Thirty-seven members of Congress are hoping the third time’s the charm for their bill that seeks to prevent insider trading from members of Congress.
The Transparent Representation Upholding Service and Trust in Congress Act, or TRUST, was first introduced in June 2020 and brought it back to the House floor in January 2021. However, it never went further than that.
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On Jan. 12, Reps. Abigail Spanberger of Virginia and Chip Roy of Texas, joined by a bipartisan alliance of 35 co-sponsors, reintroduced the bill.
“We saw tremendous momentum, we saw growing support in our districts, and we saw growing recognition across the political spectrum that such a reform needs to be made now,” Spanberger said in a statement.
“Our TRUST in Congress Act would demonstrate that lawmakers are focused on serving the interests of the American people — not their own stock portfolios.”
The issue TRUST seeks to resolve
If passed, TRUST would effectively ban members of Congress, their spouses and children from trading individual stocks and force them to place their investment assets into blind trusts.
The legislation aims to address the advantage that politicians have as well-connected people with the inside track on new legislation that might affect a company or an industry.
While those insights don’t make them clairvoyant, it’s certainly an advantage when it comes to trading in the stock market.
A survey, commissioned by conservative advocacy group Convention of States Action last year, showed that more than 75% of voters believe lawmakers have an unfair advantage when trading — and those feelings aren’t unfounded.
And a report from Business Insider revealed that 72 members of Congress didn’t report their financial trades as they are mandated to do by the Stop Trading on Congressional Knowledge Act of 2012.
But an even larger investigation from the Wall Street Journal last year revealed thousands of Washington officials are taking part in ethically gray trading.
TRUST aims to reduce that by requiring senior officials and others affected by the bill to either sell their holdings when they take their position in Congress or put them into a blind trust, where they would have no control over the trades.
They would still, however, be able to purchase diversified ETFs, diversified mutual funds, and U.S. Treasury bills, notes or bonds.
“The American people are tired of seeing members of Congress making pretty significant profits while they’re voting on the very policies that affect the corporations they’re meeting with on a regular basis,” Roy told Fox Business.
Not the first bill on the matter
The proposed legislation is similar to a bill introduced by Democrats last September, called the Combating Financial Conflicts of Interest in Government Act, which also aimed to limit investing conflicts of interest for politicians and their families.
However, that bill — championed by then-Speaker of the House, Nancy Pelosi — was heavily criticized by both sides of the House for lacking teeth and including a built-in loophole around the blind trust requirement.
Spanberger slammed the House Administration Committee at the time for introducing “a kitchen-sink package that they knew would immediately crash upon arrival,” just days before the legislative session was due to end.
However, with more co-sponsors than ever before, Spanberger and Roy are optimistic that they can get TRUST passed and rebuild trust with the American public.
“We need to do something to stop that breach of trust that is apparent to the American people that we seem to be day trading while we’re supposed to be doing the work of the American people,” Roy said in an interview with Fox Business.
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Source: https://finance.yahoo.com/news/american-people-tired-lawmakers-introduce-150000544.html