House Democratic leaders indicated Wednesday that they are moving forward with legislation aimed at banning members of Congress from trading stocks, a sharp reversal from their years of previous support for the practice. House Speaker Nancy Pelosi, D-Calif., has reportedly dropped her opposition to the effort, opening the way for a bill this year.
Wide majorities have long considered it ridiculous that members of Congress are able to own and trade stocks even as they have the power to move the prices of those stocks with legislative action or inaction. After multiple trading scandals, Congress required disclosure of ownership and trades, though members frequently flout the rules.
Pelosi may simply be bowing to the inevitable and caving to broad public pressure, but there was a specific, internal push that may have made a difference: a discharge petition in the works from Rep. Alexandria Ocasio-Cortez, D-N.Y.
A House rule allows 218 members who sign such a petition to force a bill onto the floor for a vote. Last week, Ocasio-Cortez got that process started by filing a bill banning member stock trades with the Rules Committee filled with requirements that would make the committee very unlikely to pass it. The resolution would have required an immediate floor vote on the bill and barred amendments.
After seven legislative days without action, a discharge petition can be requested and filed, and today — Wednesday — was the seventh legislative day. Ocasio-Cortez’s move was aimed at putting pressure on Pelosi’s office not to simply ignore the issue and instead to push forward her own version of the legislation — a version that would be less onerous for members.
Pressure has steadily been building to ban members of Congress from owning and trading stocks. In 2020, sitting Georgia Republican Sens. Kelly Loeffler and David Perdue came under scrutiny for stock trades. Loeffler was among a small group of senators who allegedly used special knowledge afforded by their positions to make trades (Loeffler has denied this), while Perdue, a prolific trader, made what have been called “well-timed” stock trades at the beginning of the coronavirus pandemic. Both lost reelection. Sen. Richard Burr, R-N.C., is also under investigation for selling stock in the hospitality industry in March 2020.
Pelosi, one of the House’s wealthiest members, has long been dug in, however. “No,” she said simply when asked in mid-December if members should be banned from trading. “This is a free market.”
Minority Leader Kevin McCarthy, R-Calif., sensed an opening in the Democratic resistance and has said that he would move to ban trading if Republicans take over the House majority. On January 20, Pelosi opened up to the possibility of a ban. “I just don’t buy into it, but if members want to do that, I’m OK with that,” she said.
On February 1, Ocasio-Cortez introduced her resolution with the Rules Committee.
The underlying bill, written by Rep. Raja Krishnamoorthi, D-Ill., and joined by Ocasio-Cortez and others, does not include a ban on the spouses of members trading stocks, though a spokesperson for Ocasio-Cortez said she supports adding that restriction. The bill does ban senior congressional aides from trading stocks.
Legislation in the Senate introduced by Elizabeth Warren, D-Mass., does ban spouses from trading. Sen. Jon Ossoff, D-Ga., has also introduced a ban.