by Greg Barker
Wednesday, 8
June 2022
Debate
11:00

Why haven’t we banned Washington politicians from trading?

Leaders like Nancy Pelosi are abusing their position
by Greg Barker
Who, me? Credit: Getty

When the Federal Reserve introduced a raft of restrictions on its senior officials, which included banning them from purchasing certain funds, shorting stocks, and holding cryptocurrencies, commodities, and foreign currencies, it didn’t have much choice. This was a response to not only the 2020 congressional insider trading scandal, but the recent revelations of potential insider trading by Fed officials Eric Rosengren and Robert Kaplan. 

Despite public anger, both officials faced zero punishment, apart from what appeared to be involuntary early retirement, which just so happened to coincide with the peak of the greatest stock market boom in U.S. history.

Fast forward to today, and fresh scandals are emerging. With insider trading in crypto also rife, it comes as no surprise that tomfoolery in conventional markets remains rampant. Though crypto’s unregulated state allows any deviant authority figure to bet on the known outcomes of key decisions without a trace, this hasn’t stopped them from openly making suspiciously timed bets in traditional, regulated markets.

As this viral tweet noted, the latest stock options filings screenshotted by congresstrading.com (one of the countless semi-parody services to emerge in recent years that track the trading activity of Washington insiders) showed how the husband of Congresswoman Nancy Pelosi had bought millions in Apple and Microsoft stock options on May 24th, 2022. By doing so he’d called the latest bottom in the U.S. stock market, not only increasing the couples’ ever-increasing wealth but also the public’s scepticism surrounding the Pelosi family’s conveniently timed trading performance.

But as with other politicians who have built fortunes in the stock market, even if Pelosi and her husband did intend to illegally trade on hot tips from Wall Street connections, proving foul play remains an arduous task. Before more recent regulations came into force, Congress, following an insider trading scandal in the 2008 financial crisis, enacted the Stock Act to prevent people in power from committing foul play in financial markets. 

Yet, after Business Insider published a damning record of 63 Stock Act violations by members of Congress, this also failed to create widespread support for banning insider hijinks.

That, however, could be about to change. In mid-December last year, feeling the heat from the public and fellow Congress members, Pelosi changed her stance from rejecting a ban on stock trading — at one point saying, “we are a free-market economy. [Politicians] should be able to participate” — to enabling lawmakers to craft bills and conduct public hearings around the subject. These are now stalling, but underway.

The increasingly popular idea among Americans to ban members of Congress from trading individual stocks could be the starting moment in a revival of public trust in institutions, which remains at historic lows. 

Whether or not Pelosi and other people in power are just getting lucky or have devised an insider trading ring similar to the bucket shops of the early 1900s, the damage has already been done. Until democracies figure out how to stop the powerful from profiting from their positions in both regards, growing mistrust of public institutions and those who lead them will not only continue but heighten. An outright stock trading ban, at this shaky stage, may be the only path to recuperation.

Greg Barker is an independent journalist and quant, who also writes under the name Concoda. You can find him on Substack and Twitter at @concodanomics.

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Rasmus Fogh
Rasmus Fogh
21 days ago

Sounds worth while. But as long as US politicians require huge sums for campaigning and there is no limit on spending or fund raising – good luck get things cleaned up!

Allison Barrows
Allison Barrows
21 days ago

I laughed out loud at the headline. “We” haven’t banned anything because “They” run everything.

ARNAUD ALMARIC
ARNAUD ALMARIC
21 days ago

I cannot think of no other US politician who has so sullied the name of the United States as this Nancy Pelosi has done. Where did you find her?

Rasmus Fogh
Rasmus Fogh
21 days ago
Reply to  ARNAUD ALMARIC

Donald Trump? Richard Nixon? Jefferson Davis?

ARNAUD ALMARIC
ARNAUD ALMARIC
21 days ago
Reply to  Rasmus Fogh

No to the first two, but the third is close.

Andrew McDonald
Andrew McDonald
20 days ago
Reply to  ARNAUD ALMARIC

No to foulmouthed lawbreaker Nixon? Sets the bar a bit high.

Andrew Martin
Andrew Martin
21 days ago
Reply to  ARNAUD ALMARIC

From the Adams Family.

ARNAUD ALMARIC
ARNAUD ALMARIC
21 days ago
Reply to  Andrew Martin

She reminds me of Rider Haggard’s character’SHE’.

Dominic A
Dominic A
19 days ago
Reply to  ARNAUD ALMARIC

Margorie Taylor Greene, Mitch McConnell, Joseph McCarthy……

T Maz
T Maz
21 days ago

Any private person who played the market with insider information would be in jail – see Stewart, Martha (who was wrongly convicted, btw). Politicians are permitted to use insider info! Could the system be any more corrupt?
But whom among them will stand up and call this out and risk losing their own gravytrain? None so far.

Warren Trees
Warren Trees
21 days ago

What’s the purpose of selling your soul to become a politician besides the lifetime pension and unfair advantages?

joe hardy
joe hardy
18 days ago

Term limits.