Congress hasn't banned lawmakers from trading stocks. Can a bank crisis change that?

In This Article:

At least 9 lawmakers from both parties sold banking stocks during the financial turmoil in March, disclosures that are already renewing calls for an outright ban of Congressional stock trading.

Notable traders include Rep. Josh Gottheimer (D-NJ), who sold Silicon Valley Bank stock after that bank had signaled deep trouble and one day before regulators seized the lender. There is also Rep. Jared Moskowitz (D-FL). An account linked to the freshman Congressman sold shares of Seacoast Banking Corporation (SBCF) just days before that stock tanked.

Gottheimer and Moskowitz deny any impropriety and the transactions appear to be perfectly allowed within current law. Nevertheless, advocates of a ban say these trades further undermine the public's faith in Congress. The transactions have already spurred a demand for hearings on the issue.

"I'm not at all surprised," said Rep. Abigail Spanberger (D-VA) of the disclosures. She is the author of a letter this week calling for a public discussion of the trades.

It’s become a familiar routine, Spanberger added in an interview this week, for a major news event to soon be followed by revelations of "buying or selling by members of Congress in a way that looks as though it's connected."

A red light traffic signal is seen with the dome of the U.S. Capitol building in the distance, in Washington, U.S., February 16, 2022. REUTERS/Jon Cherry
Lawmakers in Washington are once again trying to stop their colleagues from trading stocks. (REUTERS/Jon Cherry) · Jon Cherry / reuters

The Virginia lawmaker is the co-author with Rep. Chip Roy (R-TX) of a bill that would require members of Congress as well as their family members to put their investments into a qualified blind trust. They have introduced their legislation in each of the last three sessions of Congress without success so far.

One of the notable sponsors of her bill is Gottheimer, the lawmaker who disclosed his sale of Silicon Valley Bank stock. He has also disclosed a sale of Charles Schwab (SCHW) stock and a purchase of shares in Morgan Stanley (MS) during the turmoil.

A representative for Gottheimer, when asked about the Silicon Valley Bank trade, pointed to a 2022 statement where the lawmaker said he was in the process of setting up a blind trust and had already turned over investment decisions to a third party.

"I don’t believe Members of Congress, judges, or any government employee in a policy role, should be involved in the day-to-day trading of securities, including crypto currencies," he said then.

A representative for Moskowitz didn't respond to a request for comment but the lawmaker told The New York Times that the Seacoast trade took place in an account set up for his children and had been suggested by a financial adviser. He also maintains that the sale happened before a congressional briefing on the turmoil that he has previously discussed attending.