‘A Failure of House Leadership’: Democrat Mutinies After Hoyer Blocks Congressional Trading Ban

‘A Failure of House Leadership’: Democrat Mutinies After Hoyer Blocks Congressional Trading Ban
Rep. Abigail Spanberger (D-Va.) speaks at the podium standing with members of the Problem Solvers Caucus in a press conference outside the U.S. Capitol in Washington on Dec. 21, 2020. (Cheriss May/Getty Images)
Joseph Lord
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A House Democrat is up in arms against party leadership in the lower chamber after Majority Leader Steny Hoyer (D-Md.) blocked legislation that would ban stock trading by members of Congress.

Rep. Abigail Spanberger (D-Va.), incensed by the decision, said in a Sept. 30 statement that it was “a failure of House leadership” and called for a new generation of Democrats to take control of the party.
The text of the legislation (pdf), dubbed the Combatting Financial Conflicts of Interest in Government Act, would seek to ban a range of officials—in Congress, the executive branch, the Supreme Court, and at the Federal Reserve—from trading or owning investments in instruments including stocks, commodities, futures, and cryptocurrencies.

The draft legislation would force individuals covered by the measure to divest themselves of these holdings or put them in a qualified blind trust.

Spanberger’s letter comes after Hoyer on Sept. 30 announced that the bill would not come up for a vote this week.

Asked to explain the decision to not follow through on the expected vote, Hoyer told reporters, “People have to look at it.”

“It’s an important issue,” he added, saying Democrats need more time “to make sure that if and when we do something, we do it right.”

Spanberger’s Statement

Spanberger, a leader of the bipartisan effort to block stock trading by members of Congress, shot back in a stinging statement against her party’s current leaders.

“Our job as elected officials is to serve the people—not ourselves,“ Spanberger wrote. ”That’s why I’ve been proud to lead the charge on legislation to ban Members of Congress and their immediate families from trading individual stocks—not only because it’s the right thing to do, but because the Virginians I represent overwhelmingly support it and want us to get it done.

“Since the early days of the pandemic, I have worked with lawmakers from both parties—and across the ideological spectrum—to earn their support for my bipartisan bill, the TRUST in Congress Act, to require individual stock holdings be divested or placed in a qualified blind trust while in office. Our commonsense proposal demonstrated that many Democrats and Republicans alike take this issue seriously and are listening to the voices of the people.
“For months, momentum grew in both the U.S. House and the U.S. Senate to finally take a step towards prohibiting Members of Congress from day trading while on the job. We saw remarkable progress towards rectifying glaring examples of conflicts of interest. And after first signaling her opposition to these reforms, the Speaker purportedly reversed her position,” Spanberger said, citing Speaker of the House Nancy Pelosi’s (D-Calif.) past opposition to a stock trading ban before later signaling her openness to the move. “However, our bipartisan reform coalition was then subjected to repeated delay tactics, hand-waving gestures, and blatant instances of Lucy pulling the football.”

Calling Out the Old Guard

Spanberger then went a step further, calling for new Democrats to step up to the helm.

“This moment marks a failure of House leadership and it’s yet another example of why I believe that the Democratic Party needs new leaders in the halls of Capitol Hill, as I have long made known,” Spanberger wrote. “Rather than bring Members of Congress together who are passionate about this issue, leadership chose to ignore these voices, push them aside, and look for new ways they could string the media and the public along—and evade public criticism. As part of their diversionary tactics, the House Administration Committee was tasked with creating a new piece of legislation—and they ultimately introduced a kitchen-sink package that they knew would immediately crash upon arrival, with only days remaining before the end of the legislative session and no time to fix it.

“It’s apparent that House leadership does not have its heart in this effort, because the package released earlier this week was designed to fail. It was written to create confusion surrounding reform efforts and complicate a straightforward reform priority—banning Members of Congress from buying and selling individual stocks—all while creating the appearance that House Leadership wanted to take action.

“In the months ahead, I will be dogged in my efforts to ban Members of Congress from using the privilege of their position to profit. I look forward to working with both my Democratic and Republican colleagues to get these reforms done.”

Commenting on Spanberger’s statement, Pelosi suggested that the legislation didn’t have enough support to pass.

“We have to have the votes to bring [the bill] up,” Pelosi said.

Democrats Call for New Leadership

Spanberger’s letter, with its call for new Democrats to take the helm, fits into larger divisions among Democrats.

Generational fractures between old guard Democrats and young lawmakers who won their seats during the blue wave in 2018 have begun to emerge in the party.

Democrats’ caucus includes three of the five youngest members of Congress—including Reps. Alexandria Ocasio-Cortez (D-N.Y.), Sara Jacobs (D-Calif.), and Ritchie Torres (D-N.Y.).

