The future of Congressional stock trading

The future of Congressional stock trading

Updated February 21, 2022

A lot has happened since the release of Congressional Trading in 2021.

The day after the report came out, reporters forced Senior Democrat and Republican politicians to comment on whether they think Congress should be allowed to trade stocks while in office (ex. Senate Majority Leader Chuck Schumer saying he might be for it, House Minority Leader Kevin McCarthy).

Later that week, Democrat Senators Jon Ossof and Mark Kelly proposed an outright ban on stock trading by Members of Congress.

This month, Republican Senator Josh Hawley and Republican Representative Vicky Hartzler published an op-ed calling for a ban on congressional stock trading citing a lack of public trust in politicians.

Speaker Nancy Pelosi, who famously defended stock trading by sitting Members and their spouses by citing the free-market economy, has now flipped and supports the House exploring legislative proposals to ban it.

Recently, other notable politicians, from across the aisle, have co-sponsored proposals to ban the practice entirely. These include notable Senators like Elizabath Warren, Steve Daines, Kristen Gillibrand, Debbie Stabenow, Marsha Blackburn; and House Representatives like Katie Porter, Pramila Jayapal, Matt Rosendale, Abigail Spanberger, Chip Roy, Eleanor Del Norton, Bill Foster, Mondaire Jones, Chrissy Houlahan, Scott Perry, Fred Keller, and Ron Wright.

So, how has this momentum of banning trading affected Members? Let’s look at congressional trading so far in 2022 and what legislative proposals have been announced so far.

Sell, sell, sell?

At the time of writing this, there appears to be more Members of Congress selling in 2022 compared to the same period in 2021. Specifically, up to $14.62M in stocks have been sold off in 2022 so far compared to $11.94M during the similar period in 2021. Furthermore, there’s less stock buying this year (only up to $9.22M) compared to last year (up to $17.57M).

Trades in other asset classes such as options, government securities/agency debt, and other securities also appear to be down compared to the same period last year.

However, we need to keep in mind that Congress has up to 45 days to report their trades from the transaction date, and many fail to disclose their purchases with little in way of repercussion. We have not reached that point yet, but will continue to monitor the situation (ex. we’d have to wait for disclosures to be posted until early April 2022).

The way forward

There are several proposals being discussed in DC right now. The table below summarizes these by who the co-sponsors are, when they were introduced and who would be affected. I also link to the actual texts of the acts on or to the press releases.

Click here to check out the table.

I have been advocating to ban politicians from trading securities for a while now. Conflicts of interests can damage our trust in institutions and the people we elect to represent us.

There is still a lot of work to do. As we’ve witnessed with our politicians as of late, they will propose big ambitious plans but never follow through with them. Until then, I’ll continue to report on their unusual trades.

Remember that we got to this point because of you, reader. When you expressed your shock and disgust at the level of trading by Congress and ultimately support for a ban, politicians took note. Let’s continue to make noise to ensure our elected officials follow through.

Together, we are whales.