Senators to Propose Ban on U.S. Lawmakers, Executive Branch Members Owning Stock

[_lb0d]

My wife works in the audit department of a bank. I'm heavily regulated by the SEC on what stocks, ETFs, mutual funds I can buy/sell. An internal group monitors my buying/selling and makes approval/denial before I can do so.

I have to hold an ETF for 1 month before I can sell it--not that I should be swing trading ETFs, but still. It's very frustrating at times, especially when I'm relegated to using just her bank's trading platform, too.

[ckardat123]

I started building out tools to track congressional stock trading in 2020.

Since then, I believe there have been 9 other proposals similar to this one. None of them have been even called to a vote.

It seem like Congress is pretty unwilling to regulate its own trading.

Until they are, feel free to track the trading here: https://www.quiverquant.com/congresstrading/

[samsolomon]

Love the font choice! Never heard of Rubik, but I like stocky letters with a tall x-height. Kind of reminds me of Colfax.

https://processtypefoundry.com/fonts/colfax/

I might add the following for a slightly crisper look:

    text-rendering: optimizeLegibility;
    -webkit-font-smoothing: antialiased;

[ed_balls]

TBH will the regulation change much? If congressmen won't be allow to own stock, they will use proxy (wife, siblings, parents, in-laws).

[rwmj]

Does a "Congress tracker fund" make money? What with all the rumoured insider trading ...

[smcin]

Sen Cynthia Loomis (R-WY) [EDIT: 'Lummis'] doesn't show up on the list (for stocks), is she still the biggest crypto trader?

https://www.marketwatch.com/story/congresss-crypto-traders-t...

[nashashmi]

The rules on Congressman trading should be coming from their districts and states that they represent. it could possibly hurt the quality of congressmen and senators that run for election if this rule is implemented at a federal level.

[gjsman-1000]

For me, I'm not sure why there is a "Ms. Nancy Pelosi," and a "Nancy Pelosi," that both have trade activity.

(Nancy Pelosi is interesting. She entered Congress worth about ~3-4 million. Now she is worth $100 million, give or take $20 million depending on the estimate. Interesting. I'm not saying it's Insider Trading, but the probability...)

[jakearmitage]

I wish there was a tool that allowed me to follow Congress as if it was an index. Automatically buying and selling what they buy and sell. Right from my Fidelity or something.

[carabiner]

Also https://www.capitoltrades.com/

[PartiallyTyped]

Unusualwhales (not affiliated) does that too!

[neilv]

I would love for all lawmakers to be limited to market index investing.

Say, asset allocation (other than their home and a Washington pied a terre) of 50% US stocks index, 20% non-US stocks index, 30% US bonds index.

No stock-picking. No sector-picking. No real estate other than through the indexes. No private company ownership. No trusts. No circumvention.

Alignment with ordinary people's retirement funds seems great.

[r3trohack3r]

On the surface this seems pretty decent game theory wise, particularly if you implement annual or bi-annual trading windows with a delay in trade execution (I.e. a trade must be publicly declared 120 days before it is executed) and if those restrictions stay in place long after their tenure in office to discourage prioritizing short term returns over long term stability.

AFAICT, forcing lawmakers to invest in total market index funds (with only buy/sell and maybe stop-loss; where total market is defined as an index fund tracking every publicly traded stock in proportion to its value) where it is difficult to make short term trades with insider knowledge of major market moving events would align their incentives with both our retirement accounts and improving a major slice of the economy.

One might say law makers would circumvent this regulation by having friends and family make the trades on their behalf, an outcome Id welcome; it’s easier to catch them making illegal trades when they have to coordinate to make it happen.

I think it would also mean a significant portion of your compensation as a lawmaker is a direct result of developing the markets. In some ways, regulation like this looks like performance based compensation.

[BenFranklin100]

This is a good suggestion. Outright banning ownership of stock might limit the number of people who choose to run for office. This is a fair compromise.

[jefftk]

Even broad market trends are something they could have inside information on, if they have advance notice of major legislative efforts success.

[spacemadness]

They’ll get around it somehow. It might just be an extra step for them to do hidden trades through extended family or some such.

[Xorakios]

Or just US treasuries.

[jqpabc123]

All show and no go.

Like most such "reforms", it is intended for naive public consumption while also being easily circumvented.

Setup a trust or corporation run by a family member and continue with business a usual.

[anonym29]

This isn't a reason to not support the current effort. Democracy is an iterative process, not a magic wand that you wave to instantly teleport to a flawless system.

This bill is step one. When (not if) it gets circumvented, that's when the next law addressing that problem can be passed.

[mhb]

I dunno. There's a reasonable chance that the SEC might have encountered that sort of activity some other times in its history.

[giantg2]

If the restrictions are similar to restrictions by the SEC or financial institutions, having more than 10% ownership over a company or control over a trust would also violate those restrictions.

[rsstack]

As if it would even reach a vote. (Some) Senators (plan) to _propose_ ban ...

[BurningFrog]

If so, that's probably true for all insider trading regulations?

[rsynnott]

> Setup a trust or corporation run by a family member

Unless you can control their contact with that family member, that sounds like it would accomplish approximately nothing.

