9 ms·

Senators propose law that bans members of Congress from trading stocks

195 points by mandeepj 3y ago

phone8675309 3y ago
Per the article this is likely DoA: > Two bills on this matter — the TRUST in Congress Act and the PELOSI Act — have failed to move the needle this year, and it’s unclear if or when the Ban Stock Trading for Government Officials Act will be debated and voted on.
- jameslk 3y ago
  If it's truly a democracy I'd expect otherwise given the polling on this issue: > Public support for a ban on stock trading among members of Congress is almost unanimous — with 86% in favor nationwide, according to a new survey by the University of Maryland’s Program for Public Consultation.
  - phone8675309 3y ago
    The approval rating of Congress as a whole is 20% versus 76% disapproval rating. The pretense of this nation being a functional democratic republic has long been abandoned. We have merely the simulacrum of it now.
    - gottorf 3y ago
      > The pretense of this nation being a functional democratic republic has long been abandoned. We have merely the simulacrum of it now. The institutions of democracy in this country are challenged, but I'd say we are a long way from being a mere "simulacrum" of a functional democratic republic. I am confident that the populace and the institutions will rise up to the challenges. Popular policies or leaders aren't necessarily good, and vice versa. As an example, the president of El Salvador is wildly popular, with 80-90% approval ratings in polls; but critics also accuse him of being an authoritarian whose rule may well end up leaving El Salvador in a backslide into autocracy.
    - frumper 3y ago
      "But my rep is pretty good" says a majority of people as incumbents win.
      - Clubber 3y ago
        Yes, that's the issue. People generally like the people they elect, just not all the others. In a representative house, that's probably the way it should be, more or less.
  - gottorf 3y ago
    A democracy doesn't mean that the representatives you elect must always and only follow the will of the constituency: "Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion." Of course, when it comes to this particular matter of insider trading, it would seem particularly self-serving for Congress to not pass such a law with such popular support. But I want to point out that there is no broad agreement that in a "true democracy", the will of the majority is always reflected in policy.
    - isaacremuant 3y ago
      If you're going to go down that route, democracy is a sham in that there's little to no incentive for an elected official at a high level to represent their constitutients since they do better by representing their donors/lobbyists/political partners and paying lip service right before election times. Accusing their opposition of "being terrible, so you have to vote me" work wonders too, if they're able to convince people that false dichotomies are real.
chrisco255 3y ago
I don't see how any law like this would be constitutional without a full amendment. One class of Congress cannot arbitrarily impose restrictions on future classes of Congress without an amendment.
- EA-3167 3y ago
  Perhaps the ones proposing the law realize that, and are simply taking an action they can claim shows "Hey we tried, guys." That would be the sort of blatant cynicism I can imagine in the senate, and unfortunately I suspect it will work on the campaign trail too.
  - chrisco255 3y ago
    This is likely to be the real answer.
- JumpCrisscross 3y ago
  > one class of Congress cannot arbitrarily impose restrictions on future classes of Congress without an amendment Plenty of laws regulate Congress–it isn't sovereign. Laws require the President's sign off. It isn't one Congress binding another. It's the U.S. government restricting the Congress. (Or more accurately, its members.)
  - chrisco255 3y ago
    [flagged]
    - JumpCrisscross 3y ago
      > you're proposing a Constitutional change to deny members of Congress a legal right that is available to the broader population Is this a crackpot legal theory about how the last hundred years of precedent are unconstitutional because Redditor No. 9 million said as much? Where in the Constitution does it explicitly bar bribery? Come on.
coreDNA123 3y ago
If this can avoid congress members from trading defense stock and declaring war on china and iran to bump it...
- gottorf 3y ago
  Indeed. It doesn't appear to be such a huge burden to ask Federal elected officials, who are all paid a substantial salary and have great benefits, to put their assets in a blind trust, like in that old Onion joke[0]. [0]: https://www.theonion.com/you-people-made-me-give-up-my-peanut-farm-before-i-got-1819585048 https://www.theonion.com/you-people-made-me-give-up-my-peanu...
