Is Insider Trading Just a Perk of Being in Congress?
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In the 1980 movie, The Final Countdown, a modern United States naval carrier entered a time warp that placed it in a position to prevent the Japanese attack on Pearl Harbor in 1941. The ship captain had to decide whether to alter history by defending Pearl Harbor. Luckily, before the captain was forced to choose, the carrier and its crew returned to their own time. Except one crew member, left behind in 1941. That crew member got rich trading stocks based upon his knowledge of the historical events for the next forty years. While not quite as advantaged as that naval crew member, your elected officials in Congress are privy to valuable tidbits of information long before the general public. And some of them seem to be getting quite wealthy using that information.
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Throw Them All Out:
How Politicians and Their Friends
Get Rich Off Insider Stock Tips,
Land Deals, and Cronyism
That Would
Send the Rest of us to Prison
Is insider trading just a perk of being in Congress?
Perhaps you are just a little resentful at what you perceive as the misuse of inside information by politicians to enrich themselves. Surely, many American voters are just as upset. You are not alone. A few representatives and senators have announced bills to curtail insider trading by members of Congress. But will enough people in Congress vote to ban its members from trading individual stocks?
The Representation Amendment restructures Congress so the House of Representatives has thousands of representatives, and senators answer to the state legislatures. Would members of the “Representation Congress” vote for the ban? Or is the lure of easy money too great for anybody, regardless of how Congress is structured?
The Ban Congressional Stock Trading Act
Senator Jon Ossoff [D, GA] with Senator Mark Kelly [D, AZ] introduced the Ban Congressional Stock Trading Act on January 12th of 2022. Here is the summary for the bill.
To amend the Ethics in Government Act of 1978 to require Members of Congress and their spouses and dependents to place certain assets into blind trusts, and for other purposes.
What is a “blind trust”? Essentially, it is a fund holding your investments, but what makes this fund “blind” is that the fund managers hide their investment actions from the fund owner. The fund owner cannot direct the fund managers in ways to invest the money. Forcing members of Congress to transfer all investments covered by the bill to blind trusts makes it more difficult for members of Congress to profit directly by buying and selling stocks, bonds, and commodities using information not available to the general public.
The Ban Congressional Stock Trading Act comes from the Senate. House members Abigail Spanberger [D, VA] and Chip Roy [R, TX] introduced a similar bill, the Transparent Representation Upholding Service and Trust (TRUST) in Congress Act.
Senator Josh Hawley [R, MO] announced a competing bill (the Banning Insider Trading in Congress Act) in the Senate.
Support for the Bills Crosses Party Lines
Support for the bills crosses party lines. Senators Ossoff and Kelly and Representative Spanberger are Democrats, but the Democrat Speaker of the House appears to be opposed to the bills. You cannot guess which side of this issue your representative or senators are on by their party affiliation.
Members of Congress who support these bills or bills like them got a boost from a Business Insider article alleging more than fifty members of Congress broke existing laws limiting how they can invest their money. Before you go all “us versus them” on this, read the article; plenty of people from both parties are on the list.
So, will enough people in Congress vote to pass one of these bills? Congress did pass the STOCK Act (Stop Trading on Congressional Knowledge Act of 2012) after all. If it has happened before, it can happen again. A cynical American voter might be a little slow to believe the current Congress would pass any of these bills.
Does the Representation Amendment Deliver a Remedy?
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House Committee on Ethics:
Motivating Factors for
Members of Congress
(Ethics, Corruption, and
Governance)
Which begs the question, “If ten thousand members of the American public found themselves in a situation in which they have access to valuable information, would they vote to prevent themselves from using it for profit?” The Senate membership comprised of state ambassadors must approve the bill. Would the states’ ambassadors go along? How many states would direct their senators to vote for the bill?
The American people have griped for decades about the perks enjoyed by Congress, but once given access to the perks, perhaps their attitudes change. If you believe the American people would enact laws further restricting the ability of members of Congress to profit from the inside information they have, you have another reason to support the Representation Amendment.
Using the voting system described in the book, The Representation Amendment (Because We Don’t have Enough People in Congress and the People Already There are the Wrong Ones), the public has full access to the text of every bill from the day it is submitted and can track its progress to the end. You will know your representative’s position on this and every other issue. If your representative disagrees with the bill, the voting system describes how your representative can submit an alternative bill or publish a paper explaining her opposition.
If the American people ratify the Representation Amendment, which provides for a House of Representatives about as responsive to the wishes of the voters as is possible, and the people in the House fail to pass a bill limiting the investing habits of its members, then you can safely say the American people were never really serious about this issue.
The Representation Amendment gives states a voice through the Senate. Would the states have reason to block a bill passed by the House to limit directed investing by their ambassadors? Unlikely. They gain nothing. Would senators defy their states to block this legislation? Some might. But senators’ terms are renewed every six years. Those senators might not last long in their positions.
If you support these bills, let your representative and senators know. If you want the bills to pass, ratify the Representation Amendment. Maybe you’ll increase your odds of winning.
