If ever there was a time to try to restore trust in government, this is it.
And there’s no better place to start than in the halls of Congress — where members are privy to a wealth of valuable information long before the public. Think of the run-up to the pandemic, government purchases of pharmaceuticals, and new Defense Department contracts, to name just a few possibilities.
Now at last House Speaker Nancy Pelosi has pledged to bring a compromise bill to the floor aimed at preventing members of Congress — and their close family members — from trading in individual stocks while in office. The bill, being crafted from a number of proposals that have surfaced during the year, could also extend the stock trade ban to include high-ranking congressional staffers, who, after all, are also privy to that same level of insider information.
Pelosi’s commitment to House action on the bill before the month is up comes in the wake of a New York Times report that found at least 97 members of Congress or their close family members (usually spouses) traded in stocks or commodities closely linked to the lawmakers’ committee assignments. So close, in fact, that they risked a conflict of interest.
Now, actual insider trading is prohibited by the 2012 STOCK (Stop Trading on Congressional Knowledge) Act, which was supposed to prohibit members and employees of Congress from using “any nonpublic information derived from the individual’s position … or gained from performance of the individual’s duties, for personal benefit.”
But proving that has been a tricky bit of business.
Under the disclosure provisions of that earlier law, we know that Senator Richard Burr, then chair of the Senate Intelligence Committee, prior to the pandemic truly hitting the United States, dumped as much as $1.7 million in stock before the market took a colossal hit. The North Carolina Republican privately told a group of constituents meeting in Washington on Feb. 13, 2020, that the coming health threat “is more aggressive in its transmission than anything that we have seen in recent history.”
A Justice Department investigation cleared him of insider trading charges in January of 2021.
The Times report found two members of the Massachusetts delegation among those trading stocks with potential conflicts. The husband of Representative Katherine Clark, the fourth-highest ranking Democrat in the House, the Times reported, has made a number of stock trades involving health care companies, including two purchases of Hologic stock in late 2020 about one week before the company was awarded a $119 million COVID-19 testing contract with the Departments of Health and Human Services and Defense. The shares were sold several days after the contract was announced. Clark’s office said neither she nor her husband direct trades in their retirement accounts — and that she favors a congressional ban.
Representative Bill Keating, a member of the House Armed Services Committee, reported trading between $22,000 and $155,000 in stocks and bonds in companies that contract with the military. Keating says the picks were made by an investment firm and that he too is supportive of a stock trading ban.
The shape of the actual legislation is still a work in progress — currently the subject of a negotiation headed by House Administration Committee Chair Zoe Lofgren of California.
But an earlier bipartisan framework sets the stage for the stock trading ban and provisions for lawmakers to either divest or put their holdings in a blind trust. It would permit those covered to “Diversify such investments by placing them in widely held, diversified mutual or exchange-traded funds, or US Treasury bills, notes, or bonds.”
It also calls for better enforcement mechanisms and “penalties that are sufficient to ensure member compliance.”
“With members of Congress from both parties flouting basic financial conflict of interest laws, and appearing to personally profit off their positions of public trust, Americans are understandably questioning whether their government works on their behalf,” Citizens for Responsibility and Ethics in Washington wrote in a letter to lawmakers last week urging passage of something resembling the “framework” proposal.
The House has clearly gotten the message. The Senate, however, is working at a rather more leisurely pace. Senator Jeff Merkley of Oregon, a proponent of a stock trading ban, said last week he didn’t expect any action until after the midterm elections. Senator Elizabeth Warren, who filed a stock trade ban bill last February along with Republican colleagues Steve Daines of Montana and Marsha Blackburn of Tennessee told the Globe editorial board she is still on the hunt for additional GOP supporters.
“Every day that we delay on passing meaningful restrictions on stock trading among members of Congress is a day that further erodes the credibility of this body,” she told Business Insider.
Public confidence in Congress — always a cellar-dweller in Gallup Polls — hit a new low this summer, dropping from its already abysmal 12 percent in 2021 to 7 percent this year.
Whether members of Congress are guilty of real conflicts or perceived ones is almost beside the point. The issue has become one of restoring public trust in a branch of government that desperately needs to face up to its own demons and emerge from the Washington swamp.
Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.