Most Republicans and Democrats support a ban on stock trading for members of Congress, according to a survey by the Program for Public Consultation (PPC) at the University of Maryland’s School of Public Policy.
Eighty-six percent of members of Congress say they support the measure, with 87 percent Republicans, 88 percent Democrats, and 81 percent Independents in favor of the ban.
The survey also outlines that the bi-partisan majority also wants a stock ban for the president, vice president, and Supreme Court.
The criticism of members of Congress trading stocks while in office is not new; however, the issue resurfaced after some members of Congress were accused of making lucrative purchases of pharmaceutical stocks based on insider information about Covid-19 vaccines.
Currently, Members of Congress can trade stocks from large companies. Members of Congress get information that the public does not get, which can impact the value of stocks or assets they may trade. Members of Congress and other federal officials also make decisions that affect the business prospects of companies they may hold stock or assets in.
In 2012, a law was introduced to address a potential conflict of interest. The bill requires Members of Congress to disclose all of their stock trades so that the public, ethics boards in Congress, and federal agencies can see if there is any conflict of interest and investigate any possible “insider trading.”
Insider trading is when someone buys or sells stock based on information that is not available to the public and is a felony that comes with prison time.
There is currently a debate over whether it is enough to require just the disclosure of stock trading for Members of Congress, or if there should be greater restrictions.
The bill to prohibit any stock trading in individual companies among members was introduced in 2022, as well as a ban on the President, the Vice President and the Supreme Court.
Under the new rule, officials would still be able to buy and sell stocks in large portfolios, like mutual funds; and would still be able to own their existing stocks as long as they are put into an independently managed fund, also known as a blind trust. The ban would apply to any family that lives with them.
However, Members of Congress would still be able to buy or sell shares of mutual funds or index funds that include stocks in numerous companies.
The survey of 2,625 registered voters provided a short briefing on the legislative proposals. The respondents also evaluated arguments for and against.
“While the prospect of a stock trading ban is controversial within Congress, public support approaches unanimity,” commented Steven Kull, director of PPC. However, most did not favor banning stock trading for all federal employees. This was favored by just 40%, including just 42% of Republicans, 37% of Democrats, and 42% of independents.
The most popular argument in favor of the prohibition on Members said that there are “too many potential conflicts of interest when Members of Congress can hold and trade stocks in individual companies” (92% convincing, Republicans 92%, Democrats 93%).
It states that there are too many potential conflicts of interest when Members of Congress can hold and trade stocks in individual companies. Members often take actions that significantly affect companies and industries in which they may have stocks in. Banning stock trading would give the public greater trust that their officials serve the nation’s interest, not their wallet. This is an easy way to prevent corruption and restore trust in government.
The con arguments did not do as well. It stated that a law already requires Members of Congress to report all their stock trades, so everyone can see what they are doing.
Since that law was passed, a major study found that Members don’t do any better in the stock market than the general public.
The most convincing argument was that this new law is not necessary since there are already laws against insider trading that apply to Members of Congress but it was found convincing by minorities (28% overall, Republicans 25%, Democrats 30%).
The survey was conducted online on May 19-30, 2023, with a probability-based national sample of 2,625 registered voters provided by Nielsen Scarborough, which is recruited by telephone and mail from a random sample of households. There is a margin of error of +/- 1.9%.
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