Federal Reserve leaders should be representative of the country’s population. If they don't understand us, they can't represent us.
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Sometimes in life, we get lucky and the best solution is the simplest one. For example: Our elected members of Congress are openly and regularly trading stocks chasing personal profits, leading to seemingly endless possibilities for corruption. Thus, we should ban congressional stock trading.
Simple and clean. But let’s dive deeper.
So, what’s the big issue with congressional stock trading, you ask? Well, as a part of their duties, members of Congress are given unprecedented amounts of confidential information about, and routinely exercise oversight over, companies and organizations, which include publicly traded corporations. Unchecked, members could then use this information to profit in the stock market, linking personal gain and legislative action in ways that directly harm the legitimacy of our government.
And while longstanding legislation like the STOCK Act of 2012 attempts to make a clear ban on insider trading by members of Congress and congressional staff who use information gained from their official capacity, all this raises a logical question: why should Congressional leaders be allowed to trade stocks in the first place?
It has become more and more clear that the STOCK Act is nowhere near sufficient enough to halt these problematic trades. The momentum for these reforms continues to gain steam after a Business Insider report detailing that 57 members of Congress have failed to properly report their financial trades as detailed in the STOCK Act. And while these are only the most recent examples of dubious congressional stock trading, we all remember the 2020 scandal concerning Senator Richard Burr’s coincidental stock moves just after receiving classified briefings on the COVID-19 pandemic.
On the bright side, it is encouraging that recent energies have continued to increase the public’s call for passage of legislation to address this problem. For example, there’s the Ban Conflicted Trading Act, introduced by Rep. Krishnamoorthi (D-IL) and Sen. Merkley (D-OR). This bill would bar lawmakers and senior staff from trading stocks and require them to place stocks in a blind trust. And then there’s the Ban Congressional Stock Trading Act, introduced by Senators Jon Ossoff (D-GA) and Mark Kelly (D-AZ), additionally requiring that lawmakers’ dependent children and spouses be included in the ban as well. So many great ideas— now let’s get these bills to a floor vote!
And unless you think that every member of Congress is some type of financial markets genius (spoiler alert: they aren’t), it’s just a tad bit peculiar that they so frequently outperform everyday traders and investors. A recent New York Times report detailed that on average Members of Congress earned higher than average returns on their stock investments. And while of course all of the members deny any type of wrongdoing when it comes to these purchases, why leave the trust of the American people up to chance?
But, let’s examine…classified briefings and oversight power of major industries in the economy plus an outsized success rate for their many investments all adds up to…?
We don’t quite have to do the math here, but it does appear the American people overwhelmingly have started to put two and two together and come to their own conclusions, as new polling shows overwhelming support for an outright ban on congressional stock trading. And with such rampant support spanning the political spectrum, our Congress has no excuse not to answer the public’s call and implement these reforms that the people are demanding.
After all, if our highly esteemed elected officials are truly “doing it for the people,” trading stocks should be the very least of their concerns.