📈 Stocks Locked And Barred
The federal government has an ethics problem: regulators and members of Congress who make laws governing trade rules, industry regulations, and more, also own stocks in the very companies they are overseeing. As the Wall Street Journal reports, while there is a law to block such conflicts of interest, it is rarely if ever enforced. Take Mark Wu, for example: tapped by President Biden to help craft key trade policy regarding online retailers and other Silicon Valley tech companies, Wu simultaneously held $1 million of Amazon stock. When an agency chief of staff asked Wu to sell the stock or recuse himself from crafting the digital trade policy, Wu resigned. “Violations often go unpunished,” the Wall Street Journal notes. “When a problematic holding is identified, if the official resists selling it, the rules often are waived. The result is a system that largely relies on government employees to police their own stock investing”
Between 2019 and 2021, some 97 members of Congress sat on committees that gave them key insights into companies they either bought or sold stocks in, reports The New York Times. And the practice is legal.
The 2012 STOCK Act, continues The Times, allows members of Congress “to buy and sell stocks, bonds and other financial instruments as long as they do not trade on inside information and disclose any transactions by themselves or immediate family members valued at $1,000 or more within 45 days.”
Changing The Rules
A bill in the House is attempting to tighten the rules on what members of Congress can and can't do with stocks. “The American people don’t want us day trading for profit, and engaging in active trading of the very equities that are connected to the policies that we are deciding on and voting on every day,” Republican Representative Chip Roy, a co-sponsor of the TRUST Act, told The Times. But Speaker of the House Nancy Pelosi was not as keen on the idea, saying that US Representatives are part of “a free-market economy. They should be able to participate in that.”
It doesn't seem like a controversial stance to say that federal legislators and regulators alike should face strict rules and scrutiny over their personal stock dealings. Yet, it remains unclear if this renewed talk of bills like the TRUST Act is a political show ahead of the midterms or a real effort that may pass.