A bill that might actually go too far?
The new bill would bar Washington officials from owning or trading stocks, even in blind trusts.
I fully support the first half, but the second seems to be a non-starter. If you can’t trade even in a blind trust, then you can’t add funds (adding is trading) at all while you are in government. That seems excessive without any real goal accomplished.
Edit to unhide, for some unknown reason.
Heck, I am for requiring members of Congress to live in (really nice) monastic dormitories and to surrender all personal wealth. Plato had some interesting ideas along those lines.
david fb
I think the problem is that blind trusts aren’t really blind. First of all, sometimes the owner of the assets can influence the manager of the assets (via unrecorded conversations, via a spouse/child/other family member). But second of all, the manager of the trust isn’t blinded, they know they are managing Senator X’s portfolio, and they know Senator X’s positions on big things, and they know what legislation is in progress. So Senator X is a big tobacco supporter, and is working on killing an anti-tobacco bill, and the bill is wending its way through Congress, and it appears likely to pass. The manager of the trust can buy tobacco companies in the hope that they go up after the legislation is quashed.
So the blind trust accomplishes nothing of significance because the assets end up invested in roughly the same way.
Yep. That’s one problem.
But the real issue is personal integrity. A democratic republic works only as long as those elected to office put the good of their constituents and the country ahead of (or at least on an equal footing) with their own interests.
When we elect people that put their own interests far ahead of their constituents’ interests, things start falling apart. Those in power stop using the power of their office for the good of the people and instead use it for their own good.
And I see this issue affecting governments at every level - from cities and counties (and HOAs!) all the way up to Federal offices.
Call me an eternal optimist, but I think humanity is better than that. We can elect people who want to do good for others. But we have become so greedy ourselves that we look upon greed as a desirable trait. Then we seem shocked when that greed comes out in the form of elected officials putting their own interests ahead of everyone else’s interest.
I suspect it may take things getting a bit worse before we wake up and smell the excrement we’ve been wading in and decide to try something different - seeking out people of integrity and competence rather than those who scream the loudest in a room.
–Peter
Oh. Well that ship has sailed.
Thus has it ever been.
“Eternal optimist” is not the phrase that comes to mind.
If you want to have Congresscritters allowed to trade stocks, then there should - and could - be a simple set of regulations for it. First, they have to register all holdings with an independent third party. It could be government, or it could be a private company licensed to handle such with regular reporting.
Second, buys and sells would have to be done “on a regular periodic basis”, much as executives with lot of shares have to so as to minimize trading on insider information.
Third, any violation of rules means automatic impeachment and conviction, done via the legal system, not political bodies.
Fourth, any profits must be publicly disclosed, annually.
Fifth, those profits should be forwarded to Goofyhoofy’s Finer Monitoring Services, LLC, Honestville Pike, Tallahassee, NV 50505.
The trustee should not know any more than you or I. The trading prohibition is to stop congress critters from using knowledge the rest of us do not know to facilitate trading.
Regardless, it would seem rather easy to create an entity that manages ALL congress critter assets in a non-segregated manner so congress critter from MA is invested the same way as congress critter from UT and the trustee does not have individual control over a specific person’s assets.
This would definitely work, and it’s the most reasonable proposal I’ve heard.
Doesn’t solve the spouse/kids/other family problem though. Especially the ultra-wealthy spouse case.
But it could. My firm requires that I either have my assets in house or with a firm that discloses all my trades. I must also get pre-approval to buy and must hold for specified period of time. These rules apply to both my accounts and those of my family.
Isn’t this all solved by applying insider trading laws applicable to executives to members of congress?
The most effective aspect of Insider Trading laws are those that require officers to pre-clear the buying and selling of their own corporate stock. Congress critters do not have corporate stock.
What works much less well are the laws designed to catch people trading on non public information. Only the most egregious and brazen are usually caught under those laws.
Really??? Do they apply to your children? To your parents? Siblings? Do they apply to your adult children? What about a stepchild that you haven’t adopted? Or what if you had a family trust, that’s been growing for 2-3 generations, does it apply to that?
When I was an executive at a firm, I (and my spouse) had to get pre-approval to trade in its shares, but that’s it. My children/parents/siblings did not need to do anything before trading those shares.
Any account for which I may have access or otherwise direct trades to include spouse and children. If I have POA for my parents or siblings, then it would include those accounts as well.
The Thrift Savings Plan could be used as a framework. While accounts are individual, like a 401k, the investment options are limited to a slate of mutual funds.
While I approve of the thrift for new money, I would not want to force someone to liquidate what they already own to buy those funds. Such might create substantial capital gains unnecessarily.
Handle it like a rollover from a 401k to an IRA. Zero tax due if rolled directly into the TSP.
Steve
This is already done for government officials that are required to liquidate upon taking their position. Like Fed governors.