When Second District Rep. Angie Craig took office in 2018, she sold off all of the stock she held in St. Jude Medical, the company where she had worked for over a decade before taking office.
“I didn’t believe that I should come in as a sitting member of Congress owning individual stock because I didn’t want anyone to perceive that I was doing anything but looking out for their best interests,” Craig said. Craig does not currently own any individual stocks.
Now, Craig wants to expand this caution to the rest of Congress. She’s starting with the House by introducing the No Option for Stock Trading and Ownership as a Check to Keep Congress Clean Resolution. That’s a mouthful, so it’s colloquially referred to as the NO STOCK Resolution.
Craig’s resolution would prohibit members of the House of Representatives from owning common stock of any individual public corporation.
An already existing law, the Stop Trading on Congressional Knowledge (STOCK) Act, which was signed into law by President Barack Obama in 2012, was designed to combat insider trading. It prohibits the use of non-public information for private profit, and includes members of Congress and other government employees who might have access to insider information. The bill passed the Senate on a 96-3 vote.
But Craig believes that the STOCK Act doesn’t go far enough.
Why Craig introduced the NO STOCK Resolution
Craig first introduced the NO STOCK Resolution in the 116th Congress under former President Donald Trump. She said that a major turning point for her was when she was sitting on a Transportation and Infrastructure aviation subcommittee meeting where members were being briefed on the Boeing 737 MAX airplane that had multiple deadly crashes and was later taken out of commission.
“I actually sat in that subcommittee hearing, and I thought to myself, ‘My God, like, everybody in this meeting could walk out and short Boeing right now if they wanted to, why are we allowed to trade stocks?’ It just seemed so wrong to me,” Craig said.
Although the Boeing event was the real catalyst for Craig, she said that some questionable trades made by lawmakers at the beginning of the COVID-19 crisis cemented her desire to pass the NO STOCK Resolution.
In Mid-February 2020, before the virus spiked in the U.S. or the situation was officially declared a pandemic, Republican Sen. Richard Burr of North Carolina, then chairman of the Senate Intelligence Committee, sold hundreds of thousands of dollars in stocks. The sale occurred shortly before the U.S. stock market tanked as the pandemic became widespread in the states. Due to his position on the Intelligence Committee, Burr had access to private coronavirus briefings before many members of Congress and long before members of the American public.
Democratic Sen. Diane Feinstein of California and Republican Sen. James Inhofe of Oklahoma also fell under scrutiny over stock sales that they or their spouses made right before the global market took a huge hit due to the pandemic. Former Republican Georgia senators Kelly Loeffler and David Perdue were also investigated.
All of the accused lawmakers denied any wrongdoing, and the Justice Department dropped its probe of all of them. However, the Securities and Exchange Commission is still investigating Burr’s sales.
It’s times like these — when members of Congress have access to information that could mean a huge hit to the stock market — that Craig argues that the temptation or ability to trade individual stocks with that knowledge simply should not exist.
“I think that the American people deserve to know that we’re making our decisions solely based on our constituents best interests,” Craig said. “Even the appearance of wrongdoing or self interest, like owning stocks in a company affected by a congressional action, erodes faith in public policy and in our institutions as a whole.”
An investigation by Business Insider revealed that dozens of members of Congress violated the STOCK Act’s reporting requirements. (First District Rep. Jim Hagedorn made the list for being three months late disclosing the sale of a stock in a company that makes colon cancer screening products.) The STOCK Act requires members of Congress to disclose stock trades within 45 days of the transaction.
Craig’s NO STOCK Resolution would prohibit members of the House from “owning common stock of any individual public corporation.” To comply with the rule, members will have to sell any common stock shares as soon as they get into office. Members of the House would still be able to own stocks in a blind trust or in some mutual funds.
Craig said she decided to introduce her NO STOCK Resolution as a resolution instead of a bill because this way, it would change the House rules and avoid having to go through the filibuster process in the Senate (the bill would need the support of at least 60 senators instead of a simple majority). As a consequence, the rules would only apply to members of the House.
Banning trading by members and their spouses
Craig’s isn’t the only congressional effort to curtail congressional stock trading. Democratic Sens. John Ossoff of Georgia and Mark Kelly of Arizona introduced a bill in the Senate last week called the Ban Congressional Stock Trading Act, which would require not only lawmakers but also their spouses and dependent children to place their stock portfolios into blind trusts for the duration of the lawmaker’s time in office.
This bill differs from Craig’s in a couple of key ways: First, it’s a bill, not a resolution, meaning that in order to become law it will have to get past the filibuster in the Senate and also be approved by the House. It also applies to lawmakers’ spouses and children, which Craig’s bill does not do.
Only 10 active members of Congress have currently reported using a qualified blind trust, or a formal arrangement requiring congressional approval in which the lawmaker transfers management of their financial assets to an independent trustee. Third District Rep. Dean Phillips is one of those 10 lawmakers. None of Minnesota’s other representatives or senators have reported using a qualified blind trust. This approach differs from Craig’s — she decided to sell off her individual stocks when she took office instead of handing them over to an independent trustee.
Meanwhile, Republican Sen. Josh Hawley of Missouri introduced a very similar bill called the Banning Insider Trading in Congress Act, which would also ban lawmakers from trading stocks while in office. However, Hawley’s bill would not ban spouses and dependent children of lawmakers from trading stocks. Hawley’s bill would have the Government Accountability Office oversee the issue, while Ossoff’s bill would have the congressional Ethics Committee perform any audits.
Perhaps the biggest difference between the two bills: Ossoff’s bill would fine lawmakers from their salaries if they broke the new law, but Hawley’s would require lawmakers to return their profits to the general public through the Treasury Department.
Pelosi defends stock ownership
Despite the activity around the issue, it might not even see a vote in the House while House Speaker Nancy Pelosi is in charge. Pelosi has repeatedly defended members’ right to trade in the open market while in office, especially when they are already mandated to report their trades under the STOCK Act.
In a press conference last week, reporters asked Pelosi why members of Congress should be able to trade stocks, she said “we have a free-market economy, they should be able to participate in that.”
Though Pelosi has her misgivings about legislation like Craig’s NO STOCK Resolution, House Minority Leader Kevin McCarthy has reportedly expressed interest in limiting or banning members from trading stocks. And there’s support from the White House: Biden’s top economic adviser, Brian Deese, called it a “sensible” proposal in an interview Friday with CNBC.
Craig said this type of bipartisan support is a very good sign for her resolution.
“You get lots of information when you’re a member of Congress, Craig said. “And yes, the [current] rules prohibit you from insider trading, but we’ve seen examples that really are in a super gray area. And all that does, is it really just diminishes Americans’ and Minnesotans’ confidence that members of Congress are here for the right reason.”