Whether you’re a liberal Democrat, a Republican who wears a MAGA hat, or a member of Fintwit, there’s one thing that everyone agrees on: Congressmen and women should not be able to trade individual stocks.
Efforts are being made to get things moving. Democrats and Republicans have come up with two bills this week that would make members of Congress r/WSB lurkers just like the rest of us. This is what Joe Biden’s top economic adviser thinks about a ban on stock trading. It’s also possible that if Republicans take back the House in November, they might limit or ban Congress from trading stocks.
These bills don’t say that Congresspeople can’t own stocks, but they say that they can’t trade them while they’re in office. If the Democrats were in charge, for example, they would want lawmakers, their spouses, and their children who depend on them to set up a “blind trust” for their money.
There is a good chance that the current Congress won’t pass either of the two bills. Nancy Pelosi, the House Speaker, is against a ban on stock trading because she and her husband are so good at it. “We live in a free market economy,” she said last month. Members of Congress “should be able to participate in that, too,” she said then.
And they did, too. Last year, members of Congress bought and sold a lot of things on Unusual Whales, a site that wants to help people who want to buy and sell things on their own.
Stocks worth $290 million
Options contracts worth $140 million have been signed so far.
Other securities worth $124 million were also bought.
Coins with a value of $500,000
As a group, on average, they did better than the rest of the people who were out there. But only a small group of lawmakers made these trades; 430 of the 535 members of Congress didn’t make any trades.
How can we tell?
The Stop Trading on Congressional Knowledge Act, which was signed into law in 2012, made it illegal for federal lawmakers to make insider trades, like when they bought or sold stocks. It also said that they had to make public any trades worth more than $1,000 within 45 days of making them.
But the STOCK Act has been less strict than a substitute teacher on Friday. It’s an independent ethics group called the Campaign Legal Center that filed complaints against seven of the 15 or so lawmakers it says haven’t been honest about their investments. One of them is 300 transactions behind. The STOCK Act has never punished any lawmakers, but some have had to pay fines that are not made public.
This is how you zoom out: Because the backlash to congressional stock trading has reached a fever pitch now. It’s not a new problem.
The rise in retail trading during the pandemic may have sparked a wave of resentment against anyone who has an unfair advantage, like Fed officials who set interest rates or lawmakers who get intelligence briefings.
In other words, if Reddit isn’t your best source of information about stocks, then maybe you shouldn’t be able to buy or sell them.