Democrats make last-ditch effort to ban stock trading by lawmakers
Democrats led by Sens. Jeff Merkley (Ore.) and Jon Ossoff (Ga.) are making a last-ditch effort to pass legislation banning members of Congress from trading stocks, but the election-year window is fast closing and they face serious obstacles.
Senate Democrats have several proposals on the table but they have yet to agree over how broad to make the bill.
Sen. Kirsten Gillibrand (D-N.Y.) is insisting on expanding a stock-trading ban to include senior executive branch officials, members of the judiciary and Federal Reserve board members.
Her legislation would also require covered officials and staff to report any time they, a spouse or a dependent receives something of value from the federal government.
But other Democrats worry a broader reform bill will be tougher to pass.
Senate Majority Leader Charles Schumer (D-N.Y.) supports banning lawmakers from trading stocks but he wants Democratic colleagues to resolve their differences before bringing something to the floor.
Merkley, Ossoff, Gillibrand and Sens. Elizabeth Warren (D-Mass.), Gary Peters (D-Mich.), Sherrod Brown (D-Ohio) and Mark Kelly (D-Ariz.) are all participating in a working group to craft consensus legislation.
Merkley hopes to use the two-week April recess to build more support in hopes of getting a bill to the floor and passed by the Memorial Day recess.
He and other Democrats recognize the chances of passing the legislation drop with each passing week as the parties draw their battle lines ahead of the Nov. 8 general election.
A growing number of Republicans are lining up against a stock trading ban. They argue it would be difficult to implement, create a new disincentive for public service and complicate the lives of congressional spouses.
“I don’t think that’s a good idea,” said Sen. Mike Crapo (R-Idaho).
“The bottom line is we already have the Stock Act,” he said, referring to the law that passed Congress in 2012 and prohibits lawmakers from using nonpublic information gained from their positions for personal benefit.
Sen. Roy Blunt (Mo.), a member of the Senate Republican leadership team, who is retiring at the end of the year, said: “I’m not going to make it harder for people to serve.”
Sen. Mitt Romney (R-Utah), a key moderate, said “it’s very difficult to implement.”
“Such legislation would be meaningless unless it included your spouse, because people can transfer back and forth between oneself and one’s spouse, and yet banning one’s spouse from being able to trade … is also patently unfair,” he said. “I think it’s very difficult to figure out a way to make that work.”
The idea to ban members from trading stocks gained bipartisan momentum earlier this year after Speaker Nancy Pelosi’s (D-Calif.) husband’s stock trades and investments started to attract widespread attention and scrutiny.
Pelosi initially defended lawmakers’ ability to trade stocks, telling reporters in December: “We are a free market economy. They should be able to participate in that.”
She later softened her position after coming under heavy pressure from fellow Democrats.
“I just don’t buy into it, but if members want to do that, I’m okay with that,” she said in January.
House Republican Leader Kevin McCarthy (Calif.) and other House GOP leaders in January privately discussed with donors the idea of campaigning on a stock trading ban in the midterm election.
While McCarthy talked about promising to bring it to the House floor if Republicans win back control of the chamber in November, there’s been little follow-up discussion in recent weeks.
House Administration Committee Chairwoman Zoe Lofgren (D-Calif.) is taking the lead on the issue in the House.
She is reviewing a broad range of options, ranging from tighter restrictions on stock trades by members of Congress to an outright ban, according to a Democratic aide familiar with the effort.
Lofgren is holding a hearing Thursday morning to examine stock trading reforms for Congress and said she’s heading into it with an open mind.
“There’s a whole bunch of different bills with different approaches and so we’re going to become better educated,” she said.
Lofgren said she hasn’t decided whether the stock trading rules for lawmakers need to be tightened or whether to ban all sales of individual stocks.
“We’re not sure yet,” when asked about her preferred course of action on the issue. “We’ve got a dozen different bills …. I don’t know which one is right.”
Some Democrats believe McCarthy floated the idea of running on a stock ban in January to ratchet up pressure on Pelosi and question whether he’s really committed to it.
Lofgren said she hasn’t heard anything from the GOP leader.
Critics of a proposed ban on stock trading warn that it would unfairly deprive lawmakers from a widely used strategy for accruing wealth and preparing for retirement.
Some lawmakers and aides warn that a stock ban could make it tougher to recruit quality candidates to run for office or hasten the retirements of people already serving in Congress.
Not all Republican senators are against banning stock trades by lawmakers, however.
Sen. Steve Daines (R-Mont.) has sponsored a bill with Warren to ban lawmakers and their spouses from owning or trading individual stocks.
Sen. Josh Hawley (R-Mo.) also has a bill, the Banning Insider Trading in Congress Act, that would do the same thing.
And Sen. Ben Sasse (R-Neb.) has introduced a broader government ethics reform bill that would prohibit lawmakers from buying or selling stocks during their time in office or lobbying for compensation after leaving Congress.
Senate Republican Whip John Thune (S.D.) said whether a stock ban gets the 10 or more Republican votes needed to overcome a filibuster will depend on how it’s drafted.
Not all Democrats are sold on the idea of banning stock ownership.
“We said we would take a look at anything that people want to suggest and we should have strong laws in place,” said Sen. Maria Cantwell (D-Wash.). “We need to look at what’s already on the books and what we’re doing.”
The immediate challenge to passing a bill in the Senate is getting all members of the Democratic working group to agree to the same proposal.
Gillibrand on Wednesday said she doesn’t want to narrow her legislation to just cover stock trading by members of Congress.
She noted that her bill would take the Stock Act “to the next level” by covering “the executive branch, the judiciary and the Fed.”
“It’s essential those are included,” she said.
Asked if she could accept a narrower stock ban, she replied: “No, absolutely not. These are all necessary. We have to move on all of them. We have a unique opportunity to do all of them and I don’t see any opposition yet to any of those pieces.”