The majority leader’s announcement that the House would not vote this week on a bill to curb trading by members of Congress punted the issue until after the midterm elections and reflected a rough road ahead.
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Representative Steny H. Hoyer, Democrat of Maryland and the majority leader, said the legislation was on hold, at least until after the midterm elections.
WASHINGTON — Legislation to limit stock trading by members of Congress has stalled amid resistance from members of both parties to more tightly regulating their financial activities, raising doubt about the prospects of a bid to ensure that public officials are not profiting off their positions.
Speaker Nancy Pelosi, Democrat of California and initially a skeptic of such a measure, embraced the effort in recent months after pressure from rank-and-file lawmakers. She said that the House would take up the issue this month, before adjourning for the midterm elections. But on Thursday, Representative Steny H. Hoyer, Democrat of Maryland and the majority leader, told reporters that the legislation was on hold, at least until after the balloting in November.
“It’s an important issue,” Mr. Hoyer said. But members of the House, he said, “need time to look at it and make sure that when we do something, we do it right.”
The delay was a potentially permanent setback to efforts to rein in stock trading by members in response to a surge of anger among voters and scrutiny by watchdog groups about lawmakers’ virtually unlimited ability to buy and sell financial instruments.
Congress is scheduled to return to Washington in six weeks to complete its business after the election, but the appetite among members to regulate themselves is unlikely to increase after they have faced voters, especially if Democrats lose their majority. The chances of the effort in the Senate, already uncertain, are unlikely to improve, at least in the short term.
“We’ve watched delay after delay after delay,” said Representative Abigail Spanberger, Democrat of Virginia and a leading proponent of banning trading by members of Congress. Rather than embracing legislation she had introduced last year to do so, she added, “House leadership decided that they wanted to kind of reinvent the wheel” and write their own bill.
In a scathing statement on Friday, Ms. Spanberger called the delay an example of why her party needed new leaders in Congress, branding it “a failure of House leadership.”
Ms. Pelosi told reporters on Friday that she did not think the measure had the votes to pass because of widespread concerns among members.
“This is the legislative process,” she said.
Public outrage over congressional stock trading intensified in recent years after revelations that Senator Richard M. Burr, Republican of North Carolina, and three other senators had sold stocks in early 2020 after private briefings on the risks of a coronavirus outbreak in the United States.
ImageSenator Richard M. Burr, Republican of North Carolina, in 2020. Public outrage over congressional stock trading intensified after revelations that he and three other senators had sold stocks early that year, after private briefings on the risks of a coronavirus outbreak in the United States.Credit…Pool photo by Al Drago/EPA, via Shutterstock
“I think that politicians have gotten away from the definition of public service,” said Kevin Williams, an Iraq war veteran and firefighter in San Antonio, who trades stocks in his spare time and has said on social media that trading by lawmakers and their spouses is improper. “You get elected by your constituents to come up there and represent them. You’re not up there to trade stocks.”
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Polls suggest that nearly two-thirds of Americans support a measure to bar members of Congress from trading individual stocks.
Ms. Pelosi, like many of her colleagues, had at first been cool to the idea of tightening the current law. It is illegal to trade on nonpublic information, and a law enacted a decade ago requires representatives and senators to disclose any transaction valued at $1,000 or more that they or members of their immediate families make.
Historically, Congress has been reluctant to regulate itself. Members are exempt from several workplace and labor laws, as well as some whistle-blower and disclosure statutes.
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Still, a growing chorus of lawmakers has argued that stricter limits on financial trading are needed to combat the appearance of impropriety and to prevent conflicts. Paul Pelosi, Ms. Pelosi’s husband and an active trader, has drawn scorn from critics who say he could be benefiting from knowledge of his wife’s work, though there is no evidence to show that. Ms. Pelosi has said she has no prior knowledge of or involvement in any transactions.
An analysis by The New York Times showed that from 2019 to 2021, 97 representatives and senators or their immediate family members reported trades of stocks, bonds or other financial assets that could have been influenced by committees they were serving on. The day after the article was published, Ms. Pelosi announced that the House would vote this month on legislation to limit stock trading by lawmakers.
But instead of embracing Ms. Spanberger’s measure, Ms. Pelosi dispatched a close ally, Representative Zoe Lofgren, Democrat of California and the chairwoman of the Administration Committee, to draw up a different bill. The speaker’s one requirement, she said, was that it cover the judicial branch as well as Congress.
That bill, released late Tuesday, would eliminate most financial asset trading for lawmakers, their spouses, dependent children, senior staff aides and federal judges, including Supreme Court justices. It would allow them to hold investments through financial holding structures known as blind trusts — in which the owner does not know how the assets are managed — and certain other types of investments, such as broad-based mutual funds, state or municipal bonds and some family businesses.
Lawmakers would have six months to get rid of their individual stock holdings. The bill would also increase the fees that members must pay if they fail to comply and empower the Justice Department to bring civil actions against violators.
Some ethics experts praised the measure as an essential step toward replenishing trust in Congress.
“Although this bill has room for improvement concerning the scope of covered officials and potential loopholes, it answers voters’ calls for reform,” Trevor Potter, the president of the Campaign Legal Center, said in a statement on Thursday.
But others derided the bill as ineffective, citing a provision that would allow Congress and other government bodies to vote to allow their members to hold any other type of investment trust they deemed permissible. Skeptics also argued for stronger disclosure requirements
Blowback was also coming from inside the House. Fifteen Republicans sent a letter to Ms. Lofgren on Sept. 16 complaining that they had not been meaningfully included in negotiations on the bill and arguing that it was intended to score “cheap political points rather than passing sound policy.”
At the same time, some Democrats also said that they had been left out of Ms. Lofgren’s legislative process entirely. Many lawmakers barely had a chance to review the bill before Mr. Hoyer announced it was being shelved.
“I think there’s a lot of effort to purposely, kind of, make this die under its own weight,” said Representative Chip Roy, Republican of Texas and the first of 71 members to co-sponsor Ms. Spanberger’s bill. “There are a lot of people in the body who would rather not restrict their ability to continue to trade.”
Mr. Roy said he would not have voted for Ms. Lofgren’s bill because he considered it to be overly complicated.
“Honestly, I don’t know why we’ve made something that’s not so complex, so complex,” said Representative Angie Craig, Democrat of Minnesota. She is one of 64 co-sponsors of a separate bill introduced by Representative Raja Krishnamoorthi, Democrat of Illinois, that would ban most stock trading and also bar members from serving on the boards of for-profit companies.
Ms. Lofgren, who held a hearing on the stock-trading issue in April and whose staff spent eight months drafting her 26-page bill, was more resigned.
“It’s a leadership decision,” she said of the delay in considering her legislation. The future of the bill was “whatever they decide,” she said of House leaders.
Some lawmakers expressed hope that a stock-trading bill could still be passed later in the year, before Congress ends it current session. One was Senator Jeff Merkley, the Oregon Democrat who is leading his party’s efforts on the issue in the Senate.
“I am disappointed; I won’t say it hurts it,” he said of the effect of the delay on the bill. “The fact that it’s been in the news so much at this moment makes it more likely that members are being asked ‘where do you stand on this?’ as they approach their elections.”
Mr. Merkley said he had yet to announce his own bill because of policy “sticking points,” but was hopeful that the effort could be jump-started in the so-called lame-duck period after the elections.
“If you look at the last Congress, 44 percent of the bills were passed in the last two months of the Congress,” he said. “That’s where the rubber hits the road.”