Since the pandemic, the stock market activity of members of Congress is increasingly being scrutinized.

On Wednesday, a bipartisan bill that would prevent members of Congress from buying and selling stocks while they are in office was brought to the Senate floor by a Senate committee.

The Senate Committee on Homeland Security and Governmental Affairs voted 8-4 to approve a revised version of a law that would prohibit members, their spouses and children, and presidents and vice presidents from owning or buying individual stocks and assets.

Today we will take an historic step towards passing legislation that prohibits members of Congress to trade stocks. The first time a Senate Committee has considered legislation on this subject was when Michigan Democrat Gary Peters chaired the meeting. “Americans should be confident that the federal officials they elect are acting in their best interest and not just their own.”

After years of unsuccessful attempts to reinforce an existing 2012 law prohibiting insider trading, the latest attempt to curb members’ trading activities comes after failed attempts to improve that law. Those who criticize the law say it is not enforced enough and has insufficient penalties.

The markup took place hours before Israeli Premier Benjamin Netanyahu was to speak at a joint session of Congress. The committee initially had a lengthy list of bills that needed to be marked up. However, on Wednesday morning they discarded all but the legislation which would prohibit member trading. Peters announced that the committee will reconvene to discuss the remaining agenda items next week. This was the first full Homeland Security Panel meeting since the attempted assassination of former President Donald Trump earlier this month.

Peters stated that “we had originally planned a far more ambitious agenda.” “But since the attempted assassination 10 days ago of former president Trump, the committee is focused on providing answers and transparency to the American public.”

“Wolf in sheeps’ clothing”

Since years, anti-trading legislators have tried to improve on existing laws. However, competing proposals and a lack of leadership support have repeatedly stalled the effort. In the House and Senate, at least 12 proposals have been made to limit or ban members’ ability to own and trade individual stocks.

Jeff Merkley of Oregon, a Democrat who introduced a bill called the Ending Trading and Holding in Congressional Stocks Act (ETHICS), a retooled form was reached after bipartisan negotiations. The agreement was announced at a joint press conference with Democratic Senators earlier this month. Jon Ossoff and Peters of Georgia, and GOP Senator Josh Hawley from Missouri.

In their version, members of Congress and the President and Vice president would be prohibited from purchasing and selling securities, commodities and futures, as well options, trusts, and other similar holdings. The law would mandate that elected officials, their spouses, and dependent children divest themselves of their covered assets starting in 2027. It would also increase the penalties for violating the 2012 law on insider trading from $200 to $500.

The bill was criticized by some Republican members.

Mitt Romney, a Utah Republican senator, called the legislation a wolf dressed in sheep’s clothes because it was drafted carelessly. Romney, one of the richest senators, is not seeking re-election and said that the proposal is punitive. He suggested it could be a solution looking for a problem, since insider dealing is already illegal.

Romney asked, “Have You Thought About Donald Trump?” Under this bill, Donald Trump could not become president. He would have to sell his entire stock in Truth Social. He would have to sell his private investments.

We don’t want people to trade stocks. Romney, who is a Trump critic continued, “If the legislation was drafted to stop that, I would support it.” It calls for the divestiture of all kinds of assets people might have, which will prevent them running for political office.

Romney proposed a second-degree modification to the substitute amendment, which would have excluded any securities or other assets owned prior to becoming a congressman, president or vice-president. This amendment was defeated.

Blind trust provision is dropped

In an earlier version, the bill allowed members to transfer their assets to blind trusts that were qualified. This solution has been proposed in other pieces of legislation.

Abigail Spanberger, a Republican representative from the House of Representatives, has introduced a similar proposal that is supported by more than 70 members in the House. Spanberger has, however, expressed her support for “momentum”, around the revamped Senate Bill.

Spanberger, a Virginia Democrat who is running for governor of her own state, urged Speaker Mike Johnson (R-La.) last year to bring legislation before the House. She repeated that call in July but has yet to receive a response.

She said, “I am encouraged by this bipartisan energy that is moving us towards enacting the long-overdue and much-needed reform,” in a July 10 statement. It’s time that Speaker Johnson does his part by bringing bipartisan legislation to the U.S. House.

Since the pandemic when some legislators sold their stocks before COVID-19 caused havoc on the global markets, the stock market activities of members have been scrutinized more and more. Justice Department investigation, but no charges filed.

The incident drew the attention of the media and sparked a cottage-industry of trade trackers. Dozens sites and social media accounts provide their followers with tips on how to trade like members in Congress, and they document what prominent legislators are buying and trading. The public polling continues to show this practice as deeply unpopular.

Congress has so far refused to act.

Nancy Pelosi (D-Calif.), former Speaker of the House, made millions with her venture capitalist spouse during her tenure in office. In 2022, she vowed that after years in opposition, legislation would be brought to the floor, but then broke her promise.

Kevin McCarthy, former Californian Rep., stated that he supported a ban on members trading stocks when Pelosi was speaker. However, he dropped the idea once he became speaker. Senate Majority leader Charles E. Schumer (D-N.Y.) endorsed this idea in 2022 but has not spoken publicly about it since.

On Wednesday, neither Schumer nor Johnson responded to comments made by their spokespeople.