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Earning a position in Congress requires significant financial resources.
In the 2022 midterm elections, candidates and political action committees collectively invested nearly $17 billion in their state and federal campaigns, making it the costliest midterms to date.
While having financial support can be advantageous for gaining access to Congress, it also presents an opportunity for legislators to build their personal wealth once they secure their position.
Members of Congress often mention representative Nancy Pelosi in relation to stock trading. She is the poster child for congressional trading.
Pelosi is ranked as the third wealthiest legislator in Congress. She and her husband, Paul Pelosi, carried out 31 trades last year, up from 19 trades the year before.
This indicates Pelosi has a vested interest in the stock prices of the companies in which she holds shares and how it may affect her family's investments. Some individuals equate her to a market whale that can affect entire markets, making her the focus of public scrutiny.
However, Pelosi was ranked No. 6 for trading members of Congress in 2021; in 2022, she did not make the top 10. I believe the discussion surrounding Pelosi detracts from the real issue, a more significant systemic problem.
It may seem implausible that a member of Congress earning a salary of $223,500 annually could also be worth more than $171 million, a dilemma -Pelosi faced over her 35-year career in Congress. However, this is not only Pelosi's issue but also a sign of a more significant problem with our government.
Between 2019 and 2021, 183 members of Congress reported participating in at least one trade. Over 50% of these members served on congressional committees that may have given them insider information.
This situation has recently gotten worse. In 2022, members of Congress executed trades valued at nearly $400 million, which is 25% higher than the amount traded in 2021.
Despite 40-year high inflation, interest rate increases, a bear market, and the increased public attention towards congressional stock trading, members of Congress have diversified their holdings from riskier assets to safer securities and government debt.
In 2022, the number of officials filing financial disclosures decreased to 131 from 147 in 2021, indicating fewer individuals traded last year.
However, a smaller group of people executed a considerably larger number of trades, amounting to around $3 million worth of shares traded per member, compared to $2.16 million in the previous year. This is impressive, especially considering that 2022 was a poor year for the stock market.
Despite the reduced number of traders, 131 members still make up almost a quarter (24%) of Congress, with the power to make decisions directly affecting companies they or their families have invested in.
In addition, Wall Street Insider and other news outlets discovered that 78 members of Congress had recently failed to report their financial trades appropriately. This shows that many officials do not adhere to the STOCK Act, a law meant to prevent insider trading in Congress and enhance transparency in personal financial dealings.
Although violating the STOCK Act does not prohibit members of Congress from trading securities, the law's purpose is to combat insider trading. However, those who break the law are only subject to a $200 fine, and there is no evidence lawmakers who violate it pay the penalty. These issues show the STOCK Act is not being enforced effectively because of an inconsistent and inefficient penalty system.
As concerns about the stock trading activities of lawmakers persist and the STOCK Act's failure to hold them accountable, there has been a growing demand for introducing the PELOSI Act (Preventing Elected Leaders from Owning Securities and Investments Act).
Senator Josh Hawley (R-MO) introduced the PELOSI Act on January 24, 2023, which seeks to prevent members of Congress from owning and trading stocks. However, it may be difficult to convince politicians to restrict their ability to trade securities. It would be like asking a bird not to fly or a dog not to bark. So, it is unlikely this bill will be passed anytime soon.
There is a need for systemic change to address the problem of congressional stock trading and more effective enforcement of existing regulations.
It's time to hold our elected officials accountable for their actions and prevent them from enriching themselves while in office. We entrust these individuals with the responsibility of making decisions on behalf of the people, and it's unacceptable for them to use their position for personal gain.
It's not only unethical, but it also undermines the public's trust in the government and the democratic process. We need to demand more transparency from our elected officials, and stricter regulations to prevent them from taking advantage of their positions.
It's not about left versus right, or Republican versus Democrat; it's about the proper role of government in our lives.
We must push for stronger enforcement of the laws that are already in place and call for tougher penalties for those who violate them. It's time to take a stand against corruption and send a clear message that the American people will not tolerate government officials who prioritize their own interests over the public's.
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Brian Carson is a correspondent for The Sentinel.