House Democrats introduced the so-called “Combatting Financial Conflicts of Interest in Government Act” on Tuesday, which would ban federal personnel from trading stocks. The legislation has been presented as a potential remedy to previously reported conflicts of interests on the Hill and as a means to prevent more abuses from taking place in the future.
The bill
This legislation, if passed, would apply to: members of Congress; each officer or employee of the legislative branch; the president; the vice president; presidential appointees; federal judges; members of the Board of Governors of the Federal Reserve; and the president of the Fed. Additionally, these individuals’ spouses and dependent children would be implicated in the ban.
Prohibited from trading and owning securities, commodities, futures, cryptocurrencies, digital assets “or any comparable economic interest acquired through synthetic means,” these persons would be required to either divest their holdings or place them into a qualified blind trust.
Those who violate the restrictions will be subject, at the discretion of the supervising ethics office, to a penalty of $1,000.
If, however, that violation continues for more than 30 days after the notice, then for each subsequent 30-day period after the date of notice, the offender will be fined an additional $1,000 plus “an amount equal to 10 percent of the value of the covered investment that is the subject of the violation.”
The problem
The New York Times published findings earlier this month revealing that at least 97 members of Congress were guilty of such conflicts, whereby they bought or sold stock, bonds, or other financial assets that “intersected with their congressional work.”
For instance, among California Democrat Rep. Ro Khanna’s trades in 897 companies, there were found to have been 149 potential conflicts.
While sitting on the Agriculture Committee, Khanna had reportedly traded in the agricultural company Deere & Co., among several other impacted companies.
While on the Armed Services Committee, his trades included Boeing, General Electric, and Raytheon Technologies.
While sitting on the Oversight Subcommittee on Economic and Consumer Policy, Khanna traded in Pfizer, Johnson & Johnson, Medtronic, and a host of other effected companies.
Rep. Zoe Lofgren (D-Calif.) traded in Intel and Applied Materials when sitting on the Science, Space and Technology Committee.
Rep. Alan Lowenthal (D-Calif.) traded in Vivint Solar, Sempra Energy, Vistra, and other energy companies when sitting on the Natural Resources Subcommittee on Energy and Mineral Resources.
While on the Transportation Committee, Lowenthal saw fit to trade in Uber, Boeing, and General Motors.
The proposed remedy
Although Speaker Nancy Pelosi had shot down the initiative last year, she directed Rep. Zoe Lofgren (D-Calif.) to draft the bill in February.
Support for the bill had initially multiplied when it was revealed that Sen. Richard Burr (R-N.C.) dumped stocks after a classified briefing discussing the COVID-19 threat at the outset of the pandemic.
Senate Minority Leader Mitch McConnell (R-Ky.) indicated at the time of Pelosi’s February announcement that he would consider supporting the ban.
Republican Sen. Josh Hawley said, “Year after year, politicians somehow manage to outperform the market, buying and selling millions in stocks of companies they’re supposed to be regulating. … Here’s something we can do: ban all members of Congress from trading stocks and force those who do to pay their proceeds back to the American people.”
Hawley insisted, “It’s time to stop turning a blind eye to Washington profiteering.”
Despite indications earlier this year that the bill would be brought forth, there was nevertheless prolonged delay.
Days after the New York Times highlighted that her husband Paul Pelosi had bought and sold between $25 million and $81 million worth of stocks between 2019 and 2021(including some tied to businesses impacted by congressional scrutiny and action), Pelosi was asked why it had taken several months to materialize.
Pelosi indicated there had been a great deal of back-and-forth about its language, but that its latest iteration had come out “strong.”
The deadline
The House reconvened Wednesday, one of three days of legislative business left before the midterm elections. Lawmakers will bail out of Washington on Friday, not to conduct business again until November.
Therefore, if the bill, introduced at the last moment, is not passed this week, then it will have to wait for months to be considered. In that time, the body of the House may significantly change.
If Pelosi returns in November, it may not be as House speaker. A Republican majority in the House may spare her from having to worry about the passage or application of this bill.
Going out of style
The Hill reported that Pelosi’s international travels over the past year have amounted to her “swan song.”
There have been indications that she seeks to become U.S. ambassador to Italy. The post, which is presently unfilled but for a temp, chargé d’affaires ad interim Shawn Crowley, is regarded by some to be the desired soft landing for the first Italian-American to lead the U.S. House.
An anonymous source recently told Fox Business Network that the job is Pelosi’s if she wants it.
Besides the appeal of the embassy in Rome, which boasts a three-story, $1.1 million wine cellar, a private theater, swimming pool, and tennis court, parking Pelosi overseas may prove politically expedient for House Democrats, providing them with a less contentious leadership transition.
As ambassador — which, as a presidential appointment, consequently falls under the proposed ban — Pelosi would still be banned from trading, although it is possible she may no longer want to.
Pelosi was exempt from the New York Times’ analysis of conflicts of interests since “her disclosure filings were not flagged” as she “does not sit on any legislative committees.” Nevertheless, while she sat in Congress, her husband Paul had notably good fortune in the market, such that some have thought him the beneficiary of more than just the gift of preternatural prescience.
Recently, Paul Pelosi picked up between $1 million and $5 million in Nvidia shares (~20,000 shares) on June 17. His investment in the computer chip company was shortly followed by congressional moves to pass over $70 billion in corporate subsidies for U.S. semiconductor production, prompting his shares to soar in value.
Paul Pelosi bought nearly $10 million in Microsoft shares through call options on March 19, 2021, days before the company was awarded a contract by the U.S. Army valued at $22 billion. By April, the stock had jumped 12%.
Just prior to Biden signing an executive order to replace the federal automobile fleet with electric vehicles, Paul Pelosi bought $1 million in Tesla stock. The Washington Times reported he had made a 21% on his investment.
Paul Pelosi has also made significant bets on Amazon, Apple, and Google, which are among the tech behemoths Nancy Pelosi is supposed to regulate.
Nancy Pelosi has an estimated net worth of over $100 million. Her annual salary is approximately $200,000.