Stock ban for an unpopular Congress is long overdue | Editorial

Congress is in the basement of public opinion. It scored a 72% unfavorable rating in an April Pew Research Center poll. Robo-callers may be more popular.

But Congress can do something about about it — forbid its members from owning and trading in stocks. Multiple bills have proposed this, none successfully.

The only law in force, called the STOCK Act, requires members and staff to disclose their trades on a timely basis and makes clear that the law against insider trading applies to them. But it doesn’t forbid trading — even when a conflict of interest exists.

Nothing else members of Congress do privately is more fraught with unwholesome potential. They are often privy to information that might be available to the public only later, if at all, and their votes can influence the markets. But proving illegal intent is difficult, no matter how glaring the coincidence.

The latest attempt at reform, a notably bipartisan one, is sponsored by Sens. Kirsten Gillibrand, D -N.Y., and Josh Hawley, R-Mo. Their rare agreement on this one fairly reflects public opinion across the political spectrum. In a poll by Morning Consult and Politico, 69% of Democrats, 64% of independents and 58% of Republicans were in favor of an outright ban.

The Gillibrand-Hawley “Ban Stock Trading for Government Officials Act” (S.3494) would prohibit stock ownership and trades by members of Congress, the president and vice president and senior executive branch officials, as well as by their spouses and dependents.

Notably exempt: The Supreme Court. It shouldn’t be.

Overwhelming support

A July University of Maryland poll showed astronomical support, ranging as high as 90%, for prohibiting stock trading by members of Congress, the president, vice president and Supreme Court justices.

“While the prospect of a stock trading ban is controversial within Congress, public support approaches unanimity,” said Steven Kull, director of the university’s Program for Public Consultation.

The bill would also forbid blind trusts, which have a way of being visible to their beneficiaries if not to the public.

It would allow investments in mutual and index funds that don’t allow the owners to trade individual stocks. Those exceptions save the bill from being too harsh.

They need to be hedged, though, against investments in funds narrowly focused on specific industries such as pharmaceuticals and especially defense, which is totally dependent on congressional appropriations.

Predictable howls of protest

Even as it is, the bill will draw predictable howls from Congress members and supporters over the alleged unfairness of denying them a right available to everyone else in a market economy.

But membership in Congress is a privilege available to only 535 Americans at any time. Base pay is $174,000 annually, with supplements for the Speaker, Senate president pro tem, and majority and minority leaders. Members have generous office and travel allowances. They already are subject to various limits on outside earned income, but those don’t apply to stock profits.

The Gillibrand-Hawley bill also requires the affected officials as well as congressional staff to report when they or their spouses, dependents and staffs seek or receive any benefit from the federal government, such as a lease on property. It levies penalties of up to $10,000 for failure to comply.

Congress owes this bill, and the public, a prompt, fair and honest hearing.

Reducing public embarrassment

It also owes that to itself if it wants to climb out of the basement of public disapproval. Another benefit would be to spare its members the inevitable embarrassment when they have to disclose attention-getting stock trades, however innocent they may be. Two of our area’s Congress members have had that experience recently.

In April, Rep. Jared Moskowitz, D-Parkland, needed to explain why an investment account belonging to his children sold stock in Seacoast Banking Corporation in March, three days before its shares fell 20%.

The first-term congressman had attended a congressional briefing on the turmoil in the banking industry. He said that came after the shares were sold and that his financial adviser had recommended selling them to diversify the children’s holdings.

Rep. Lois Frankel, D-West Palm Beach, said she lost money when she sold stock in First Republic Bank and bought stock six days later in JP Morgan, which took over the failing First Republic. Frankel said the trades were made by a money manager “who buys and sells stocks at his discretion” and that she had nothing to do with them except to report them under the STOCK Act.

In both cases the sums of money were not large and there was no showing that either Moskowitz or Frankel had acted on any information not available to the public. But politics being politics, they probably haven’t heard the last of it.

At least seven other members or their families sold bank stocks in March, according to the New York Times. Earlier, the Times had reported that over a three-year period, nearly one in every five Congress members or their families had bought or sold stocks that could be affected by their votes.

It would all have been moot had they not been allowed to invest in any individual stocks.

Making sport of Congress became a national pastime long before baseball did. Critics of all persuasions from Mark Twain to Will Rogers to Mark Russell to George Will have indulged in it.

“Being elected to Congress,” Will wrote, “is regarded as being sent on a looting raid for one’s friends.”

Being seen as looting for oneself is worse, and Congress now has an opportunity to make that go away.

The Sun Sentinel Editorial Board consists of Editorial Page Editor Steve Bousquet, Deputy Editorial Page Editor Dan Sweeney, and Editor-in-Chief Julie Anderson. Editorials are the opinion of the Board and written by one of its members or a designee. To contact us, email at letters@sun-sentinel.com.