By Eve Ottenberg / CounterPunch
Multimillionaires pack the halls of congress. That’s because the only people who can afford congressional campaigns are rich. But what you might not know is that once these very wealthy individuals arrive in Washington, they use their committee assignments, and often the insider info those assignments provide, to make even more money – trading stocks.
On September 29, Insider named 72 national legislators who violated the law to prevent insider trading and conflicts of interest. But that was not the only recent eye-opening news on lawmakers’ tribulations with er, the law. In the years between 2019 and 2021, the New York Times reported September 13, “more than 3700 trades reported by lawmakers from both parties posed potential conflicts between their public responsibilities and private finances.” That’s a lot of questionable trades. You might even say there should be a law against this.
Well, there is, kinda. It’s called the Stock Act and passed in 2012. It allows stock trading, so long as the politicos eschew insider information. But according to the Times probe, a substantial number of those 3700 trades could very well have involved insider info. Those congress critters, you see, get the confidential lowdown on what’s happening in an industry or to specific companies and then, presto, they trade stock. So the Stock Act ain’t working, to understate matters.
How do our legislators come by this insider knowledge? According to the New York Times September 16, congressmembers “meet with chief executives, read classified intelligence reports and help set up the rules by which the economy works.” The story details conflicts such as those of Alabama GOP senator Tommy Tuberville on the armed services committee, who, with his wife, “sold options tied to Microsoft less than two weeks before the company lost a $10 billion contract with the Defense Department.”
Then there is Tennessee GOP representative John Rose, who “sold $100,000 to $250,000 in Wells Fargo stock a few months before a committee he is on released a report that was critical of the bank.” Finally, the Times cites the wife of California Dem representative Alan Lowenthal, who “sold Boeing shares a day before the House committee that he sits on released a report exposing the company’s mishandling of its 737 Max jet, which had been involved in two deadly crashes.” If you don’t think these stock trades stink to high heaven, you need to schedule an appointment with an ENT doctor, pronto.
In addition to the lawmakers cited by the Times, House speaker Nancy Pelosi has come under fire for her own and her husband, Paul’s stock trades, some of which were, er, unseemly. Most recently in July, “Nancy Pelosi is pushing legislation that stands to benefit her significantly thanks to a couple of brand new, multimillion dollar trades she has made,” Zerohedge reported July 17. That week, Pelosi was “exercising $8 million of call options in Nvidia and selling Apple and Visa calls…But then, what did Speaker Pelosi do just hours after disclosing the trade on Friday? She threw her weight behind a stalled $50 billion CHIPS PLUS bill that ‘would provide $52 billion in funding for semiconductor manufacturing grants and investment tax credits for the chip industry…’ Let us guess: the unrealized gains tax won’t be supported by Pelosi until she cashes out of the market altogether, either.”
Other trades, ones that looked downright criminal were those of GOP Georgia senators David Perdue and Kelly Loeffler back in January 2020. They had attended a closed briefing on covid, predicted soon to become a plague. Promptly thereafter, both senators traded millions of dollars worth of stock, right before the stock market crashed, something that evidently irked voters, who declined to send them back to congress in the next election. Other questionable trades were made by senators Richard Burr, Jim Inhofe, Diane Feinstein and others. As a result, a few squeaky clean legislators introduced bills earlier in this year to ban members of congress and their families from actively trading stock. Those bills pretty much went nowhere.
Back in February, there was much ado about Pelosi supposedly “warming” to legislation banning stock trades for congressmembers, but evidently she cooled quickly, or what she warmed to was the appearance of welcoming such a ban, while not actually doing anything about it. By now you could be forgiven for concluding her concern was mere show. Her own actions on her own account speak volumes. Witness especially the fact that she continued to make trades apparently related to legislation. Nancy “We’re All Capitalists Now” Pelosi is in it to make money. In what, you ask? Everything. And that includes government. Capitalists, after all, turn a buck everywhere they can.
House Dems might “soon introduce legislation” to stop members’ stock trades, Spectrum News reported later in the year, July 29, but it’s unclear whatever happened to this putative bill. Then, on September 9, a group in the House and senate “introduced new bipartisan legislation to ban members of congress and their spouses from owning and trading stocks,” according to the Washington Dem representative Pramila Jayaypal’s website. Jayaypal, along with Montana representative Matt Rosendale and four senators, Massachusetts’ Elizabeth Warren, Montana’s Steve Daines, Tennessee’s Marsha Blackburn and Minnesota’s Debbie Stabenow comprise the group that sponsored the legislation. This law would prohibit insider trading, which supposedly the Stock Act already does, but maybe the fact that these lawmakers felt something stronger is warranted betokens an inkling of recognition that, uh, congress has a problem. It’s called pigs feeding at the public trough.
According to Jayapal’s website, the new bill introduced by the six congressmembers proposes four remedies: 1) Bans congress critters and their spouses from “owning and trading individual stocks, bonds, commodities, futures and other securities;” 2) “Allows a transition period for lawmakers to divest their holdings and come into compliance;” 3) “Establishes a civil penalty of up to $50,000 for each violation;” 4) “Includes a provision which allows deferral of taxation of gains on investments that members of congress and their spouses are forced to divest.”
That was early September. Then on September 27, Pelosi preempted any such bold gesture to ban congressional stock trading by introducing her own bill. But as Walter Schaub, former head of the U.S. office of government ethics observed in an article in Time, this bill stinks. “To say this bill is weak, however, would be an understatement. The bill is dangerous. It would undermine what little ethics we have in our federal government.” That’s because the Pelosi bill would replace strict blind trusts with fake blind trusts, “like the one former president Donald Trump invented for himself in 2017.” Pelosi’s bill would allow “ethics offices for each branch of government to approve any kind of trust they want, ignoring established government-wide standards.” Schaub adds that “worse still, Pelosi’s bill would excuse officials from disclosing the holdings of their fake blind trusts. Even Trump disclosed the holdings of his…” Not surprisingly, after this lousy and accurate press, Pelosi put off voting on a congressional stock bill till after the midterms. So the problem persists…
An outright ban, like Jayapal’s, would end this problem, as those in congress know very well. So why is it so hard to come by? Maybe because, despite professing support for an anti-corruption law, our senators and representatives really prefer the status quo. Pelosi evidently sure does. They want to look like they’re doing something when they’re really not. That way they can keep raking in cash based on illegal knowledge, as they have been doing ever since congress tried to regulate these seamy practices in 2012. Congressmembers get rich at the public’s expense – and all indications are that they have no intention of changing that. Corruption is the name of the game, and our congressional politicians love it.