  - mcv 3y ago
    Is that still satire? The URL says The Onion, but the article sounds totally serious.
  - caminante 3y ago
    FTA: Blind trusts wouldn't be allowed. >The new bill would bar Washington officials from owning or trading stocks, even in blind trusts. The implication is that blind trusts are just wealth managers with a facade of independence.
    - gottorf 3y ago
      Thanks for pointing that out -- I missed that originally. It seems heavy-handed. Either blind trusts are actually blind (that is, real independence on the part of the trustee, not just a facade) or they aren't. If it's the latter, then that should be the part that needs dealing with. But I have a hard time believing that this is a real problem; trust law is extremely well established. In the end, what we want to do is align the personal incentives of our elected representatives with the incentives of society as a whole. That includes the ability for elected officials to (indirectly and passively) participate in the stock market, just like how millions of Americans do with their 401ks and IRAs. The problem is the rampant insider trading, not that congresspeople own stock. If this bill would make it so that elected officials can only own Treasury notes and real estate, well, it will probably end up inflating the value of those assets instead ;-) but jokes aside, it appears an undue burden.
DANmode 3y ago
You're supposed to be thinking and talking about UAPs!
- ikekkdcjkfke 3y ago
  If anyone could find a viral antidote to the divide in america..
ThePowerOfFuet 3y ago
> Continue reading on the app Appwall? No thanks.
- pedalpete 3y ago
  I don't get that app wall, but rather than posting a comment which doesn't add value, you can always get a non-walled link, which would help other people to not run into the same issue as you. If you don't want to click the link below, I'll summarize, there is almost nothing of value in the post. https://archive.is/wip/o11Qe https://archive.is/wip/o11Qe
nullc 3y ago
> The new bill would bar Washington officials from owning or trading stocks, even in blind trusts. Unless you're going to ban congresspersons to hae wealth-- where is the money going to go and what distorting effects will that have -- and will it be superior to the problems of (say) having a blind trust that just holds market indices?
- thunky 3y ago
  I don't see anything wrong with them owning total (US) market indices.
  - barbariangrunge 3y ago
    Take greenhouse gas emissions for example: if we had acted more aggressively in the past, we might have mitigated a lot of the climate change we're seeing today. But it would have impacted the stock market, and every senator/congressperson would have lost money personally by backing those initiatives. So, today, now we have record temperatures as the norm, ie, we're not shocked when every third Tuesday we see a record temperature and extreme weather event
    - thunky 3y ago
      I think that's a stretch. Energy is 4.5% of the S&P. Even if they weren't invested directly in Exxon they would not want to be associated with killing an industry and the jobs that go with it. They could have made money backing green energy just as easily anyway.
- mburns 3y ago
  It goes into a blind trust or an index fund. https://www.congress.gov/bill/117th-congress/senate-bill/3494/text https://www.congress.gov/bill/117th-congress/senate-bill/349...
  - nullc 3y ago
    Indeed, wtf. the article seems to directly contradict the bill text.
clove 3y ago
If they do this, we will lose the smartest members of congress. Hear me out via an example: Consider Nancy Pelosi, who made $20M via trading in 2020. To have predicted the market would crash during otherwise good times and then rise during otherwise hard times, you would have had to be an economic genius. If we had banned our senators from trading, Pelosi would probably choose trading over guiding our nation, essentially employing her 200+ IQ to making money instead of making our nation great. I say that instead of banning congress from trading, we should give them more power the better they are at trading, as doing so would ensure that the smartest congress members have their decisions more fairly weighted.
- hiatus 3y ago
  In your own profile you mention that you are a stock trader. Do you not see the potential confusion between cause and effect you are making here? When you control the laws of an entire country, it should be trivial to multiply your wealth by investing in areas and industries that you intend to effect with legislation.
- revlolz 3y ago
