Nancy Pelosi’s Stock Ban Contains a Giant Loophole
(RightWing.org) – In 2011, the media reported House Speaker Nancy Pelosi (D-CA) met with VISA’s CEO before the House was set to vote on ending highly profitable fees and that the company had donated to her re-election campaign. VISA was in the process of launching an $18 billion public stock offering, and the legislation would have harmed the value of the stocks. The company then approached her husband about a cut of the Initial Public Offering (IPO). The media alleged the speaker gamed the financial reforms to reap a profit after the bill was delayed for two years.
In 2012, Congress passed the Stop Trading on Congressional Knowledge Act (STOCK Act) to change the perception lawmakers were profiting off their insider knowledge. Eleven years later, some question what the STOCK Act did to alleviate the appearance of corruption. On September 13, The New York Times reported 97 lawmakers or their families bought stocks or other financial vehicles over a 3-year period which may have overlapped their committee appointments and violated the law. Now, a bipartisan group of legislators wants to replace the STOCK Act, but the new proposal may contain a giant loophole.
Did the STOCK Act Fail?
In 2020, the failures of the STOCK Act took center stage. Dozens of members of Congress in both political parties made investment transactions worth over $150 million. They bought stocks that would increase in value during the pandemic; some included companies providing remote work technologies, telemedicine, and car makers shifting production from vehicles to ventilators. At the same time, they divested themselves of investments in hospitality companies or restaurants.
While the politicians may not have done anything illegal, it highlighted weaknesses of the STOCK Act. In December, Pelosi ignited controversy when she told the press lawmakers should be allowed to participate in the purchase and sale of stocks by participating in the “free market economy.” Rep. Alexandria Ocasio-Cortez (D-NY) argued members of Congress should abstain from stock purchases because they have access to data the public doesn’t and because they write and pass laws.
On September 14, the speaker told reporters new legislation banning stock trades could come up for a vote by the of the month. Yet, it was September 28 before Rep. Zoe Lofgren (D-CA) introduced the Combatting Financial Conflicts of Interest in Government Act. The legislation is supposed to ban politicians, their families, senior congressional staff, executive branch members, and the Supreme Court (SCOTUS) justices from trading stocks. Yet, the Daily Caller News Foundation (DCNF) interviewed numerous experts who backed the proposal but said there was a loophole that needed to be fixed.
New Law Could Allow Members of Congress To Continue Profiting Off Their Government Knowledge
The 26-page bill would require those obligated under the law to place investments in a blind trust run by an independent trustee to manage the assets and ensure no conflicts of interest exist. A public official would authorize the trustee.
Director of federal policy at the National Taxpayers Union (NPU) Andrew Lautz told the DCNF that government entities could approve trusts that aren’t “blind.” He said there could be ways to circumvent the law due to broad language subject to interpretation.
Tech policy director at the Taxpayers Protection Alliance Dan Savickas said there is no accountability in the bill, which defeats its intent. He noted there wasn’t a way in the legislation to ensure lawmakers don’t talk to those running the blind trust.
Still, a Democratic source told the DCNF that a goal of the law was to allow flexibility for ethics offices as they make rules as new forms of blind trusts are created in the future. The source added the Committee on House Administration, which is working on the legislation, will look at refinements to the law as part of the normal legislative process.
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