Scroll through the right TikToks and you’ll find a cottage industry of would-be financial advisers who are obsessed with the money moves of lawmakers. Sometimes, it’s a little hard to tell whether these accounts are looking to scold politicians or celebrate them. Many take a special interest in Speaker of the House Nancy Pelosi, who, to be fair, does not trade stocks herself. But her husband does—aggressively. One TikToker called her a psychic. “The optics of this whole practice are pretty uncomfortable and sort of gross from a good-government perspective,” says Sam Brodey, who reports on Congress for the Daily Beast.
Despite all the cheerleading on TikTok, most Americans do not think lawmakers should be able to trade stocks at all, which is why some thought this was going to be the year Congress reined itself in when it came to the stock market. After all, there are multiple bills floating around the Capitol that could ban elected officials from investing in companies directly. “There’s not a whole lot of issues that are talked about on the agenda right now that command such bipartisan support,” says Brodey.
The public wants them to do it. Many congresspeople themselves want to do it. So why won’t Congress quit stock trading? I had Brodey on Wednesday’s episode of What Next to find out. Our conversation has been condensed and edited for clarity.
Mary Harris: It’s not like there are no rules for how politicians should conduct themselves when buying stocks. It’s just that the rules that exist are pretty loose. In 2012, Congress passed the STOCK Act. It mandates regular disclosure of a member’s investment activity. And it also prohibits members of Congress from using private information gleaned from their public job when they invest. But there’s a problem with that.
Sam Brodey: The standard for nailing someone on a STOCK Act violation is really, really hard. A good example here is former Sen. David Perdue of Georgia, who was an influential lawmaker on a specific Armed Services subcommittee related to naval ships and submarines. And while he was active on that subcommittee, he had invested heavily in a contractor that got a massive contract to build submarines for the U.S. Navy and ended up increasing the value of the stock that Perdue owned. That is allowed. There is no rule saying that you can’t do that.
There are plenty of examples like this—trades that come at a particularly opportune moment and seem to play hopscotch with the ethical line. But the recent push to ban stock trading in Congress really picked up steam a couple of years back after a few senators made trades that were hard to ignore.
These trades stood out because the politicians involved seemed to be adjusting their portfolios based on information they got at work. Back in January 2020, after an intelligence briefing on the dangers of the novel coronavirus, senators from Georgia and North Carolina seemed to dump vulnerable stocks. Sen. Richard Burr averted $87,000 in losses, and then became subject to a lengthy investigation by the Securities and Exchange Commission.
That’s when a few members of Congress began pushing for reform. Democratic Rep. Abigail Spanberger and Republican Rep. Chip Roy introduced a bill in June of 2020 that quickly drew bipartisan support.
Members from across the political spectrum in both parties have written and gotten behind these bills because the politics are so good. And it gives basically anybody a readymade and compelling political message, whether that’s “I’m fighting the swamp” or you can even work out some kind of Pelosi message into it if you want.
An anti-Pelosi message.
Exactly. Or if you’re Abigail Spanberger and you’re in a tough district, you can say, “Look, I’m fighting to clean up Washington.” That’s a tried-and-true message that we’ve seen over the years to be pretty effective.
Because the politics of it were so good, we saw lots of members introduce various proposals related to stock trading on both sides of the Capitol. They shared the same goal, which was to severely curtail or outright ban members of Congress from trading stocks. But because members are so sensitive to this, because it affects them, there was a lot of debate and discussion about the finer points of how these bills were actually going to work. The Spanberger-Roy bill required members to put their assets into blind trusts, and others said that would be too onerous for some members. And then other proposals were like, “Well, we should just have this apply across the government. Let’s have this apply to the judicial branch.” So there were a lot of proposals, and then the problem became reconciling those proposals to arrive at one bill that could get consensus support.
It’s interesting, because Nancy Pelosi assigned one of her top deputies, Zoe Lofgren, to work on this bill. It seems like a good sign that she would do that. But was it?
Let me take us back to a day in February of this year, when the House is in session. And there was kind of a critical mass on stock trading. People like Spanberger were getting really bullish about their ability to move this thing quickly. It wasn’t unreasonable to think that perhaps this could get done. So there’s all this hype that Pelosi’s going to make a big announcement on this. And then she goes to her weekly press conference, and she gets up there, and she says, “Well, we’re going to consider doing this, but we need to get members to support it. And we have to look at expanding this to the judicial branch and the Supreme Court. So what we’re going to do is we’re going to see if the members want to do this and get to yes.”
And people are like, Wait, that wasn’t an announcement of anything. That was an announcement that we’re going to take a look at this.
So she’s pumping the brakes.
Yeah, Pelosi punted on that one. And then ultimately she handed the ball to Zoe Lofgren, a close ally of hers, who chairs the House Administration Committee, which sets the rules for members of Congress. There was a sense that Pelosi and her senior team were not supportive of this, didn’t really see the political upside, and were really reflecting the concerns of their closest allies, the senior members who have been there for a long time, in the lukewarm bathwater of Capitol Hill where you start to lose touch with reality, who are saying, “Why should I have to do this? Who cares?”
I’m trying to figure out who Nancy Pelosi is in the stock ban conversation because she, of course, has a husband who’s heavily invested in the stock market. And that raises a lot of red flags for folks. And she definitely doesn’t seem warm on the idea of stock ban legislation. Do you have theories here about what’s going on? Because she certainly has the power to block legislation if she wants to.
