Reviews | Democrats in Congress must ban lawmakers from trading stocks

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It’s a long-running scandal that members of Congress are allowed to trade individual stocks. They have access to privileged information. They oversee a vast network of federal policies. Their actions can have direct effects on the companies in which they hold stakes. The potential for real or perceived conflicts of interest is enormous.

Still, House Speaker Nancy Pelosi (D-Calif.) has not always favored cracking down on lawmakers’ stock trading. “It’s a free market economy,” she said last year, dismissing concerns. Lately, she’s changed her stance, saying a stock trading bill from Rep. Zoe Lofgren (D-California) will hit the House floor this month. Its good. The question is whether the speaker will do what is necessary to cross the finish line.

Ms Lofgren sent a letter to her colleagues last week setting out a framework for a bill that would prevent public officials from exploiting their positions for personal gain: prohibiting them and their spouses and dependent children from negotiating stocks, securities, commodities, futures, cryptocurrencies and similar investments, and requiring them to either dispose of existing assets or place them in a qualified blind trust. These officials would still be able to hold diversified funds as well as government bonds, on the theory that trading in such investments does not have the same potential for abuse. Disclosure requirements would also become more detailed and penalties for non-compliance tougher.

The proposal described by Ms. Lofgren is attractive. But advocates of good government are nevertheless wary. Democratic congressional leaders have not allowed votes this year on several bipartisan bills drafted along the same lines, hardly bolstering confidence that they are determined to reform. Timing is now an issue: Lawmakers are leaving Capitol Hill on Friday and won’t return until after the midterm elections, so any thorny disputes will need to be ironed out quickly if the Lofgren bill is to pass.

The proposal’s prospects are further clouded by the push to apply the bill’s restrictions to Supreme Court justices as well as members of Congress. It’s a guaranteed failure for Senate Republicans, at least some of whom should back the bill for it to move forward. Otherwise, the bill could pass through the lower house, giving Ms Pelosi a victory and a talking point, but perish in the upper house.

The speaker should not allow this to happen. If Ms Lofgren and her allies believe their bill is better than those already presented, they should take the opportunity to fix their own branch and leave the others for separate legislation. Some reforms are better than none.

A recent New York Times report on conflicts of interest in Congress found that nearly one-fifth of lawmakers have bought or sold assets in industries likely to be affected by their work. Some of the examples seem to show irregularities; the majority probably show only the appearance of it. But both are corrosive to citizens’ trust in good government. By quickly introducing a workable bill, House Democrats would help restore public trust — holding themselves accountable for stock trading and doing what they said they would do.

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