The Committee on House Administration will soon hold a hearing on proposals to ban members of Congress from being able to trade individual stocks, taking a step toward eventually voting on such legislation.
According to Insider, which spoke to two anonymous sources, the committee has requested testimony from government watchdog groups like the Project on Government Oversight (POGO) and Citizens for Responsibility and Ethics in Washington (CREW). Lawmakers have also invited the Congressional Research Service to testify.
The committee didn’t confirm the hearing with Insider, saying that hearings aren’t typically announced until a week before they’re held. A committee hearing would be a big step to move the proposal forward within the House. Republicans have not yet chosen a witness for the hearing.
It’s unclear if a stock trading ban would pass if it came to a vote now. However, recent bills have had rare bipartisan support, and some Senate Republicans are in favor of such proposals. House Speaker Nancy Pelosi (D-California) and Senate Majority Leader Chuck Schumer (D-New York) back the idea; an early draft of President Joe Biden’s State of the Union address slated for Tuesday night included support for the effort, but may be taken out to include other priorities.
Lawmakers in the House and the Senate have introduced several different stock trading bans. One of the strictest proposals was introduced in February by Senators Elizabeth Warren (D-Massachusetts) and Steve Daines (R-Montana) and Representatives Pramila Jayapal (D-Washington) and Matt Rosendale (R-Montana).
The bipartisan, bicameral legislation would outright ban members of Congress and their spouses from owning stocks, requiring them to divest from all stocks other than widely held investment funds while in office. Violations would carry a $50,000 fine per infraction.
This goes slightly further than other proposals, like one from Senators Jon Ossoff (D-Georgia) and Mark Kelly (D-Arizona). Ossoff and Kelly introduced a bill in January that would ban more family members from owning stocks; it would also ban spouses and dependent children from actively trading stocks.
But the bill would only require that those stocks be put into a blind trust when members take office, meaning that lawmakers can still influence their stock portfolios in a blind trust with legislation that could affect companies that they had previously invested in.
Government watchdogs say that a stock trading ban must be strict in order to be effective. In guidelines circulated to Congress, CREW says that stock trading bans must not allow members to put their portfolios in a blind trust, must ban spouses and dependent children from trading stock and must have a strict enforcement mechanism. Bans also shouldn’t allow for intent loopholes, CREW says – in other words, there shouldn’t be a carveout for the lawmakers who supposedly unknowingly violated the law.
No one bill that has been introduced so far adopts all of those principles; of those requirements, Sen. Josh Hawley’s (R-Missouri) bill only has a clear enforcement mechanism, according to CREW, requiring members to give gains from banned stock trades to the Treasury Department.
As lawmakers have shown, however, enforcement is key. Lawmakers and their aides regularly violate the STOCK Act, which places disclosure requirements on members’ stock trades. According to financial filings, members will often report multimillion dollar trades months late. But violators typically only face a small fine of around $200.