By Matt Underwood Stock trading by members of Congress could be banned in a bipartisan push, and honestly, it’s about time. It’s the kind of move that seems like it should have been in place from the get-go. The idea is simple: prevent members of Congress, their spouses, dependent children, and any trusts they control from buying, selling, or owning stocks, commodities, or other financial instruments. New lawmakers would have a 90-day window to comply, while those already in office get 180 days to divest. It sounds straightforward, but as with anything involving legislation, the devil is in the details, like how to handle diversified funds, and the potential for loopholes.
Now, some folks are rightfully skeptical, and that’s understandable. There’s a history of similar attempts, and they haven’t always gone anywhere. It’s easy to see this as performative politics, a way to look good without actually changing anything. The concern is that they might just find new ways to skirt the rules, perhaps through family members or shell companies. They could simply pass the information to family members to make trades, and the insiders wouldn’t be impacted. It’s a valid worry, because if you’re determined to exploit the system, you probably will, unless the agencies are able to stop them.
The bill’s limitations would be most obvious in the crypto market. The original legislation’s language has a weakness, as crypto can be used to hide the identity of the transactors. And with the dollar potentially being devalued, some believe certain politicians would try to create their own crypto to gain economic and political control.
One of the common threads is the belief that this should extend beyond just Congress. The call for this ban to include all levels of government, the executive branch, and the judicial branch is a sensible point. If the goal is to prevent conflicts of interest and ensure that decisions are made in the best interest of the public, the restrictions should apply universally. The stock trading should be considered insider trading and punished as such. It also raises the question of whether elected officials should be allowed to have stocks at all, instead only being allowed to invest in government bonds to align their financial interests with the public’s well-being.
The timing of this proposal is interesting, with some wondering if it’s a reaction to upcoming market shifts. A complete ban might not pass. Instead, there might be a requirement to provide 24-hour public notice before individual stock trades, or even better, term limits.
A significant issue that is raised is the potential for corruption to continue in any form, especially if politicians continue to accept bribes from their donors. The suggestion of completely separating political campaigns from private money is worth noting. The call for public funding of campaigns is one way to start addressing the influence of big money. Some believe that limiting income or capital gains outside of salary, while increasing the base salary of elected officials, could lead to a system where politicians are incentivized to enrich their constituents.
There’s also the question of the practicalities. People work for the FAA and cannot hold stock in aviation companies, so why should a member of Congress have any ability to profit off a conflict of interest? There will likely be plenty of debates on how to define “dependent,” and how to manage assets that are held by non-dependent family members. No matter what, there will be ways that people can continue to find to get around the rule, especially if the law does not properly account for their partners or friends.
While a bill banning stock trading by members of Congress is a great first step, it won’t solve all the problems. Some of the criticisms are valid. Crypto’s role in this whole situation is definitely important to examine. But it’s encouraging to see this bipartisan push, and maybe, just maybe, this time it will actually lead to some real change.