A bipartisan group of House members on Wednesday unveiled a bill to bar lawmakers and their families from trading or owning individual stocks, a much-anticipated compromise that some conservatives and liberals say their colleagues can get behind.
The legislation, dubbed the Restore Trust in Congress Act, is an amalgamation of other bills that have been introduced to limit or ban stock trading by members of Congress and their immediate family members.
The bill would not only bar members and their spouses and dependent children from trading, but also from owning individual stocks. It allows members who sell their stock to defer paying taxes from the sale if they reinvest in a mutual fund. It would also impose a 10% penalty — and force the surrendering of profits — for certain offenses, a significant strengthening of current penalties.
Under the bill, members would not be allowed to own individual stocks or corporate bonds, but could still own treasuries, municipal bonds, mutual funds, ETFs or certain types of commodities. Family-owned small businesses would also still be allowed.
“What we’ve decided to do is take the multiple bills that are represented by folks on this dais, bring it together into one bill and speak with one united bipartisan voice that it is time for Congress to act,” Rep. Chip Roy, a Texas Republican, told reporters Wednesday. “It is time for the leadership of Congress on both sides of the aisle to do what the American people have been demanding, which is to end day trading by members of Congress.”
Republicans and Democrats alike have tried for years to ban congressional stock trading.
They cite allegations of insider trading after members dumped stocks at the start of the COVID-19 pandemic. They’ve argued that Congress is rife with financial conflicts of interest, as dozens of lawmakers keep violating the disclosure provisions of the existing Stop Trading on Congressional Knowledge Act, or STOCK Act. And they cite weak penalties for STOCK Act violators: A $200 fine is standard and may be waived by the House or Senate ethics committees.
“There are two types of people who come to Washington. There are those who are determined to root out corruption and those who are wedded to the status quo. And the status quo has been in effect for far too long,” Rep. Seth Magaziner, a Rhode Island Democrat, told reporters.
“It is long past time that we ban members of Congress from trading stocks. Why? Because the opportunity for corruption is just so great,” Magaziner added. “When members of Congress decide how to vote on a bill, they should be voting best on what they think is best for the American people, not what is best for their investment accounts. When members of Congress come here, they should not be able to profit off of inside information that the average American or the average market participant does not have access to.”
Republican Reps. Brian Fitzpatrick and Tim Burchett and Democratic Reps. Pramila Jayapal and Alexandria Ocasio-Cortez were among the lawmakers that addressed reporters Wednesday, expressing optimism after months of negotiations.
“I do feel like this is different,” Jayapal told reporters. “I feel like we are really at a place where we brought all the bills together, and we are going to, as Brian [Fitzpatrick] said, we are going to get it to the floor, whether it’s through whatever process that looks like.”
But stock-ban efforts have fizzled in the face of opposition from leadership and colleagues, many of whom argue they should be allowed to participate in the market like any member of the public.
Members of Congress, who by nature of their jobs often learn market-moving information before the average American, are already barred from trading on inside information and are required to disclose annual financial reports and whenever they make trades.
This year alone, the existing STOCK Act has tripped up several lawmakers, including Republican Sen. Markwayne Mullin and Reps. Dan Meuser, Lisa McClain, Austin Scott, Neal Dunn, Scott Franklin, Brandon Gill and Tim Moore.
Democratic Reps. Debbie Wasserman Schultz, Dwight Evans, Jamie Raskin, Chellie Pingree, Shri Thanedar, George Whitesides, Ritchie Torres and Jonathan Jackson have also violated the act’s disclosure provisions.
Dozens of others violated the STOCK Act earlier this decade.
As concerns related to members trading stocks have mounted, several members of Congress have introduced bills to reform the controversial practice and put some muscle behind passing them.
In July, the Senate Homeland Security Committee voted to advance a bill that would ban stock trading by members of Congress, the vice president and the president. Notably, the ban would not apply until the start of the officials’ next term. This would effectively exempt President Donald Trump, who initially opposed the bill when he first thought it would apply to him.
The bill introduced Wednesday would not subject members of the executive branch to the same restrictions, although lawmakers left the door open to an amendment if they can get a consensus. Roy also said he had spoken to Senate counterparts, including pro-ban Republican Sen. Josh Hawley, about the best path forward.
And Republican Rep. Anna Paulina Luna of Florida last week threatened to file a discharge petition to force a vote on an earlier bill introduced by Roy and Magaziner earlier this year that would require members of Congress and their families to either divest or place certain assets in blind trusts.
Luna told reporters Wednesday that there was a discharge petition “prepared and ready to go.”
“We’ve asked nicely for leadership to put this on the floor. If they don’t, I’m saying timeline is end of month,” Luna said.
Roy dodged a question about whether he was prepared to support the discharge petition, but said there was an “urgency” to pass the legislation and if it’s not brought to the floor through regular order, “however gets there is fine with me.”
So while Congress appears closer than ever to actually passing a congressional stock-trading ban, there’s no guarantee lawmakers will get a bill to the floor, much less the president’s desk.
“I have always favored the ban, but I’ve never aggressively pushed it, because I respect the views of other people on the subject. So it’s something that we’re going to be discussing. We’ll see,” House Speaker Mike Johnson told Punchbowl News on Wednesday morning.
“I don’t do it. I understand the concerns about it, but I also know that because our salary was frozen a long time ago, a lot of people rely upon that outside income to pay for their kids’ colleges and other necessities,” Johnson added. “So you don’t want to put greater deterrence for good people to run for Congress, and that’s a concern I have — all of us on both sides of the aisle for candidate recruitment. So it’s a tough issue.”
House Minority Leader Hakeem Jeffries and Trump himself have offered support, in principle, for stock-ban legislation.
“It’s time to get this much-needed reform across the finish line — no more excuses,” nonprofit reform group Issue One’s legislative director, Jamie Neikrie, said in a statement. “Members of Congress have a responsibility to hold themselves to the highest ethical standards, and passing the Restore Trust in Congress Act is how Congress shows it’s serious about restoring trust and integrity in government.”