[teeray]

One major flaw of our system is that it's nigh impossible to get lawmakers to pass laws favoring the public good that act against their own interests.

[jollyllama]

I don't know who said it first, and there are plenty of cartoons of it, but they should have to deck themselves out with the logos of campaign contributors and entities in which they hold shares, like NASCAR cars/drivers.

[smcin]

URL: https://archive.li/KB69t

Proposed by Sens. Kirsten Gillibrand (D-NY) and Josh Hawley (R-MO)

[rsynnott]

This seems completely reasonable; it's arguably surprising it hasn't been done before.

The devil will be in the details; in particular it would likely have to extend to spouses.

[0xbadcafebee]

At least they can still take bribes - sorry, "campaign contributions" - from conglomerates exploiting/hurting the public.

[plim8481]

Never thought I'd see the day Kirsten Gillibrand and Josh Hawley would co-author a bill

[engineer_22]

Common thread: they're both up for re-election in 2024

[harry8]

This kind of thing, outsiders from both sides of government joining to try to get something done is the only way you will ever get any reform.

Also why the insiders from both sides will be so scathing about outsiders on the other side and claim they are literally $evil_person_from_history

[legitster]

I think a complete ban on owning individual stocks would be a bit overkill. Perhaps, controversially, I believe members of the government should own some stock - I want them personally invested in the economic wellbeing of the country. I also don't want to limit the candidate pool artificially to just professional politicians.

But the fix here seems pretty easy. If you are an executive at a publicly traded corporation, you have to disclose any changes in your position of that stock months in advance. Just make politicians follow the same process for the entire stock market.

[jzoch]

Let them own index funds only. Individual stock holding is not an investment in the economic well-being of the country

[kelseyfrog]

The other option is complete real-time transparency. Eliminate the alpha on congressional trades. A de-anonymized book view of all congressional orders and trades.

[tombert]

I think it would make sense to only allow congresspersons to own "total market" index funds like VTSAX; wouldn't that more or less align their interest with the general American public?

[kats]

No way. If they remove normal ways for people in Congress to make money, then normal people won't run for Congress. More MTGs will get in, but smart people who could make >10x more will say no.

[TravelTechGuy]

IMHO this ban will never pass. The only law all these people are always sure to vote for is the one increasing their salary and benefits.

But beyond that, even if it passes, I expect so many violations that it'd be as if it didn't pass.

If we've learned anything in the last 6-7 years is that if there's no shame, law becomes less relevant. It's enough to look at some of of the current crop (and I'm doing my absolute best to prevent myself George from dropping Santos actual names here) to understand that the believe they're above any law.

[sgc]

As soon as it is implemented, there goes any shred of sanity in our real estate laws. Something has to be done, but no matter what, it is going to be a bumpy ride.

[apsec112]

This seems super overbroad? "Executive branch employees" is basically everyone who works for the federal government, which is 2.1 million civilians and another 1.3 million active-duty military. Most of these people are, like, border patrol agents or Social Security clerks or nurses at Veterans Affairs hospitals or prison guards, and are just middle-class workers who won't have access to insider information anyway.

[engineer_22]

https://archive.is/KB69t

Alternative Universe:

New Proposal Bans Plumbers from Houses of Congress.

Read: Under new proposal Mario Bros must trade in plungers for portfolios. Minority Leader Bowser had this to say: "It's important for the koopas of our nation to know their leaders are working for them, and not taking all the mushrooms and star powers for themselves."

[thedangler]

Have you seen how much wealth a lot of congress have gained over their careers. There is no way someone can look at those numbers and come to the conclusion that they did become multi millionaires without inside information.

It should be banned out right or every position they take is public knowledge within 1 trading day or less.

"Representative Nancy Pelosi has made up to $12.5M off of Microsoft stock so far this year. This is almost 100 times her salary as a member of Congress. "

I love this graph

https://twitter.com/QuiverQuant/status/1680973761560846338

[_ea1k]

In practice, how would this work? A requirement that they only use index funds? But then wouldn't that bias them to support the companies that are the major movers in that index? Indexes are often heavily weighted to a small subset after all.

TBH, it seems like an idea that sounds good on the surface but has practical issues in implementation that would make it irrelevant

[capital_guy]

This is a ridiculous take. Imperfect is better than bad. Right now you have the Speaker of the House's husband buying $5million worth of Alphabet call options. That's not a good system.

[ldoughty]

Blind trust would be the most logical solution.

You can put $X into the trust, but you never know which companies that money is invested in. When you ask for $Y to be paid out, the manager of the fund sells what they see fit to fulfill the request without the client's involvement/input

[mikrl]

More reasonable would be a ban on trading, if not ownership. But then again, lawmakers would just advocate positions in favour of their static portfolio.

It does seem better than the status quo of ‘extremely lucky’ returns though.

[ccppurcell]

How about they do their jobs, and put off making money in other ways till after their term ends. Maybe they can buy government bonds.

[fallingknife]

I say let them trade. But they should have to report all their trades 5 business days in advance. So they can trade however they want, but any member of the public can front run them.