Congress Moves to Ban Themselves From Insider Trading

While Americans’ assets were being raped and pillaged by Wall Street insiders, unscrupulous hedge fund traders and Ponzi scheme artists, Congressional members were enjoying positive returns on their stock and bond holdings garnered from forward knowledge of laws that would be passed and which companies would benefit.

Now, after an outcry from the public in what is obviously unethical behavior – be it legally acceptable or not – Congress is reportedly moving to ban future insider related activity by its members.

On Tuesday, the House Financial Services Committee is slated to hold a hearing on the STOCK Act – short for Stop Trading on Congressional Knowledge Act.

The bill, which has languished since first being introduced in 2006, now has over 150 sponsors and the Senate held its first-ever hearing on related legislation last week.

“We’ve had a lot of recent converts now that the public knows what’s going on,” quips Peter Schweizer, author of Throw Them All Out, a book which — along with a subsequent 60 Minutesprofile — helped focus the nation’s attention on the trading activities of sitting members of Congress.

According to both Schweizer and separate university studies, sitting members of Congress have outperformed the market by 6% to 12% in the 1980s and 1990s. Another study contradicts that claim. Andrew Eggers of Yale University and Jens Hainmueller of MIT examined the stock portfolios of members of Congress between 2004 and 2008 and found the country’s representatives “unperformed the market by 2-3% annually” during that period.

But whether elected officials outperform or trail the market is almost beside the point: Americans overwhelmingly believe insider trading by members of Congress needs to stop.

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