  This seems like a troll post, but I will bite in the spirit of hn and consider it very serious. The brain drain idea is a fallacy. These aren't doctors who will flee to private practices away from Medicare spot where they can earn more money. These are elected public representatives of the people. More power translates to more corruption and tyranny, and I'd be 100% opposed. Our government would be approaching near complete erosion of trust and values if we further empowered these people to become elected privateers. That may be silly to say given how low trust and value are at the present time, but this notion of empowering them to earn more money feels like it would be a defining catalyst moment in future history books to where it all went wrong for the American Republic.
  - polski-g 3y ago
    There are high IQ people who decide against being a doctor because its a lot easier to make $350k programming than working 60hr/week as a doctor (also no educational debt). Same thing here. If you want high IQ people to do things, then you need to compensate them in some fashion.
timcavel 3y ago
[dead]
rayiner 3y ago
This is a much better idea than the STOCK Act. It’s much less risky to separation of powers to have a bright line rule banning stock trading than to have prosecutions of members of the legislative branch by the machinery of the executive branch involving nebulous insider trading allegations.
WentFullRetard 3y ago
[dead]
notquitehuman 3y ago
They’re still openly soliciting and accepting bribes. This isn’t going to do anything to reduce public enthusiasm for the guillotine.
- nielsbot 3y ago
  I am optimistic it will help a little. Probably naive of me.
- zulban 3y ago
  Plugging one hole isn't useless just because there's two.
- voakbasda 3y ago
  Nothing less than the guillotine will satisfy me. We need to drain the swamp and start over, with that being the clear an present consequence for such behavior.
eadmund 3y ago
I wonder what the unintended consequences of this would be. If congressmen make less from trading stocks, where will they instead make money, or what will they do instead of make money? Full disclosure: I think that the idea of ‘insider trading’ is incoherent. In every trade, both parties believe that they are getting more than they are giving. In every stock trade the seller thinks that he is selling something for more than it is worth to him, and the buyer thinks that he is buying it for less than it is worth to him.
- bettercallsalad 3y ago
  > where will they instead make money, or what will they do instead of make money? Think tanks and defence analyst appearing on cable news seem like something they are already heavily involved in. Not to say speaker fees. Or lobbyists for foreign governments. They have endless streams of incoming money once they are elected to office for the rest of their life. Same goes for Fed officials like Federal Reserve. Ben Bernanke now works for Citadel. Go figure!
maxcan 3y ago
I've always felt that we should 5x-10x the salaries (Singapore style) of federal elected officials and cabinet secretaries but require them to divest their entire portfolio within 30 days of taking office and only hold securities issued by the US government, states, and localities.
- peteradio 3y ago
  Sounds nice on first order. Are there any unintended consequences? Personally I don't think you can kill corruption you can only balance it against itself.
  - maxcan 3y ago
    Im sure there are but not really aware of what they are. The one that I can think of is putting some downward pressure on asset prices when the market knows that a lot of wealthy people have to sell off assets somewhat quickly.
- spacemanspiff01 3y ago
  What I've always kinda thought is that each congress person gets a large amount of budget to spend on staff. ~order of 10 million per congressman. This would allow for the establishment of in house knowledge groups/ staffers, particularly with regards to policy, rather than having to rely on lobbiests. It would also reduce the churn from congressional staffer to industry lobbyist. Or at least that's my thought. The us gov spends a ridiculous amount of money, spending more in the organization meant to monitor and control that spend. If you even have a half a percentage gain in efficiency would pay for itself. This is forgetting the ability of congresspeople to be more responsive to constituents.
swamp40 3y ago
Ask professional loophole writers to write a law inhibiting their own wealth. Even more jaded, they will propose it to large media fanfare, but then delay the actual vote for months while they all voice their support for it. Then they will allow any Senator to vote FOR this if they need a local boost in their approval numbers. But obviously they will carefully make sure that the bill fails by a few key votes.
- bratgpttamer 3y ago
  "The Senate Parliamentarian had a doctor's appointment today, so regretfully, we couldn't pass this even if we wanted to"

