U.S. President Joe Biden delivers remarks on the one-year anniversary of the January 6, 2021 attack on the Capitol in Washington, U.S., January 6, 2022.
Michael Reynolds | Reuters
WASHINGTON — As several proposals in Congress to prohibit members from trading stocks gain steam this week on Capitol Hill, President Joe Biden has chosen not to take sides in a debate that could divide his fellow Democrats.
While Biden “believes that everyone should be held to the highest standard,” White House Press Secretary Jen Psaki said Tuesday, “he’ll let members of leadership in Congress and members of Congress determine what the rules should be” about stock trades.
Psaki’s remarks were in response to a direct question about where Biden himself stands on the issue, which she did not reveal. She did, however, note that the president did not trade individual stocks while he was a member of the Senate from 1973-2009.
The issue of whether or not members of Congress should be allowed to trade individual stocks has been simmering on Capitol Hill since 2020, when the Justice Department investigated Sen. Richard Burr, R-N.C. on suspicion of insider trading.
As chairman of the Senate Intelligence Committee, Burr sold $1.3 million of stock in mid-February, while he was receiving classified briefings on the coming Covid pandemic. Burr was ultimately not charged with a crime.
In recent weeks the issue has gained a new momentum, spurred by growing public support for a ban and new reporting on how widespread violations are of the current law, the 2012 STOCK Act, which was designed to prevent insider trading and conflicts of interest in Congress.
Last year alone, a total of 54 members violated the STOCK Act rules, according to an analysis by Business Insider’s Dave Levinthal published earlier this month.
There are growing signs that the public supports a ban, too. A recent survey commissioned by a conservative advocacy found that 76% of voters believed that lawmakers and their spouses had an “unfair advantage” in the stock market. The same survey, conducted by the Convention of States Action, also found that just 5% of likely voters approved of members of Congress trading stocks.
During the past week, several members of Congress, both Democrats and Republicans, House members and senators have introduced legislation that would effectively ban lawmakers and their immediate family members from actively trading stocks while the member is in office.
In the House, Rep. Abigail Spanberger, a Democrat from Virginia and Rep. Chip Roy, a Texas Republican have co-sponsored the TRUST Act, which would require members of Congress to put their investments into a blind trust while in office.
On January 12, two Senate Democrats, Jon Ossoff (Ga.) and Mark Kelly (Ariz.) introduced a companion bill to the TRUST Act, the Ban Congressional Stock Trading Act.
That same day, Missouri Republican Sen. Josh Hawley introduced his own congressional stock trading ban bill, which differs from the Democrats’ bill in that it has less severe penalties and more generous deadlines.
But while these proposals may be getting traction from individual members of Congress, there is no indication yet that House leadership wants to advance them.
On the contrary, in December House Speaker Nancy Pelosi dismissed the idea of a ban on members of Congress trading stock, calling it essentially un-American. “We are a free-market economy,” she told reporters in the Capitol. Members of Congress “should be able to participate in that.”
One person in particular who has participated in that is Pelosi’s husband, venture-capitalist Paul Pelosi. Pelosi’s annual House financial disclosure forms reveal that Paul Pelosi is an active trader with tens of millions of dollars’ worth of stock.
Speaker Pelosi has for years insisted that she personally does not own any stock, and she has no involvement in Paul Pelosi’s investment activities.
Nonetheless, with Pelosi on one side of stock trading question, and House Democrats like Spanberger on the other, it’s understandable that Biden himself might be reluctant to take sides.
But while the president might choose to volley the question of stock trading back to Congress to decide, one of Biden’s closest economic advisors, National Economic Council chair Brian Deese, addressed the issue head on last week.
Speaking live to CNBC’s Andrew Ross Sorkin last Friday, Deese called the proposed bans “certainly sensible.”
“There’s a lot of distrust and mistrust around how politics works, around the political process,” Deese continued. “One of the things that we need to do across the board is restore faith in our institutions, whether that be Congress and the legislative branch, whether that be the Fed and otherwise. So anything we can do to try to restore that faith, I think makes a lot of sense.”
“It’s a rule that we all operate by and live by in the Executive Branch,” Deese told Sorkin, referring to the more stringent rules about financial conflicts that apply to executive branch employees. “It doesn’t put any real practical burden on our ability to do our jobs,” he said.
Biden is scheduled to hold a press conference on Wednesday to mark his one year anniversary in office, where he could decide to address the congressional stock trading question more directly.