Those making federal policy shouldn’t be playing the stock market

OPINION:

Last week, Sen. Jon Ossoff, Georgia Democrat, surprised us. He introduced legislation requiring members of Congress, along with their dependents and spouses, to put their assets in a blind trust and not be able to trade individual stocks. 

“I’m an advocate for banning stock trading by members of Congress who make policy, who have access to information and economic forecasting,” Mr. Ossoff said last week during a Senate hearing. In March, he put his money where his mouth is and transferred his assets into a blind trust.

Allegations of insider trading among Congressional members are bipartisan — especially amid the COVID-19 pandemic, where trillions of federal monies were poured into private stimulus contracts, and a government-enforced shutdown made winners of Big Tech and Big Box stores. 

The Securities and Exchange Commission is investigating whether stock sales made by Republican Sen. Richard Burr of North Carolina before the lockdowns began in 2020 amount to insider trading, and transactions from Sens. Dianne Feinstein, California Democrat, and Jim Inhofe, Oklahoma Republican, sparked the attention of the Justice Department. The Justice Department has since dropped its investigation into Mr. Burr, Mrs. Feinstein and Mr. Inhofe.

Over the last year, members of Congress and their immediate families bought and sold $515 million in stocks, according to Capitol Trades. As Congress debated and eventually passed a trillion-dollar infrastructure and COVID-19 stimulus bill, the most active sectors were in technology, energy and telecom.

And surprise! The federally elected representatives beat the market! According to Unusual Whales, which tracks Congressional financial disclosures, on average, House Democrats and Republicans had returns at +14.7%, Senate Democrats returns were up 15.4%, and Republican returns were just under +13%.

One of the most prolific traders is House Speaker Nancy Pelosi’s husband, Paul. He owns and operates Financial Leasing Services Inc., a San Francisco-based real estate and venture capital firm, where he’s amassed a personal fortune of about $114 million.

In January 2020, before the coronavirus shut down the economy, Mr. Pelosi purchased Amazon and Facebook stock, which have netted him more than $1 million in paper profit as the companies have thrived during the pandemic. 

In late February of that same year, after Mrs. Pelosi received a private coronavirus briefing, Mr. Pelosi paid up to $3.3 million to buy technology stocks, including Slack Technologies, which makes messaging software that exploded as people started to work from home.

Weeks before President Biden signed an executive order to replace the entire federal automobile fleet with electric cars, Mr. Pelosi bought up to $1 million in Tesla stock. 

So it should shock no one that one of the biggest critics of restricting individual stock purchases among Congressional members and their families is Mrs. Pelosi herself.

“We’re a free-market economy,” Mrs. Pelosi scoffed at a reporter asking if congressional lawmakers and their spouses should be banned from owning shares of individual companies last month. “They should be able to participate in that.”

Last year, Mrs. Pelosi blocked several bills to restrict stock purchases from coming to the House floor for a vote. 

Several House members tried to get an amendment from Reps. Abigail Spanberger, Virginia Democrat, and Chip Roy, Texas Republican, that required senators and representatives, their spouses and their dependent children to put stocks and other covered investments into blind trusts until after they are out of office attached to H.R.1. It was denied.

As Sludge reported, “The Spanberger-Roy TRUST in Congress Act could still be considered as a stand-alone piece of legislation, but it has been referred to the House Administration Committee, which is the only other committee whose members are appointed directly by Pelosi.”

How convenient. 

When Republicans gain control of the House this year, restricting individual trades should become a top priority. House Minority Leader Kevin McCarthy, California Republican, has said he supports stricter rules. A source familiar with this thinking told CNBC that he would push for a ban if Republicans win the majority. 

He should. He’s got a friend in the Senate, after all, in Mr. Ossoff.