195 points by mandeepj 3y ago

Per the article this is likely DoA: > Two bills on this matter — the TRUST in Congress Act and the PELOSI Act — have failed to move the needle this year, and it’s unclear if or when the Ban Stock Trading for Government Officials Act will be debated and voted on.

jameslk 3y ago
If it's truly a democracy I'd expect otherwise given the polling on this issue: > Public support for a ban on stock trading among members of Congress is almost unanimous — with 86% in favor nationwide, according to a new survey by the University of Maryland’s Program for Public Consultation.
- phone8675309 3y ago
  The approval rating of Congress as a whole is 20% versus 76% disapproval rating. The pretense of this nation being a functional democratic republic has long been abandoned. We have merely the simulacrum of it now.
  - gottorf 3y ago
    > The pretense of this nation being a functional democratic republic has long been abandoned. We have merely the simulacrum of it now. The institutions of democracy in this country are challenged, but I'd say we are a long way from being a mere "simulacrum" of a functional democratic republic. I am confident that the populace and the institutions will rise up to the challenges. Popular policies or leaders aren't necessarily good, and vice versa. As an example, the president of El Salvador is wildly popular, with 80-90% approval ratings in polls; but critics also accuse him of being an authoritarian whose rule may well end up leaving El Salvador in a backslide into autocracy.
  - frumper 3y ago
    "But my rep is pretty good" says a majority of people as incumbents win.
    - Clubber 3y ago
      Yes, that's the issue. People generally like the people they elect, just not all the others. In a representative house, that's probably the way it should be, more or less.
- gottorf 3y ago
  A democracy doesn't mean that the representatives you elect must always and only follow the will of the constituency: "Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion." Of course, when it comes to this particular matter of insider trading, it would seem particularly self-serving for Congress to not pass such a law with such popular support. But I want to point out that there is no broad agreement that in a "true democracy", the will of the majority is always reflected in policy.
  - isaacremuant 3y ago
    If you're going to go down that route, democracy is a sham in that there's little to no incentive for an elected official at a high level to represent their constitutients since they do better by representing their donors/lobbyists/political partners and paying lip service right before election times. Accusing their opposition of "being terrible, so you have to vote me" work wonders too, if they're able to convince people that false dichotomies are real.

chrisco255 3y ago

I don't see how any law like this would be constitutional without a full amendment. One class of Congress cannot arbitrarily impose restrictions on future classes of Congress without an amendment.

EA-3167 3y ago
Perhaps the ones proposing the law realize that, and are simply taking an action they can claim shows "Hey we tried, guys." That would be the sort of blatant cynicism I can imagine in the senate, and unfortunately I suspect it will work on the campaign trail too.
- chrisco255 3y ago
  This is likely to be the real answer.
JumpCrisscross 3y ago
> one class of Congress cannot arbitrarily impose restrictions on future classes of Congress without an amendment Plenty of laws regulate Congress–it isn't sovereign. Laws require the President's sign off. It isn't one Congress binding another. It's the U.S. government restricting the Congress. (Or more accurately, its members.)
- chrisco255 3y ago
  [flagged]
  - JumpCrisscross 3y ago
    > you're proposing a Constitutional change to deny members of Congress a legal right that is available to the broader population Is this a crackpot legal theory about how the last hundred years of precedent are unconstitutional because Redditor No. 9 million said as much? Where in the Constitution does it explicitly bar bribery? Come on.

coreDNA123 3y ago

If this can avoid congress members from trading defense stock and declaring war on china and iran to bump it...

