Congressional Trading Scandal

Elected officials curiously accumulate wealth while in office that cannot be explained by their salaries or the assets they brought with them before being elected.

Concerns about insider trading, which is illegal for almost all except for politicians, have led to concerns that not only are individuals getting rich inappropriately, but that in many cases they are doing so in ways which may harm the public interest.

A Business Insider study in January found that a bipartisan group of 78 members senators and representatives recently failed to properly report their financial trades as mandated by the Stop Trading on Congressional Knowledge Act of 2012, also known as the STOCK Act.

A Global Times review states that “Even as the US economy stumbles due to inflation and regulatory burdens, American lawmakers can’t help but get caught in shady stock market deals. Just last week, a Democrat representative from Massachusetts violated a 2012 law that merely requires members of Congress to report their stock trades in a timely manner. According to Business Insider, Bill Keating traded up to $15,000 worth of shares of one budget clothing chain for another but reported it after the 45-day deadline mandated by the Stop Trading on Congressional Knowledge (STOCK) Act, a 2012 bill intended to curb unethical market behavior. Keating’s office said the trades were made by an investment firm and that the House Ethics Committee forgave the transgression since the delay was within their grace period. The congressman didn’t even have to pay a $200 fine, and odds heavily favor his re-election in the midterms. Two other Massachusetts Democrats in the House have also violated the STOCK Act, according to Business Insider. In fact, a total of 73 lawmakers have, since the outlet started tracking their transgressions in 2021.”

A New York Times articles states that “97 lawmakers or their family members bought or sold financial assets over a three-year span in industries that could be affected by their legislative committee work… The timing of one trade by the wife of Representative Alan Lowenthal, Democrat of California, was especially striking: His disclosure statement said she had sold Boeing shares on March 5, 2020 — one day before a House committee on which he sits released damaging findings on the company’s handling of its 737 Max jet, which was involved in two fatal crashes.”

On January 24, Senator Josh Hawley (R-Mo.) reintroduced legislation banning lawmakers from stock trading. The Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act would prohibit members of Congress and their spouses from holding or trading individual stocks. The bill will require members found in violation to return their profits to American taxpayers. Specifically, The PELOSI Act would give members and their spouses six months after first assuming office to divest any holdings or put them in a blind trust. Any members found in violation of the bill would have to ‘return their profits to American taxpayers.

According to Senator Hawley, “For too long, politicians in Washington have taken advantage of the economic system they write the rules for, turning profits for themselves at the expense of the American people. As members of Congress, both Senators and Representatives are tasked with providing oversight of the same companies they invest in, yet they continually buy and sell stocks, outperforming the market time and again. While Wall Street and Big Tech work hand-in-hand with elected officials to enrich each other, hardworking Americans pay the price. The solution is clear: we must immediately and permanently ban all members of Congress from trading stocks.”

The name of the bill after the former House Speaker Nancy Speaker reflects questions about the wealth she gained in office. A Free Beacon report revealed that she and her husband sold up to $3 million in shares of Google, just before the Justice Department launched an antitruct probe.

Illustration: Pixabay

Quick Analysis

Ukraine’s Frozen Conflict

As we approach winter in the northern hemisphere, the war in Ukraine is beginning to resemble a “frozen conflict” from many perspectives. Ukrainian President Volodymyr Zelensky recently told the media he hopes the war will end faster once President-elect Trump takes over in January. Opinions in Moscow, however, differ from that of the Ukrainian leader. Russian President Vladimir Putin argues that the North Atlantic Treaty Organization (NATO) needs to exclude Ukraine from joining in “exchange” for peace. If it does not, he says, then no end to the war is in sight. So far there is no Christmas solution. Several NATO countries, according to Vladimir Socor of the Jamestown Foundation, are tentatively considering “coalitions-of-the-willing” to provide security for Ukraine outside of the formal NATO framework. There is, however, no collective mechanism today under which such an arrangement is viable. According to the NATO Charter, while Ukraine is a NATO partner country, it may not join as a full member since it has not fulfilled the requirements for membership. That has not stopped NATO and allies from continuing “to provide Ukraine with unprecedented levels of support, helping to uphold its fundamental right to self-defence,” according to the organization. Socor says that keeping Ukraine out of NATO will not advance peace with Russia. Waiting for a peace settlement, he suggests, would only serve to encourage Moscow to continue the war indefinitely. Although the Biden Administration officially withdrew its support for Ukrainian membership in 2021, NATO maintains an “open door” policy toward membership-seeking countries. The current White House position led the way for European states to oppose Ukraine’s membership saying that a decision should be delayed until “conditions are met.” Biden pushed for changing “open door” to a “bridge” metaphor. It is not intended as an across-the-board NATO policy and has been implemented in the past on a case-by-case basis, says Socor. “The alliance’s open-door policy was not fully insulated from Russia’s non-statutory blocking power, and NATO-aspirant countries’ path toward membership was not always irreversible.” Russia has successfully blocked states like Georgia from joining, first in 2008 and again after the war in Ukraine began in 2014. Russia recognizes the value add of Ukraine to NATO is enormous and that Kyiv has a better case than some other nations. Putin’s invasion was, in part, intended to foreclose that option. By 2021, Moscow was pushing hard to maximize its war objectives, which included further annexations of Ukrainian territory. A main goal for Putin was, and is, to ensure there is no Ukraine left to join NATO. As President-elect Trump prepares to assume office in January, he is faced with the historical challenges presented by the war. Post-conflict security guarantees were the center of several proposals made during the 2023 military stalemate. The incoming Trump Administration has yet to outline how it intends to handle the Russia-Ukraine war. Analysts in Washington believe that the new Administration will expect its European allies to guarantee the majority of Ukraine’s security needs. As we approach 2025, several European nations have acknowledged that they do not view Ukraine as eligible for NATO membership as it would draw the organization into the middle of the conflict. Others want to wait until the war is over or pending a “peace” settlement before considering Ukrainian membership. Socor reports that some “influential voices” are suggesting that “Kyiv should join NATO after “freezing” the war along a stable armistice line, de facto accepting Ukraine’s partition, with NATO security guarantees applying de jure to the government-controlled territory only.” This would mean starting accession talks soon with the actual talks to commence only after a ceasefire is in place. Trump arrives in Washington at a time when Putin’s hybrid strategies of war in Ukraine have eviscerated commonly-held differences between war and peace. “Absent a political consensus in NATO over Ukrainian membership, certain European allies, including France’s President Emmanuel Macron, are holding informal consultations about post-conflict security guarantees to Kyiv by NATO members outside of NATO’s framework,” according to the Jamestown Foundation. The Biden Administration downplayed the discussions on possible forms of military assistance and defense industry cooperation by sending only an Assistant Secretary of State. For a European peace to hold the Trump Administration would need to formally extend the United States’ nuclear deterrence to Ukraine. Options under discussion in Europe include a “coalition of the resolute” to deploy forces to Ukraine as part of a possible armistice package, deterring further Russian attacks, says Secor. European officials are also debating, without any agreement, whether its military forces could perform non-combat logistical roles to free Ukrainian forces to fight. None of the possible courses of action has moved forward as all eyes are waiting on the incoming Trump Administration for clues about its intended level of support for a NATO framework and other non-NATO proposals. Daria Novak served in the U.S. State Dept.