(Bloomberg Opinion) -- After a contentious year, Congress appears to be on the verge of passing bipartisan, commonsense legislation. Even better, the effort in question is popular, prudent and right on the merits.
This week, House Speaker Nancy Pelosi offered tepid support for legislation that would bar lawmakers from trading individual stocks. Pelosi has long resisted the reform, saying in December that members should be allowed to participate in the “free-market economy” and that current regulation was enough. With a trading ban getting strong backing from the public, she has evidently seen the light.
There’s little doubt legislation of this kind is needed.
Following several stock-related scandals, Congress passed the Stop Trading On Congressional Knowledge (STOCK) Act in 2012. It was supposed to establish clear disclosure guidelines, curtail perceived conflicts of interest, and prevent lawmakers from trading on nonpublic information acquired during their official duties. It hasn’t worked out as planned.
No lawmaker has ever been successfully prosecuted under the act. Over the past year alone, at least 55 House and Senate members (and nearly 200 staffers) have failed to fully comply with its reporting requirements, according to media reports. Meanwhile, distinctive stock-related scandals — such as the time Representative Chris Collins called his son from the White House grounds to divulge confidential information he had learned about a drug trial, and urged him to sell the relevant stock — have seemed all too common in recent years. (The elder Collins was sentenced to prison in 2020; then-president Donald Trump pardoned him later that year.)
Unlike most issues before Congress, this one isn’t very complicated: No lawmaker should be able to trade individual stocks while in office. The opportunities for abuse are too plentiful, and disclosure requirements alone will never be enough to prevent serious misconduct.
Precisely what new rules to establish is a matter of debate; several competing proposals have been circulating in Congress. But the basics are clear: At a minimum, lawmakers and their immediate families should be required to place their investment assets into a blind trust for the duration of their terms in office. Even better (and simpler) would be a blanket ban on holding equities, which would be harder to game and easier to enforce.
Wherever Congress ends up, Pelosi’s belated support for this idea is welcome. Passing such a bill would remove a constant temptation for lawmakers, prevent obvious conflicts of interest, and eliminate a longstanding source of distrust. It would also help convince the public that their elected officials are more interested in doing good than doing well.
Editorials are written by the Bloomberg Opinion editorial board.
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