Nearly 10 months after Nancy Pelosi scoffed at the idea of barring lawmakers from participating in the stock market, the Democratic speaker has unveiled a bill that attempts to address insider trading concerns in Washington. Introduced Tuesday night, the Combatting Financial Conflicts of Interest in Government Act, parts of which have been met with heavy scrutiny, would prohibit certain federal officials and their immediate families from owning or trading stocks in individual companies, and investments in securities, commodities, futures, and cryptocurrencies. Apart from members of Congress, the 26-page bill would require federal judges, Supreme Court justices, the president, vice president, and a number of officials at the Federal Reserve to place “any covered investment…into a qualified blind trust not later than 180 days after the effective date.”
By including the spouses and dependents of federal officials in its ban, the bill addresses one of the key methods lawmakers may employ to dodge conflict of interest accusations. Still, the requirement that officials enter their assets into a blind trust could create new ethics concerns and potentially eliminate current transparency initiatives, according to Walter Shaub, the former director of the Office of Government Ethics under Barack Obama. “In reaction to the Watergate scandal that toppled the Nixon presidency, Congress passed the Ethics in Government Act. Among other things, that act created strict new requirements for blind trusts in the federal government,” wrote Shaub in a Twitter thread. “Pelosi’s bill would eliminate all of these requirements by authorizing each ethics office to allow anything they want and call it a blind trust. Literally anything. There are no limits in the bill as to what these offices can do.”
Shortly after winning the 2016 election, Donald Trump attempted to address conflict of interest concerns by vowing to place his wide-reaching business assets into a trust. The move was exposed as a farce when ProPublica revealed that the former president’s trust agreement allowed him to tap his assets at will while in office. If Pelosi’s bill were to pass, it could allow countless elected officials and federal appointees to take the Trump sham even further, argued Shaub.
Last December, Pelosi soundly rejected the notion that members of Congress and their spouses should be barred from holding or trading individual stocks. “We are a free-market economy. They should be able to participate in that,” she said at the time. But in the following months, the speaker softened on the matter before ultimately, according to Insider, directing Representative Zoe Lofgren, who chairs the Committee on House Administration, to draft the Combatting Financial Conflicts of Interest in Government Act.
Over the past two years, Pelosi’s own portfolio has come under steady scrutiny. In July, when members on both sides of the aisle were discussing new congressional trading restrictions, House minority leader Kevin McCarthy went so far as to argue that Pelosi should stay out of the talks due to her venture capitalist husband’s involvement in day-trading.
Lawmakers have long been barred from leveraging insider knowledge they receive in Washington for their holdings in the stock market. The STOCK Act of 2012 requires prompt public disclosures of trades made by lawmakers and their immediate family members. But while these laws are technically on the books, they are reportedly rarely enforced. A recent New York Times report on congressional trading between 2019–2021 found that 18% of all members who “reported a trade of a stock or another financial asset by themselves or an immediate family member” “sat on congressional committees that potentially gave them insight into the companies whose shares they reported buying or selling.”