In recent years, questions about financial transparency and ethical standards in Congress have gained increasing attention. From concerns about insider trading to potential conflicts of interest, the issue of lawmakers’ personal financial activities has become a point of bipartisan discussion. With apps like Autopilot tracking members of Congress's trades, this issue is on the public's mind. This week, a look at the Restoring Faith in Government Act, how it seeks to address these concerns, and the debate on its implications and effectiveness. Let's dive in! 

Background on Congressional Stock Ownership

Members of Congress, by the nature of their roles, often have access to non-public information about industries, markets, and policies. Over the years, many have pointed out that this access creates opportunities for potential financial conflicts of interest. 

What is insider trading?

Insider trading occurs when individuals use confidential, material information to gain an unfair advantage in financial markets. While corporate insiders are prohibited from such practices, loopholes in current laws have allowed legislators to engage in trading that, at best, raises questions of propriety—and, at worst, mirrors insider trading. Many are wondering if the existing rules governing financial disclosures and stock ownership among lawmakers are insufficient to prevent unethical behavior.

Have we ever tried to address this in the past? 

This issue came into sharp focus in the early 2000s, culminating in the passage of the Stop Trading on Congressional Knowledge (STOCK) Act in 2012. This legislation aimed to increase transparency by requiring lawmakers to disclose their financial transactions within a specific timeframe. 

Key Provisions of the STOCK Act

The STOCK Act was introduced to prevent insider trading and conflicts of interest in Congress. Among its provisions were requirements for:

• Timely disclosure of stock trades by lawmakers, their spouses, and senior staff members
• Public access to financial disclosures through an online database
• Explicit acknowledgment that existing insider trading laws apply to Congress

Despite the measure's best efforts, challenges remain. Enforcement of the STOCK Act has been criticized as inconsistent, with loopholes in the law having allowed questionable practices to persist. Reports have shown that some members of Congress have failed to comply with the law’s reporting requirements, and penalties for violations are often minimal. Additionally, the act does not prohibit stock ownership outright, having left room room for *potential conflicts of interest amongst law makers.

Renewed Scrutiny and Ethical Concerns

Recent high-profile instances (and reporting over the years) of stock trading by members of Congress and their families have increased calls for reform. Former Senator Richard Burr (R-NC) sold stocks at the start of the COVID-19 pandemic while chairing the Senate Intelligence Committee. Although the SEC closed its investigation without action, the case underscored public unease over potential insider trading.

Perhaps the most notable politician related to this issue is Nancy Pelosi. In 2022, then-Speaker Nancy Pelosi’s (D-CA) husband sold millions of dollars in computer chip stocks shortly before a House vote on domestic chip production legislation. A spokesperson stated the shares were sold at a loss, but the timing raised concerns. When challenged on some of these reported ethical issues, Pelosi defended congressional stock trading, saying "We are a free market. They should be able to participate in that."

A report by Unusual Whales revealed that in 2024, over two dozen lawmakers’ stock portfolios outperformed the market, with Democrats seeing a 31% gain and Republicans 26%, compared to the S&P 500’s 24.9% growth. The report highlighted potential conflicts of interest, such as:

• Speaker Nancy Pelosi (D-CA) and her husband's stocks, which rose nearly 71% in 2024
• Rep. Debbie Wasserman Schultz (D-FL) purchased shares in Viasat, a company awarded $2.7 billion in Defense Department contracts, while serving on a related appropriations subcommittee
• Rep. Dan Newhouse (R-WA) acquired shares of RTX (formerly Raytheon), a major federal contractor, while on the Homeland Security Appropriations subcommittee

Unusual Whales commented, “The idea of lawmakers trading stocks while legislating is inherently problematic... Whether or not they act on insider knowledge, the appearance of potential abuse undermines public trust.” These examples emphasize the growing need for reforms to address conflicts of interest and restore public confidence.

