Pressure ratchets up on Congress to ban lawmakers from the stock market

The public is growing increasingly frustrated with congressional lawmakers profiting from the stock market, and a bipartisan House coalition may soon introduce limits on their trading activities.

Pressure is mounting on Republicans and Democrats to enact legislation that restricts or prohibits lawmakers from owning stocks and other investments.

At a House Administration Committee hearing Wednesday, lawmakers denounced the appearance of insider trading by former House Speaker Nancy Pelosi, former Senate Select Committee on Intelligence Chairman Richard Burr and others who have made lucrative stock transactions that appeared to be informed by their access to insider information while serving in Congress.

“In recent years, social media accounts have generated significant media attention for aggregating the stock trades of members of Congress. Understandably, it’s fueled public concern that lawmakers may be using their positions of authority to personally benefit themselves,” said Rep. Bryan Steil, Wisconsin Republican and Administration Committee chairman.

Outside the hearing room, a bipartisan group of lawmakers seeking to aggressively restrict members of Congress from trading stocks said they were growing impatient with Republican leadership on the issue.

They threatened to force a vote on their own hard-line proposal, the Restore Trust in Congress Act, if the hearing was not followed quickly with action to advance their bipartisan measure.

It would entirely ban lawmakers, their spouses and children from owning or trading stocks, commodities, futures and other comparable assets.

“We have one bill, one strategy, and it is now on leadership to get this done and to give it a vote,” Rep. Seth Magaziner, Rhode Island Democrat, told reporters outside the hearing room.

“Make no mistake: If this is not a step in the right direction but is instead a delaying tactic, then other options will be on the table for us to get this bill to the floor.”

The public overwhelmingly favors banning members of Congress from trading stocks. A 2023 University of Maryland poll found that 88% of Democrats, 87% of Republicans, and 81% of independents support a ban.

Public sentiment on the issue has been fueled by reports of lawmakers amassing wealth in office, including Mrs. Pelosi, whose husband manages the couple’s stock portfolio.

Over the past decade, the Pelosis generated a cumulative return of 816% from their investments, outperforming the S&P 500 by 559%, Yahoo Finance reported.

The site Unusual Whales, which tracks lawmakers’ stock trades, found that dozens of lawmakers outperformed the S&P last year.

Mrs. Pelosi’s gains were surpassed by nine other lawmakers, including Rep. Debbie Wasserman Schultz, Florida Democrat, Rep. David Rouzer, North Carolina Republican, and Sen. Ron Wyden, Oregon Democrat.

All the lawmakers deny using inside information to inform their stock trades, but the public isn’t buying it.

“We have lost the trust of the American people, and there are egregious examples on both sides of the aisle, and in all branches,” said Rep. Gregory Murphy, North Carolina Republican.

Mr. Pelosi, for example, purchased $1 million in Tesla stock in December 2020, weeks before President Biden took office and announced plans to purchase an all-electric fleet of government vehicles.

Mr. Burr, who retired from Congress in 2023, came under scrutiny for selling a large chunk of his stock portfolio in early February 2020, just days before the stock market crashed under the onslaught of the COVID-19 pandemic.

Mr. Burr was accused of using information from the daily classified briefings on the coronavirus that he received as chairman of the intelligence committee to save himself from losing hundreds of thousands of dollars in the stock market. He was never formally investigated or charged by the federal government.

Mr. Steil agreed that the current law governing stock trading disclosures, enacted more than a dozen years ago, requires House members and senators to report only stock trades and needs to be strengthened.

The Republican-led House hasn’t settled on new legislation. Lawmakers at the hearing questioned policy experts on the matter and heard from lawmakers who thought the bipartisan proposal pushed by Mr. Magaziner and others went too far because it banned the trading of all commodities and forced people to divest.

Rep. Morgan Griffith, a Republican representing a rural Southwest Virginia district, said that if passed, the legislation would force him to sell his stake in a community swimming pool, which would likely have to close as a result.

“So how do we protect that while curing the ills of people who are trying to do bad things?” he said.

Mr. Steil said the measure could harm lawmakers or discourage those who want to run for Congress who own family farms. Under the bill pushed by the bipartisan group of lawmakers, they would be prohibited from trading any commodities, which is necessary in agriculture to manage risk and secure prices for crops and livestock.

“We want to have people that represent a wide array of backgrounds, whether it’s a business background, a military service background or a farming background,” Mr. Steil said.

Jim Copland, senior fellow at the Manhattan Institute, warned lawmakers against placing too many prohibitions on who can run for Congress. He pointed out that the U.S. government was founded by some of the nation’s wealthiest people.

“We don’t want to create a prophylactic rule that would exclude people who are successful from this body,” Mr. Copeland said.