After an initial flurry of momentum, efforts to ban members of Congress from trading stocks have slowed as many lawmakers agree on the need to ban trades but haven’t settled yet on the details.
Now as concerns mount that time may be running out, a key figure in the talks tells Yahoo Finance that a unity bill could come soon as lawmakers gradually move towards a consensus. In a new interview with Yahoo Finance Presents, Sen. Kirsten Gillibrand (D-NY) said around a dozen lawmakers are negotiating a draft bill and that a final one will be introduced “at some point in the next few weeks.”
If the lawmakers actually deliver a proposal, it would mark a major step forward in the efforts to reform the relationship between lawmakers and Wall Street after a series of scandals in recent years have raised questions over whether lawmakers should trade stocks given their knowledge of non-public information.
Speaking to Yahoo Finance, Gillibrand suggested lawmakers have come closer to agreeing on one of the key issues — how lawmakers can put their money into blind trusts.
We are going to create some provisions for people who come into Congress owning certain portfolios, that they can hold them in blind trust,” she said. “That’s probably going to be the outcome.
She added that cryptocurrency trading would be banned, according to the most recent draft of the unity bill, and for all securities “we would allow people to own what they own, but they would have to put it behind a blind trust.
That approach would be similar to some of the current public proposals. One of the most aggressive plans — from Sens. Jon Ossoff (D-GA) and Mark Kelly (D-AZ) — allows lawmakers to move an existing asset into a blind trust without divesting it. Kelly himself has noted that he personally has gone further.
“Before I was sworn in, I took steps to put my assets in a qualified blind trust, not only can I not make trades, I don’t even know what’s in there,” he told Yahoo Finance in January. “The same thing is true for Senator Ossoff.”
Some advocates say this distinction is important, arguing a blind trust isn’t blind if you know the assets it holds.
“Placing individual assets into a qualified blind trust, absent a requirement to sell the original assets, is not a sufficient solution to the conflicts that these assets present,” Donald Sherman of the Citizens for Responsibility and Ethics in Washington said during a congressional hearing earlier this month.
Other outstanding issues
In addition to the blind trust issue, a range of other provisions remain publicly unresolved.
Some of the bills include the family members of lawmakers in any ban while others don’t. For her part, Gillibrand has proposed a ban on active trading be applied to officials like the president, vice president, Supreme Court justices, and senior Federal Reserve officials, a provision not included in some other bills.
“It’s important that if we do this ban, it’s across all layers of government,” Gillibrand said this week.
This is not the first push to stop lawmakers from having an unfair advantage in the stock market. In 2012, then-President Barack Obama signed the Stop Trading on Congressional Knowledge (STOCK) Act, which required public disclosure of trades within 45 days. Gillibrand helped push for passage then.
However, a recent investigation from Insider found that 59 members of Congress have violated the transparency provisions in the STOCK act.
Congress’ challenge in reaching a deal this year comes despite public support for a measure to police lawmakers’ trades in the wake of recent scandals, including one notable incident where then-Sen. Kelly Loeffler (R-GA) and Sen. Richard Burr (R-NC) sold stocks soon after a private briefing in the early days of the coronavirus pandemic. Burr faced a Justice Department investigation that ended without charges.
‘Time is of the essence’
A spokesperson for Sen. Jeff Merkley (D-OR) told Yahoo Finance that the Senator is hopeful a deal can be reached and “negotiations are ongoing around all issues, including qualified blind trusts.”
“Merkley believes this is a critical issue to take up while the window of opportunity is open, and time is of the essence,” the spokesperson said.
It’s unclear how many Republicans are involved in the current discussions, but figures like Sen. Josh Hawley (R-MO) and other Republicans have voiced support and even released plans for stock trading bans. Still, only a few of the bills have garnered support from a bipartisan group of lawmakers.
And even if a consensus bill is reached, some Republican lawmakers have warned against a “knee jerk bill” while others — including some Democrats — have also questioned the need for a ban at all.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.