comparatively much less serious scandal over there. Being on the right side of a scandal involving lawmakers profiting off of a plague should be so damn obvoius. Honestly the only real reason to think the Democrats would be this inept at getting a media win here is that they can’t restrain their own members to curtail this stuff with something as serious as a pandemic.

So, taking this one step further - What about owning property? Or a business? Surely legislators would be making decisions that affect owning of property, or owning businesses?

The insider trading in congress thing isn’t an abstract concept. It’s shown up in the real world to a shocking degree. Lawmakers have genuinely traded on classified information related to the pandemic and beaten out the market with those trades to an absurd degree.

As far as owning property, it would be more complex to find a solution, but if there was a comparable scandal related to that there should absolutely be rules limiting lawmakers from buying and selling property while in office.

At the risk of slippery-sloping - this continues to head in the direction of monkhood for legislators.

The most obvious example where the slippery slope argument is fallacious is when there is a specific remedy proposed to a specific problem that actually happens, and it’s compared with a remedy to a hypothetical problem.

Do congressional staffers have any rules about insider trading as relates to them?

Seems they have access to more or less the same information as the congresscritter.

If earning 174 thousand a year is considered monkhood then praise be GodBuddhaVishnu! Shave my head and give me a robe, I’m off to the monastery! :wink:

All i need is a simple full-length cotton vestment, a begging bowl, and 175 large plus a huge expense account and two offices, and I will sacrifice for my country with two years of humble servitude.

Here’s my proposal-that-no-one-asked-for-but-I’ll-say-it-anyway:

Allow Congresscritters to invest only in a special issue of government bonds. Bonds that stop paying interest and have their maturity value go to zero if the U.S. defaults on its debt.

See, that’s where so many people lose perspective, comparing the gross salary with their own situation. And that’s why running for national office sometimes seems to attract grifters.

Instead, think about “How do we attract knowledgeable experienced professionals, business owners, and executives, to run for office?” Y’know, people already exceeding this magical “der-her I’m rich!” $174,000 annual salary? And expect them to maintain 2 homes (one back home, one in DC), and expect them to give up any possibility of continuing to build personal wealth for themselves and their families (no stock trading, ever!), like they could in the private sector?

That’s exactly what I think those smart people should be required to do to enter government service. To set aside their personal financial betterment and avoid conflicts of interest. A better election system would make it that having a large amount of wealth wouldn’t be such an advantage in getting elected in the first place.

Just on public perception alone this should be a no-brainer.

I’m not convinced that only wealthy people are those that we should look to for governorship.

Someone attracted to the position by the fairly lucrative salary is more likely to be in a position to actually understand the needs of the people than someone who sees the salary as a paltry sum. If someone just cannot make it on that salary, and needs to leverage their position and power in order to unfairly compete in the stock market, then I don’t think much of them or their ability to manage money.

I think that one of the reasons that we are in this mess in the first place is because we pull so extensively from the .1%'ers, who really have no concept of what an average American life is like.