Surprised is probably an understatement for a realization dawning this week: I agree with Alexandria Ocasio-Cortez. Hard to believe, but true. And the issue that unites two opposites? The still-legal practice of allowing members of Congress to buy and sell individual stocks. On this, we agree – it should be banned.
If you don’t follow the markets, you might miss the crux of the problem. When lawmakers can trade single stocks, the temptation – and opportunity – to exploit insider information is ever-present. Members of Congress routinely receive information before the public does.
Rep. Brian Fitzpatrick (R-PA), a moderate, admitted as much in a Wall Street Journal interview: “We absolutely have access to insider information here. There is no question about it. To not acknowledge that, I think, is very dishonest.”
When that information is used for personal gain, it’s no different than a hedge fund manager trading on the same insider information – behavior that is a federal crime.
Several cases highlight the danger:
- Rep. Mike Kelly (R–PA): His wife bought Cleveland-Cliffs stock just after his office learned tariffs would benefit a local plant. Their $23,000 investment turned into an $87,000 sale. He escaped insider-trading charges, but a House Ethics report criticized his lack of candor.
- Sen. Dianne Feinstein (D–CA): In early 2020, after private Senate COVID-19 briefings, her husband sold millions in biotech stocks. The Justice Department dropped its probe, but the timing raised serious questions.
- Sen. Kelly Loeffler (R–GA): Also in 2020, she and her husband – the then-NYSE CEO – sold off millions after closed-door pandemic briefings while buying shares in companies poised to benefit. She was cleared legally, but the scandal helped cost her reelection.
Yes, lawmakers deserve the presumption of innocence. And yes, not every member trades on inside information. But when you sign up for Congress, you sign up for heightened scrutiny. That’s part of the bargain struck with the American public. With trust in government at just 22 percent, banning single-stock trades is a small sacrifice for the privilege of serving – and it could help rebuild confidence.
Importantly, the proposal does not ban index funds or mutual funds. Lawmakers can still grow their wealth through broad-based investments, without the cloud of suspicion. Personally, I’m a quasi-Boglehead who favors indexing. But for those who prefer active management, mutual funds offer a clean, fair alternative.
The scale of the problem is real. According to the Motley Fool, members of Congress have made more than 7,800 trades this year through July, involving 362 million shares. They typically beat the market – a feat Warren Buffett himself admits is difficult over the long term. Lawmakers outperformed the S&P in 2022, 2023, and 2024. That alone should raise eyebrows.
A bipartisan bill set for release next week aims to fix this issue. It would require lawmakers and their families to sell individual stocks within 180 days (90 days for new members) or face steep fines and forfeited profits. Negotiated by Rep. Seth Magaziner (D–RI), with input from conservatives like Chip Roy and Tim Burchett and progressives like AOC and Pramila Jayapal, it even carves out narrow exceptions for stock received as compensation.
Even Speaker Mike Johnson and President Trump have signaled openness to reform.
A few additions could strengthen the bill – such as extending the ban to senior executive branch officials and offering one-time preferential tax treatment for those who shift assets into index, mutual funds or similar instruments after selling single stocks. Those who would argue the move is punitive are less likely to with such provisions.
Congress should pass this bill without hesitation. At a time when faith in government is dangerously low, eliminating the perception – or reality in some cases – of self-dealing is not too much to ask. If members want to keep trading single stocks, that’s fine. But if they do, they should be compelled to resign from Congress.
Editor’s Note: Nothing in this commentary should be interpreted as financial advice. Readers should weigh any financial questions or decisions with a properly credentialed financial advisor.