As an American ambassador in South Africa, I was confronted with questions about the governance of private resources by public servants. There was a sense that the United States, with its history of transparency in finance and plethora of Good Government groups, had a contribution to make in the fight against corruption.
My audiences were surprised by my candor about our ongoing struggles to restore public confidence in our institutions. I believed that true change was only possible if grounded in a sober recognition of just how difficult it is to establish and maintain integrity in elected office.
The Trump years did the work for me as our vulnerabilities to petty corruption were made plain to the world. But we’re fooling ourselves if we believe that gross conflicts of interest began and ended with that singular administration.
Breaking news: Pelosi gets behind stock-trading ban for lawmakers
Headlines have been abuzz with accounts of senators and members of the House reportedly profiting off the privilege of their positions. At the beginning of the pandemic, senators dumped stock in the wake of confidential briefings. Family members allegedly followed suit after receiving privileged information. Members of Congress have also bought stocks in industries that stand to benefit from the bills they promote.
The alarm bells are going but, in truth, Congress has overslept.
“A robust law will send a message—loud and clear—that members of Congress are picking the public good over personal profit and that they are willing to do so because it’s the right thing to do for the people they represent.”
This has long been a problem and contributes to why public trust in government is a shadow of what it once was, why two-thirds of Americans believe that most politicians are corrupt, and why the majority of Americans — Republicans and Democrats—are frustrated with government.
Of course, stock trading in Congress is not the leading reason why trust in government is at a record low. But ensuring that members of Congress cannot profit from the privilege of their positions is a long overdue no-brainer that can help with the restoration of some trust.
The particularly egregious nature of recent reported examples may be the reason behind the current spotlight but this kind of activity is nothing new. One study of stock trades by members of Congress between 2004-10 found that trading by powerful Republicans enjoyed returns reaching an estimated 35%, well above market gains. Another study found that investments among members of the U.S. House of Representatives outperformed the overall stock market by about 6% annually between 1985-2001, concluding that there was “strong evidence” that members of Congress used nonpublic information for personal gain.
Enter the STOCK Act (P.L. 112-105), passed in 2012. The bill was conceived to put an end to these practices, but it did not go nearly far enough. Members have continued to trade in industries they oversee—and some have even introduced legislation that could increase the value of their stocks. In fact, according to one investigation, 54 lawmakers have failed to properly report their financial trades since the law passed, and few have faced serious consequences.
Democratic Sens. Elizabeth Warren of Massachusetts and Jeff Merkley of Oregon both proposed new laws in 2018. The Center for American Progress has also long called for action, releasing a proposal for 10 far-reaching congressional ethics reforms in 2019 that included a provision to ban the ownership or trading of individual stocks by members of Congress, but to no avail.
The risk is that now, as in the past, some politicians are going to hunker down, wait until this is out of the headlines, and then engage in conduct that sows further distrust.
Fortunately, however, Senate Majority Leader Schumer and House Speaker Nancy Pelosi have indicated their support for banning stock trades. That’s why Congress must move on legislation recently introduced, whether it’s the bill introduced by Democratic Sens. John Ossoff of Georgia and Mark Kelly of Arizona or the bill put forward by Democratic Rep. Abigail Spanberger of Virginia and Republican Rep. Chip Roy of Texas—both of which would require all stocks and other investments be put into a blind trust.
A bipartisan bill has now emerged in the Senate, written by Sens. Warren and Steve Daines of Montana, that would go a little further, banning senators from owning or trading individual stocks. Elected officials must get behind whichever bill has the most support, plug the loopholes, and pass a law that can build back trust.
This means not only banning members of Congress from engaging in these practices, but also extending that ban to immediate family members and to other branches of government. Scandals at both the Federal Reserve and in the judiciary have shown this to be a systemic issue that reaches beyond the halls of Congress.
This is not to say that these officials and their immediate family should be entirely excluded from sharing in our nation’s prosperity through the stock market, whether that’s through broad-based mutual funds or a blind trust. There is an important discussion to be had as Congress hashes out a robust law, but Congress must act to stop real and perceived conflicts of interest.
And for those who may argue that a ban is not commensurate with the issue at hand, they are missing the forest for the trees. This is about more than ensuring members of Congress cannot profit off Congress. At a time when we are facing a crisis in our democracy, trust is what matters above all else.
A robust law will send a message—loud and clear—that members of Congress are picking the public good over personal profit and that they are willing to do so because it’s the right thing to do for the people they represent. This can be understood from Peoria to Pretoria. That’s the North Star for earning back trust.
Patrick Gaspard is president and CEO of the Center for American Progress.