gottorf 3y ago
Indeed. It doesn't appear to be such a huge burden to ask Federal elected officials, who are all paid a substantial salary and have great benefits, to put their assets in a blind trust, like in that old Onion joke[0]. [0]: https://www.theonion.com/you-people-made-me-give-up-my-peanut-farm-before-i-got-1819585048 https://www.theonion.com/you-people-made-me-give-up-my-peanu...
- mcv 3y ago
  Is that still satire? The URL says The Onion, but the article sounds totally serious.
- caminante 3y ago
  FTA: Blind trusts wouldn't be allowed. >The new bill would bar Washington officials from owning or trading stocks, even in blind trusts. The implication is that blind trusts are just wealth managers with a facade of independence.
  - gottorf 3y ago
    Thanks for pointing that out -- I missed that originally. It seems heavy-handed. Either blind trusts are actually blind (that is, real independence on the part of the trustee, not just a facade) or they aren't. If it's the latter, then that should be the part that needs dealing with. But I have a hard time believing that this is a real problem; trust law is extremely well established. In the end, what we want to do is align the personal incentives of our elected representatives with the incentives of society as a whole. That includes the ability for elected officials to (indirectly and passively) participate in the stock market, just like how millions of Americans do with their 401ks and IRAs. The problem is the rampant insider trading, not that congresspeople own stock. If this bill would make it so that elected officials can only own Treasury notes and real estate, well, it will probably end up inflating the value of those assets instead ;-) but jokes aside, it appears an undue burden.

DANmode 3y ago

You're supposed to be thinking and talking about UAPs!

ikekkdcjkfke 3y ago
If anyone could find a viral antidote to the divide in america..

ThePowerOfFuet 3y ago

> Continue reading on the app Appwall? No thanks.

pedalpete 3y ago
I don't get that app wall, but rather than posting a comment which doesn't add value, you can always get a non-walled link, which would help other people to not run into the same issue as you. If you don't want to click the link below, I'll summarize, there is almost nothing of value in the post. https://archive.is/wip/o11Qe https://archive.is/wip/o11Qe

nullc 3y ago

> The new bill would bar Washington officials from owning or trading stocks, even in blind trusts. Unless you're going to ban congresspersons to hae wealth-- where is the money going to go and what distorting effects will that have -- and will it be superior to the problems of (say) having a blind trust that just holds market indices?

thunky 3y ago
I don't see anything wrong with them owning total (US) market indices.
- barbariangrunge 3y ago
  Take greenhouse gas emissions for example: if we had acted more aggressively in the past, we might have mitigated a lot of the climate change we're seeing today. But it would have impacted the stock market, and every senator/congressperson would have lost money personally by backing those initiatives. So, today, now we have record temperatures as the norm, ie, we're not shocked when every third Tuesday we see a record temperature and extreme weather event
  - thunky 3y ago
    I think that's a stretch. Energy is 4.5% of the S&P. Even if they weren't invested directly in Exxon they would not want to be associated with killing an industry and the jobs that go with it. They could have made money backing green energy just as easily anyway.
mburns 3y ago
It goes into a blind trust or an index fund. https://www.congress.gov/bill/117th-congress/senate-bill/3494/text https://www.congress.gov/bill/117th-congress/senate-bill/349...
- nullc 3y ago
  Indeed, wtf. the article seems to directly contradict the bill text.

clove 3y ago

If they do this, we will lose the smartest members of congress. Hear me out via an example: Consider Nancy Pelosi, who made $20M via trading in 2020. To have predicted the market would crash during otherwise good times and then rise during otherwise hard times, you would have had to be an economic genius. If we had banned our senators from trading, Pelosi would probably choose trading over guiding our nation, essentially employing her 200+ IQ to making money instead of making our nation great. I say that instead of banning congress from trading, we should give them more power the better they are at trading, as doing so would ensure that the smartest congress members have their decisions more fairly weighted.

