On stock trading ban, House Democratic leaders faced internal pressure

House Democratic leaders today indicated that they are moving forward with legislation to ban members of Congress from trading stocks, a stark reversal from their years of supporting the practice. House Speaker Nancy Pelosi, D-Calif., reportedly dropped her opposition to the effort, paving the way for a bill this year.

Large majorities have long considered it ridiculous that members of Congress can own and trade stocks even though they have the power to alter the prices of those stocks through legislative action or inaction. After several business scandals, Congress has required disclosure of ownership and transactions, though members frequently flout the rules.

Pelosi may just be bowing to the inevitable and giving in to broad public pressure, but there was one specific internal push that may have made a difference: an ongoing discharge petition. Rep. Alexandria Ocasio-Cortez, DN.Y.

A House rule allows 218 members who sign such a petition to force a bill to the floor for a vote. Last week, Ocasio-Cortez kicked off that process by filing a bill banning members’ stock trading with the rules committee packed with requirements that would make the committee highly unlikely to pass it. The resolution would have required an immediate floor vote on the bill and prohibited amendments.

After seven legislative days of no action, a request for discharge can be requested and filed, and today – Wednesday – was the seventh legislative day. Ocasio-Cortez’s move was meant to pressure Pelosi’s office not to just ignore the issue and instead come up with its own version of the legislation — one that would be less onerous for members.

The pressure has regularly constructed to prohibit members of Congress from owning and trading stocks. In 2020, Georgia Republican Senators Kelly Loeffler and David Perdue came under scrutiny for stock trading. Loeffler was among a small group of senators who allegedly used the special knowledge offered by their positions to make trades (Loeffler denied this), while Perdue, a prolific trader, made what have been called stock trades “at the right time” at the start of the coronavirus pandemic. Both lost their re-election. Senator Richard Burr, RN.C., is also under investigation for selling shares in the hospitality industry in March 2020.

However, Pelosi, one of the wealthiest members of the House, has long been entrenched. “No,” she simply replied when asked in mid-December if the members should be banned from trading. “It’s a free market.”

Minority Leader Kevin McCarthy, R-California, sensed an opening in Democratic resistance and said he would ban the trade if Republicans regain a majority in the House. On January 20, Pelosi opened up to the possibility of a ban. “I don’t buy into it, but if the members want to do it, I’m okay with that,” she said.

On February 1, Ocasio-Cortez presented his resolution to the rules committee.

The underlying bill, authored by Rep. Raja Krishnamoorthi, D-Ill., and joined by Ocasio-Cortez and others, does not include a ban on members’ spouses trading in stocks, though A spokeswoman for Ocasio-Cortez said she supported adding that restriction. The bill prohibits top congressional aides from trading stocks.

Senate legislation introduced by Elizabeth Warren, D-Mass., prohibits spouses from trading. Sen. Jon Ossoff, D-Ga., also introduced a ban.

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