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It was one of the rare moments in last month’s State of the Union that drew Democratic applause: President Donald Trump’s call to pass a bill advertised to stop lawmakers from engaging in insider trading.
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“They stood up for that. I can’t believe it. I can’t believe it,” Trump said last Tuesday evening at the Capitol, eyeing the Dems. He then looked at his own flock. “I wasn’t sure if anybody even on this side was going to applaud for that.”
There’s but one problem with the Stop Insider Trading Act that Trump urged Congress to pass “without delay”: it doesn’t exactly do what it purports. The bill that many Republicans are backing over stronger proposals is so fraught with loopholes that lawmakers can still profit from insider information so long as the profits are rolled into another vehicle such as bonds, commodities, crypto, or mutual funds.
“It suggests in the title that it’s a ban on members of Congress owning stock,” Rep. Joe Morelle tells me. “But it doesn’t do that. Not at all.”
The New Yorker is the top Democrat on the committee that sets the ground rules for those who work in the House and, as such, knows way more about the functions of Capitol Hill than any human should. “In what I would call as Orwellian a description of a bill as you could find, this is the description of the bill that Republicans have advanced to distract people.”
While the bill bans lawmakers, their spouses, and their dependent children from purchasing publicly traded stocks, they could keep those they already owned, and even sell them with seven days’ notice. And if current assets churn off a dividend, lawmakers are allowed to set their paydays on autopilot to reinvest in the same firm, growing that footprint.
The bill also allows a curious work-around: lawmakers can buy any stocks they want for their parents on the assumption it would be part of their inheritance.
And it absolutely does nothing to deal with other branches of government—namely the White House and the Supreme Court—where perceived self-dealing chips away at every public officials’ shrinking credibility.
The bill Trump is promoting also allows lawmakers to make policy that would increase the value of stocks already in portfolios. In recent years, some of the biggest dings on Congress have been around moves they made that had massive impacts on their own nest eggs, such as the 2020 Covid pandemic and the 2023 banking collapse. And the proposed bill does nothing to stop lawmakers and their kin from investing in private companies like SpaceX or OpenAI.
Morrell isn’t the only one to notice the bait-and-switch gag. Good-government groups like CREW, the Project on Government Oversight, the Campaign Legal Center, and Public Citizen have all written lawmakers asking them to shift support elsewhere, such as the Restore Trust in Congress Act, that would ban all trading of assets, not just for lawmakers but also the President, Vice President, the Cabinet, and the Supreme Court. Those under that measure’s purview could still hold assets in qualified blind trusts.
“You’d have to divest everything,” Morrell says.
A procedural maneuver to get that legislation to the floor against the wishes of House Speaker Mike Johnson already has 185 signatures already—all Democrats and still short of the 218 needed to force a vote.
A bill with similar aims circulated last year and drew 93 co-sponsors—77 Democrats and 17 Republicans—but never made it to a vote.
Of course, even if Congress somehow managed to pass this more muscular ethics legislation, it would still likely be vetoed by Trump, who has strongly hinted he won’t support a measure that puts any restrictions on his own investing ability.
But this remains a polling no-brainer for lawmakers, who are tired of being seen as self-serving greed monsters. There is clearly at least some appetite for action. It seems like there are way too many stories of lawmakers finding ways to avoid disclosures under a 2012 transparency law that has laughably small penalties. Rep. Lisa McClain of Michigan, the fourth-ranking House Republican, was late in reporting more than 500 trades worth at least $1.5 million. And Republican Sen. Markwayne Mullin of Oklahoma reported millions in trades more than a year after they occurred.
Rep. Bryan Steil, the Wisconsin Republican who runs the Committee on House Administration and serves as his chamber’s de facto mayor of Capitol Hill, introduced the Stop Insider Trading Act in January. “The American people deserve to know their member of Congress is not profiting off insider information,” said Steil. “If you want to trade stocks, go to Wall Street, not Capitol Hill.”
It’s great rhetoric. But details matter, especially when roughly half of Congress already owns stocks.
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