hiatus 3y ago
In your own profile you mention that you are a stock trader. Do you not see the potential confusion between cause and effect you are making here? When you control the laws of an entire country, it should be trivial to multiply your wealth by investing in areas and industries that you intend to effect with legislation.
revlolz 3y ago
This seems like a troll post, but I will bite in the spirit of hn and consider it very serious. The brain drain idea is a fallacy. These aren't doctors who will flee to private practices away from Medicare spot where they can earn more money. These are elected public representatives of the people. More power translates to more corruption and tyranny, and I'd be 100% opposed. Our government would be approaching near complete erosion of trust and values if we further empowered these people to become elected privateers. That may be silly to say given how low trust and value are at the present time, but this notion of empowering them to earn more money feels like it would be a defining catalyst moment in future history books to where it all went wrong for the American Republic.
- polski-g 3y ago
  There are high IQ people who decide against being a doctor because its a lot easier to make $350k programming than working 60hr/week as a doctor (also no educational debt). Same thing here. If you want high IQ people to do things, then you need to compensate them in some fashion.

timcavel 3y ago

[dead]

rayiner 3y ago

This is a much better idea than the STOCK Act. It’s much less risky to separation of powers to have a bright line rule banning stock trading than to have prosecutions of members of the legislative branch by the machinery of the executive branch involving nebulous insider trading allegations.

WentFullRetard 3y ago

[dead]

notquitehuman 3y ago

They’re still openly soliciting and accepting bribes. This isn’t going to do anything to reduce public enthusiasm for the guillotine.

nielsbot 3y ago
I am optimistic it will help a little. Probably naive of me.
zulban 3y ago
Plugging one hole isn't useless just because there's two.
voakbasda 3y ago
Nothing less than the guillotine will satisfy me. We need to drain the swamp and start over, with that being the clear an present consequence for such behavior.

eadmund 3y ago

I wonder what the unintended consequences of this would be. If congressmen make less from trading stocks, where will they instead make money, or what will they do instead of make money? Full disclosure: I think that the idea of ‘insider trading’ is incoherent. In every trade, both parties believe that they are getting more than they are giving. In every stock trade the seller thinks that he is selling something for more than it is worth to him, and the buyer thinks that he is buying it for less than it is worth to him.

bettercallsalad 3y ago
> where will they instead make money, or what will they do instead of make money? Think tanks and defence analyst appearing on cable news seem like something they are already heavily involved in. Not to say speaker fees. Or lobbyists for foreign governments. They have endless streams of incoming money once they are elected to office for the rest of their life. Same goes for Fed officials like Federal Reserve. Ben Bernanke now works for Citadel. Go figure!

maxcan 3y ago

I've always felt that we should 5x-10x the salaries (Singapore style) of federal elected officials and cabinet secretaries but require them to divest their entire portfolio within 30 days of taking office and only hold securities issued by the US government, states, and localities.

peteradio 3y ago
Sounds nice on first order. Are there any unintended consequences? Personally I don't think you can kill corruption you can only balance it against itself.
- maxcan 3y ago
  Im sure there are but not really aware of what they are. The one that I can think of is putting some downward pressure on asset prices when the market knows that a lot of wealthy people have to sell off assets somewhat quickly.
spacemanspiff01 3y ago
What I've always kinda thought is that each congress person gets a large amount of budget to spend on staff. ~order of 10 million per congressman. This would allow for the establishment of in house knowledge groups/ staffers, particularly with regards to policy, rather than having to rely on lobbiests. It would also reduce the churn from congressional staffer to industry lobbyist. Or at least that's my thought. The us gov spends a ridiculous amount of money, spending more in the organization meant to monitor and control that spend. If you even have a half a percentage gain in efficiency would pay for itself. This is forgetting the ability of congresspeople to be more responsive to constituents.

swamp40 3y ago

Ask professional loophole writers to write a law inhibiting their own wealth. Even more jaded, they will propose it to large media fanfare, but then delay the actual vote for months while they all voice their support for it. Then they will allow any Senator to vote FOR this if they need a local boost in their approval numbers. But obviously they will carefully make sure that the bill fails by a few key votes.

bratgpttamer 3y ago
"The Senate Parliamentarian had a doctor's appointment today, so regretfully, we couldn't pass this even if we wanted to"