by Charles Arencibia
Source: Pew Research Center
Public Servants of Congress
Members of Congress are called to “support and defend the constitution.” It is so essential to their duty as representatives that they must take an oath of office to affirm their allegiance to defend the liberties of the people as public servants. Despite their oath, they have repeatedly taken advantage of their position, misused their influence, and put their desires before the country's needs, and nothing demonstrates this more than the rampant insider trading that plagues congress.
With the average salary of a member of Congress being $174,000, and the average annual salary of an American (in 2021) being $58,260, it is clear that there is no need for this misuse of influence. Furthermore, Congress members should be indifferent to the outcome of the free market. In a court of law, a conflict of interest as corrupt as insider information would dismiss those involved. So why should Congress members be any different? Why should Congress members be above the law?
Congress has repeatedly abused its power and influence for its financial gain with the vast abuse of non-public information. Oxford Dictionary defines insider trading as, “the illegal practice of trading on the stock exchange to one's advantage through having access to confidential information.”
In early 2022, it was considered in the Ban Congressional Stock Trading Act. According to CONGRESS.GOV, the ban states, “This bill requires each Member of Congress to divest or place in a blind trust any specified investment owned by the Member, the Member's spouse, or a dependent of the Member.” This bill would make a clear and concise line that could not be crossed by any Congress member unintentionally, unlike their past efforts.
The STOCK ACT, which required Congress members to disclose stock transactions, has been violated by 77 members of Congress according to Bussiness Insider. Its lack of repercussions for violations of the law has led to its ineffectiveness. Business Insider also states that the penalty is only usually about $200 for a late disclosure, which is always too late to have the intended effect that stock disclosure should have on insider trading. This fine is relatively insignificant compared to the value of the stock, which in a case like John Hickenlooper was valued between $516,006 and $1.2 million.
Columbus Economic and Bussiness Experts
Mr. Santa-Maria, Columbus economics teacher, provided his perspective on the topic.
"There is less integrity in Congress than in the stock market, and I do believe there is very little integrity in the stock market," Santa-Maria said.
He also states that the ban on congressional stock trading will only diminish that specific method of profiting off insider information and lead to new methods. Santa-Maria goes on to explain that this is a symptom of a larger issue in the government with corruption and greed controlling officials.
“Kenneth Griffin, he runs Citadel, he is one of the biggest donors to the Republican Party. He is going to do whatever is best for him and his company, and if that means skirting regulation, paying a fine, or getting politicians that are more favorable to him, then that’s going to be the case,” he said.
Santa-Maria further explains this flaw in government.
“It is a systemic problem in every government that is run by humans throughout history… every single one of them," Santa-Maria added.
Mr. Corazon, a Columbus Business teacher, offered a very different approach to the issue.
“The stock market has to be fair for everybody. That is why we believe in the system and investments work on the potential of the companies, sales of the companies, and profits of the companies. But when people have information that is only privy to a few, then the fair part of the company becomes unfair," he said.
Corazon’s solution is to only allow congressional trades in exchange-traded funds (ETF) or mutual funds, since it does not include individual stocks, effectively eliminating insider trading in Congress.
The Biggest Whale
A whale in the stock market is an investor with many shares in companies and the ability to buy bulks of stocks. One of the alleged biggest users of insider information, if true, is Nancy Pelosi. Pelosi allegedly profits from the policies that she is meant to judge based on the needs of the citizens rather than her private interest.
While the congressional salary is less than $200,000 annually, Nancy Pelosi has accumulated about $65.4 million during the COVID-19 pandemic (2019-2021) according to the Washington Free Beacon. In this same period, Americans have suffered losses in finances.
According to the Center on Budget and Policy Priorities (CBPP), in December (2020) about 14 percent of people reported not having enough to eat, and before February about 21 percent were not caught up on rent.
While Americans have seen an overall negative effect on their finances, both in the workforce and the stock market, with an over 30 percent decrease in the S&P 500 from February to March (2020), Pelosi had one of her most successful years in the stock market.
It is not unusual for the average person to beat the stock market by about 5 percent but Nancy Pelosi has beaten it by nearly 15 percent according to the New York Post. Not only is this unlikely for any investor to achieve, but her position as a congresswoman raises heavy suspicions. And though there may be no concrete evidence because a formal investigation has not been conducted, many traces are pointing to her participation in insider trading.
Necessary and Just
In light of these injustices, it seems that there is only one solution to prevent greed in Congress. An outright ban on all stock trades in Congress is both necessary and just. To restore the integrity of Congress and protect the American market, all congressional stock trades should cease. Any other course of action that allows the continuation of corruption in Congress is adverse to all values that America is built upon.