Though the average age of House Democrats is 59 years old according to data from FiscalNote, party leadership has an average age of almost 72 years old, including three octogenarians.

Generational fractures between the party old guard and new Democrats first emerged as early as 2018, when Democrats extracted a pledge from Pelosi that she would not serve as speaker again. She later reneged on that promise, being reelected speaker in the 117th Congress.

Pelosi also seems to be open to another term as House Democrats’ leader. Asked by reporters if she would seek another term as speaker or minority leader, Pelosi refused to commit to her past promise to step down.

On the other hand, Spanberger is not the only Democrat to call for a changing of the guard among leadership.

Reps. Angie Craig (D-Minn.) and Dean Phillips (D-Minn.) are among the few in their caucus who have gone as far as calling for a “new generation” of Democrats to take over from President Joe Biden and other current leaders.

Calls to this end have grown gradually as younger Democrats have found their footing in Congress. However, it remains unclear how many in the party share the sentiment; in preparation for a tough midterm battle, most Democrats have striven to avoid the appearance of disunity.

But after the election—particularly if, as observers expect, Republicans take back control of the lower chamber—power struggles among aging leaders and ambitious young lawmakers could burst into the open.

Bipartisan Support

The legislation shot down by Hoyer on Sept. 29 has shown a strong degree of bipartisan support over the course of the 117th Congress.

While the fate of any such bill in the Senate is less than certain, coalitions of Republicans and Democrats in the House have made several pushes for such legislation.

In January 2022, a bipartisan group of more than two dozen House members urged Pelosi and House Minority Leader Kevin McCarthy (R-Calif.) to allow a floor vote on a bill that would bar members of Congress from trading individual stocks.

The demand was made in a Jan. 24 letter spearheaded by Rep. Jared Golden (D-Maine). A total of 27 lawmakers signed Golden’s petition, including 25 Democrats and two Republicans.

In 2012, Congress approved the Stop Trading on Congressional Knowledge (STOCK) Act, which required members of Congress to publicly disclose their financial transactions. However, a recent investigation by Insider found that many lawmakers in both the House and Senate have violated the provisions of that law.

In view of this, the lawmakers write, “it’s clear the current rules are not working.”

In another recent example of potential insider trading, several members of Congress allegedly sold stock ahead of the crash precipitated by the CCP (Chinese Communist Party) virus pandemic. These members had received nonpublic briefings on the growing virus outbreak, leading many to believe that the sudden stock sales were carried out on the basis of this knowledge.

“The law prohibits only those stock trades that members of Congress make or direct because of their nonpublic knowledge,” Golden states in his letter. “But it can be nearly impossible to determine what counts as ‘nonpublic knowledge’ or how personally involved members are in their stock trades.”

“Instead,” the lawmakers demand, “Congress should close these loopholes by simply banning members from owning or trading individual stocks while in office.”

“We came to Congress to serve our country, not turn a quick buck,” the letter continues.

“While there are many difficult questions facing Congress, this is an easy one,” the letter concludes. “Members of Congress should not be allowed to own or trade individual stocks. Let’s get this done.”

Opposition

Despite substantial bipartisan backing, the proposal has also faced backlash from members of both parties.

Most prominently, Pelosi initially suggested that she thinks lawmakers should have access to the market before later reversing her position on the issue.

During a mid-December press conference, just after Insider released its report on violations of the 2012 STOCK Act among members of Congress from both parties, Pelosi was asked whether a stock ban for members of Congress would be appropriate.

“No,” Pelosi responded quickly. “We have a responsibility to report [our trades] … [and] if people aren’t reporting, they should be.”

Further pressed to explain her “no,” Pelosi said, “because we’re a free market economy. [Members of Congress] should be able to participate in that.”

Rep. Dan Crenshaw (R-Texas) has also defended stock trading by sitting members of Congress.

According to a report by Unusual Whales, Crenshaw had the fifth-highest returns of any member of Congress for his stock trading in fiscal year 2021. During an appearance on the All American Savage Show podcast, Crenshaw discussed the returns and his position on Congress members trading on the stock market.

The host asked Crenshaw whether he thought that sitting members of Congress should be allowed to invest in the stock market.

“I think it would be fine if you banned individual stock trading,” Crenshaw said, before clarifying, “Notice I said ‘individual stocks.'”

The Texas Republican explained that while he would accept bans on buying and selling individual stocks, he thinks that members of Congress should still be allowed to invest in ETFs and similar stock funds.

“I’m kind of neutral on it,” Crenshaw continued. But if such a ban were put in place, Crenshaw claimed, “no one would run for Congress because you have no way to better yourself.”

Tom Ozimek contributed to this report.