The optics are not good. But what people miss in this conversation is how Nancy Pelosi operates and what ultimately has made her probably the most effective Democratic legislative leader in history. What Nancy Pelosi cares about is the unity of the Democratic caucus in the House. They have a narrow majority. This is her strength: She avoids issues that split her caucus. That’s what makes her effective. This is an issue that, for better or for worse, splits her caucus.
And oh, yeah, the people who are the most opposed to this are the people that Nancy Pelosi has served with for 10, 20, 30 years and are her closest allies. And if this came up for a vote, they would be under immense pressure to vote yes because the optics are so bad and this would end up being a headache and potentially split the caucus and give Kevin McCarthy and the Republicans something to beat us up with. That is a theory as to why she has been so reluctant to move the ball forward.
When did it become clear that a stock ban was not going to happen? At least not in the next few weeks, maybe not in this term.
There’s been a stewing sense for a few weeks that it was not going to happen before members left for the October pre-midterm campaign recess.
Thus denying folks something to run on.
Exactly. And I’ve been told by operatives they would love to cut ads talking about how Democrats did this. So, over the span of months, they had a long-delayed hearing. And then there were all these really incremental developments. It got kind of ridiculous to the point that you’re like, OK, how many announcements about announcements are going to happen here?
The final week that the House was in session before leaving for the recess, they finally dropped text for a bill that was the product of the House Administration Committee and Lofgren process, ostensibly blessed by leadership.
It feels a little bit like turning in your term paper right before the deadline.
It came across so obviously to proponents of the push that this was never designed to happen. They drop it three or four days before they’re supposed to leave. This is fairly complex. So it gives everyone a perfect out to say, “Well, this is a really complicated bill, and we should have a robust debate about it.” That’s always a tell in Congress—”robust debate.” And you have people like Spanberger and others tearing their hair out, going, “We’ve been talking about this since February, and now we don’t have the time to do it because this bill dropped three days before we’re supposed to leave.”
Another important thing is that the bill, in the eyes of a lot of folks who are close to the process, is pretty flawed. It cast a very broad net, saying that not only members of Congress and senior staff would be subject to this, which is what most people supported, but also brought in the judicial branch, which was not really something that proponents were super interested in tackling in this context. So, a lot of the good government groups that have been involved here panned the bill. Progressives felt it didn’t go far enough. And it probably wouldn’t have ultimately gotten a ton of support. And so now here we are. Perhaps this could get done in the lame-duck session. Weirder things have happened, but they do need to resolve some substantive issues in the bill, and they’ve got to find the time to do it, which leadership to this point has not really seemed like they wanted to do.
Part of the reason this legislation to ban stock trading died, according to the official narrative, is that the votes were not there. As far as you can tell, Is that true?
This was never whipped in any formal sense because there was no bill to whip until three days before they left. And so there was never a tally of who supports this and who doesn’t. This particular bill would not have been the bill a lot of these folks who are supportive of a ban wanted to see. However, if it had come up for a vote, I do think it would have been really hard for a lot of Democrats—and some Republicans too—to vote against it just because the optics are so bad.
Throughout the whole year when this process was going on, I heard that “members” were opposed to this—a vague blob of “members.” We never got any names or even an inkling of who the people were who opposed it. And that’s because most members did not want to be even close to on the record opposing this. So that tells me that if the legislation had come up on the floor, it would have had a pretty decent chance of passing.
One of the interesting factoids you’ll stumble across if you dig into the stock trades of politicians is that people who’ve studied them don’t think they’re market geniuses. There’s a professor at Dartmouth who said politicians would be better if they were just in index funds. It’s a weird thing to know because then you really do start to wonder why this group wouldn’t police themselves.
The vast majority of members who trade individual stocks are getting information that much of the public does not, but they’re out there making dumb trades like your average American. The problem is that a lawmaker cannot see why an average member of the public would say, “Wait, sure, I can do that, but how the hell are you able to do that?” And the fact that this has been allowed for so long calcifies in the culture of Capitol Hill to the point that it’s just accepted.
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You mentioned that there were a bunch of members of Congress who were waiting to be able to craft ads for this latest midterm election where they said, “We’ve done this, we’ve put in this stock trading ban for politicians. Look what we did for you.” And now they can’t do that. I wonder if instead those same politicians are crafting ads saying, “I’m going to go back to Washington and make sure this happens, and I’m going to be fighting against Nancy Pelosi and Democratic leadership.” And whether that opens up a whole new rift that, as you’ve said, Nancy Pelosi was trying to avoid by shunting this issue to the side.
That’s exactly right. I would not be surprised whatsoever if a Democrat running in a tough race cut an ad saying, “I fought to ban members of Congress from trading stocks. I fought against corruption. Nancy Pelosi stopped me from doing that. Send me back to Congress and I’ll keep fighting.” Yet, something that’s been a throughline for Nancy Pelosi is that her attitude is “Just win, baby.” That’s what Nancy Pelosi cares about.
So she doesn’t care if you use her as a tagline.
She never has. Because Republicans have always made her into this boogeyman in campaign season, and Democrats in those races have had to distance themselves from Nancy Pelosi. Many of them said that they would not vote for her for speaker. But then they show up, and they have a change of heart, and they vote for Nancy Pelosi for speaker because that’s just what happens.
So Nancy Pelosi shrugs her shoulders and says, “You do you.”
What does she care about at the end of the day? She cares about holding the gavel. Whatever gets her to 218 seats in the House, that’s just fine with her.