Kerby Anderson

Some members of Congress do quite well in the stock market. Speaker of the House Nancy Pelosi, for example, has a stock portfolio that outperforms the S&P 500. But she isn’t the only member of Congress that does better in the stock market than most hedge fund managers. Ten years ago (December 27, 2011) I did a commentary based on the two-year-long research by Peter Schweizer. It took him some time to pull together the information because Congress made it extremely difficult to connect the financial activities of politicians with their work activities. He made the case that members of Congress got rich off insider stock tips. You might wonder why members of Congress aren’t prosecuted. The simple answer is that what they were doing isn’t against the law. Peter Schweizer observed that there were five pages of specific regulations governing the use of congressional office stationery, but not a single word about stock trading. Not much has changed in Congress, but much has changed in public perception. A poll taken in December of 1,076 likely voters asked this question: “Should members of Congress and their spouses be allowed to trade stocks while serving in Congress?” Three-fourths (75.9%) said no. In fact, this is one issue where there is overwhelming bipartisan support (Democrats – 69.4%, Republicans – 78.2%, Independents – 79.5%). I think this could be a winning issue this year in the midterm elections. In fact, House Minority Leader Kevin McCarthy has suggested he may try to limit the ability of members of Congress to trade stock if Republicans take the majority in November. But as you might suspect, quite a few members of Congress don’t like the idea. I think you need to ask candidates this year if they plan to live by the same rules and laws that apply to the rest of us. Insider stock trading needs to stop.