A Look At John Hawley's Pelosi Act

The issue of lawmakers trading stocks has long been a controversial one in Congress. Despite holding powerful positions and having access to privileged information, legislators are not heavily restricted in their ability to invest in stocks.

This has led to questions of potential conflicts of interest and ethical dilemmas, as legislators may be able to gain insights through their legislative work, classified briefings, or meetings with constituents, donors, corporate executives, regulators, and other government officials that could give them an unfair advantage in the stock market. A recent analysis by The New York Times has shed light on the scale of the issue. According to the report, over the period of 2019 to 2021, a significant number of current senators or representatives were found to have engaged in the trading of stocks or other financial assets, either personally or through their immediate family members. This number was 183, with over half of them being members of committees that potentially provided them with inside information about the companies whose shares they reported buying or selling. One such example is Senator Tommy Tuberville, a Republican from Alabama and a member of the agriculture committee, who reportedly bought and sold contracts related to cattle prices even as the committee discussed the cattle markets.

Similarly, Representative Bob Gibbs, an Ohio Republican on the House Oversight Committee, reported buying shares of the pharmaceutical company AbbVie in 2020 and 2021, while the committee was investigating AbbVie and five rivals over high drug prices. In response to these concerns, lawmakers have attempted to introduce legislation to curtail stock trading by legislators. One such effort is the Pelosi Act, also known as the Preventing Elected Leaders from Owning Securities and Investments Act. The bill, introduced by Senator Josh Hawley (R-Mo.), would ban members of Congress from trading and owning stocks. Hawley has argued that members of Congress and their spouses shouldn’t be using their position to get rich on the stock market. He previously introduced legislation last year seeking to ban lawmakers and their spouses from holding stocks or making new transactions while in office.

The bill has yet to gain enough support from both sides of the aisle to pass through Congress. However, some experts are skeptical about whether the Pelosi Act would be effective in addressing the issue. The STOCK Act, passed in 2012, permits Congress members to participate in stock, bond, and other financial transactions as long as they don't use classified information to make trades and reveal any trades or trades made by their immediate family members that are worth $1,000 or more within 45 days.

The Pelosi Act would go beyond this by completely banning stock trading and ownership by legislators, but it remains to be seen if it would have any impact on the potential conflicts of interest and ethical dilemmas that can arise from lawmakers trading stocks.

Critics of the bill argue that it could have unintended consequences, such as preventing legislators from having a stake in the economy and making informed decisions about economic policy. They also point out that the STOCK Act already requires lawmakers to disclose their trades and that stricter penalties for insider trading already exist.

Additionally, some argue that the issue may not be so much about the trading itself, but rather the information that legislators have access to that could give them an unfair advantage. In this case, stricter regulations on disclosure and transparency of information could be more effective in addressing the problem.

In conclusion, the issue of lawmakers trading stocks is a complex one with no easy solutions. While the Pelosi Act may be well-intentioned in its effort to address potential conflicts of interest, it remains to be seen if it would be effective in practice. A more comprehensive approach that addresses both the trading itself and the access to information that legislators have may be needed to truly address the problem. Furthermore, the Pelosi Act has not passed yet and it's not clear if it will.

By Shamma Geste