In fact, in the Restoring Faith in Government Act's press release, legislators highlighted that:

• Studies have found that approximately one in seven members of Congress has violated the STOCK Act’s reporting requirements
• Between 2019 and 2021, 97 lawmakers reportedly traded stocks tied to industries they were directly overseeing through committee roles
• In 2022, members of Congress collectively outperformed the S&P 500 by 17.5%, prompting questions about whether access to non-public information contributed to these gains

These findings have reignited calls for stricter regulations to ensure that congressional actions are free from personal financial motivations. The lawmakers putting forth this bill also found that: 86% of Americans favor banning stock trading by members of Congress and their families, including: 87% of Republicans, 88% of Democrats, and 81% of Independents. 

The Restoring Faith in Government Act

The Restoring Faith in Government Act (proposed last year as well) aims to address these concerns by banning individual stock ownership and trading by members of Congress, their spouses, and dependents. This is a bipartisan effort, sponsored by: Brian Fitzpatrick (R)*, Chris Deluzio (D), Ro Khanna (D), Raja Krishnamoorthi (D), Mike Lawler (R), Cory Mills (R), and Alexandria Ocasio-Cortez (D). By focusing on eliminating potential conflicts of interest, the legislation seeks to enhance public trust in elected officials and reinforce the integrity of government institutions.

Proponents of the bill argue that the measure builds upon the STOCK Act by addressing its limitations. For example, while the STOCK Act requires disclosure of trades, it does not prohibit lawmakers from engaging in stock trading altogether. The Restoring Faith in Government Act takes a more stringent approach, proposing a blanket ban on individual stock ownership to avoid even the perception of impropriety.

Bipartisan Support and Debate

The Restoring Faith in Government Act has garnered bipartisan support, with lawmakers from both parties emphasizing the importance of addressing financial conflicts of interest in Congress. Representative Brian Fitzpatrick, a co-sponsor of the bill, highlighted the need for elected officials to prioritize the public good over personal financial gain. Representative Raja Krishnamoorthi, another co-sponsor, echoed this sentiment, emphasizing the role of the legislation in fostering trust in government institutions.

However, the bill has sparked debate over potential unintended consequences. Critics argue that banning stock ownership for lawmakers could deter qualified individuals from running for office or create complications for those with extensive financial holdings. Concerns have also been raised about how such measures might disproportionately affect lawmakers with family businesses or investments in industries unrelated to their work in Congress.

Other Efforts

The Restoring Faith in Government Act is not the first attempt to address this issue. Over the years, several pieces of legislation have sought to ban congressional stock trading, though none have succeeded in becoming law. For example, the ETHICS (Ending Trading and Holdings In Congressional Stocks) Act, introduced last year, proposed similar restrictions but failed to gain significant traction. This bill would have prohibited members of Congress, the President, and the Vice President, as well as their spouses and dependent children, from trading or owning stocks, with some exceptions. 

Public watchdog groups, including Citizens for Responsibility and Ethics in Washington (CREW), have highlighted the critical need for immediate action, and tried to rally people for around the ETHICS Act last year. They argue that every delay in addressing financial conflicts of interest erodes public trust in democratic institutions.

Looking Ahead

As the Restoring Faith in Government Act continues to move through the legislative process, its potential impact on transparency and accountability in government remains a central focus of discussion. Supporters argue that the legislation represents a necessary step in addressing ethical concerns in Congress. Critics, on the other hand, suggest that further refinements may be required to balance accountability with practical considerations for lawmakers and their families.

President Biden recently expressed his support for a congressional stock trading ban. In the final weeks of his presidency, he highlighted the importance of this reform as a way to address public distrust in government. In December, Biden said in an interview with the progressive nonprofit newsroom More Perfect Union “I don’t know how you look your constituents in the eye and know because the job they gave you, it gave you the inside track to make more money”.

During his farewell address, Biden stated: “We need to ban members of Congress from trading stock while they are in Congress. The concentration of power and wealth erodes the sense of unity and common purpose. It causes distrust and division.”

Conclusion

The ongoing debate over the Restoring Faith in Government Act, as well as previous legislative efforts like the ETHICS Act, reflects the complex challenges of implementing meaningful reform. While the bill’s outcome remains uncertain, its progress signals growing momentum for addressing financial conflicts of interest in Congress. Whether through this legislation or future proposals, the discussion underscores the importance of transparency, accountability, and integrity in public service.

Cover Photo by Allison Saeng on Unsplash

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