Question: How do you define “eternity” in the House of Representatives?
That is the official status of bills introduced by Democratic House members that seek to prohibit members of Congress from trading stocks while in office. This issue has grown more embarrassing for Congress overall in the past year, as 66 members have been named by news organizations for failing to report their financial trades in a timely manner, as required by the Stop Trading on Congressional Knowledge Act of 2012, also known as the STOCK Act.
On the most recent episode of The Drill Down podcast, Peter and Eric take a half-hearted victory lap about all of that because the STOCK Act was passed after GAI’s first book, “Throw Them All Out,” was published in 2012 and revealed how several congressmen and senators were insider-trading based on confidential information they learned through meetings of their committees. It was not against the law for them to do that, until the law was passed. President Barack Obama even highlighted these revelations in a State of the Union address, saying, “Send me a bill outlawing insider trading by Congress, and I’ll sign it.”
The STOCK Act requires timely public disclosure of any stock trades made by members. The recent proposals to toughen its provisions, all of which are now languishing in that “period to be subsequently determined by the Speaker,” would prohibit members from trading stock at all while they are in office.
House Speaker Nancy Pelosi (D-CA) and her husband Paul are well known stock traders. They are jointly reputed to be worth about $100 million. As her power in the House grew, they have made a fortune buying and selling stocks, speculating on options, putting “puts” and calling “calls” for year after lucrative year. In case you were wondering, there is even an app that can track Paul Pelosi’s stock trades.
The co-founder of that app noted in an interview that each of the Pelosi’s disclosed positions has been up 20-30% since their initial investment. Speaker Nancy Pelosi has said she doesn’t trade stocks herself, but her husband does, and very deftly. “We’ve been tracking their performance and every single stock she has bought in the last two years has gone up significantly,” said Christopher Josephs, cofounder of the app, known as “Iris.”
Speaker Pelosi says that her venture capitalist husband has “absolutely not” traded based on information she has given him. Not that she has a problem with members owning and trading stock. In December, she was asked her thoughts on about a possible trading ban proposed by those pieces of legislation that had been introduced, and she responded, “I have great confidence in the integrity of my Members… We are a free-market economy. They should be able to participate in that.”
“For a period to be subsequently determined by the Speaker.”
Eric points out that Paul Pelosi recently bought 20,000 shares of Nvidia, worth between $1 and $5 million, while the Senate was considering a bill that set aside $52 billion to reinvigorate the domestic semi-conductor industry. That bill passed the Senate today.
While the Pelosis are the most visible example of this, Peter notes other reports that 57 members of Congress and 182 senior staffers violated federal conflict of interest laws by not disclosing stock trades or engaging in other conflicts of interest. In 2020, while Congress was involved in funding efforts to crate and distribute a COVID vaccine, 75 members held stock in Moderna, Johnson and Johnson, or Pfizer. Recent reporting shows that fifteen lawmakers tasked with setting our national defense policy own stock in defense contractors. The question is obvious: are members looking out for our national interest, or boosting their own portfolios?
Eric jokes, “And it’s not like our defense policy lately has exactly been… elite.”
The bills that seek to outlaw this are bipartisan and worth considering, as Peter stresses. Co-sponsors are moderate Democrats and very progressive Democrats, but also count many Republicans alongside them. It’s not as though we should prevent lawmaker from having any investments; but it looks bad to have members voting on bills that can greatly affect a company or an industry, for good or bad, while knowingly owning shares of those companies.
The Speaker’s move to bottle these bills up “for a period to be subsequently determined by the Speaker,” is wrong, corrupt, and should be opposed.
Eric closes the show with a “charitable donation” of his own… “At least Nancy Pelosi is being honest.”